Terrific. We'll go ahead and get started. We're very pleased to welcome to the stage the CFO for LyondellBasell, Agustin Izquierdo. He's relatively new to the company, came in 2022, so he hasn't seen the good stuff yet, as far as the chemical cycle goes. But he wanted to start off. He's got a few slides that he wants to walk through. So Agustin, if you want to go ahead and run through those, and then we'll jump into the Q&A when you're done.
Excellent. Thank you, Dafi, and thank you for having me here. Let's just quickly go through a few slides. This is a normal cautionary statement. This is what we'll be talking about: forward-looking projections. And of course, also in the back of the slides, which are available on our website, you can see the reconciliation to GAAP measures. Just quickly, some highlights on third quarter, which, as you know, we reported on October 31st. It was a good quarter for us, above consensus, where we saw the good recovery from OPAM in particular, so olefins and polymers in the Americas. This was the absence of the Channelview turnaround that helped quite a bit in the, you know, that was one of the longest turnarounds that we've had, roughly an impact of $200 million.
Also, we had a little bit of recovery in terms of oxyfuels, which had an interesting summer season, very depressed, but here with some industry outages and recovery in margins, which has been nice, and the APS transformation, which continues to be well on its way. The other thing to highlight, and you know this well, our business has continued to generate a significant amount of cash. Lyondell has been historically a very good company for cash conversion. Our long-term average is 80%. Over the last 12 months, we had 90%, and just Q3 alone, 135% cash conversion. So the team continues to be extremely focused on monetizing every single opportunity. And to that extent, also, we launched earlier in the year the cash improvement plan.
As you know, it's a two-year plan now, 2025 and 2026, for at least $1.1 billion in cash improvements and generation. It's broken down, especially here. We're focusing on 2025, $600 million for 2025, which is divided in these three categories. Working capital, which should be a release of at least $200 million compared to where we finished last year. We're adjusting operating rates to make sure we're running for cash, not unlike many others in the industry. Fixed cost reductions, which we've been very aggressive on, also targeting at least $200 million. I think we're closer to achieving 1,150 of those already. This is against our reduction in personnel, closing open positions, professional services, delaying projects that are not, you know, at the highest profitability right now.
Then on CapEx reduction as well, which, if you recall, we started the year at. There was our target of $2.2 billion. Then we came to 1.9 and 1.7, and continued to reduce it. Now, the reason why here it's in yellow is because on the accrued CapEx l ine, I would say. W e do, we do target at 1.7, but you always have some invoices that come from, you know, pass from one year to the next. And that traditionally happens when you have big turnarounds at the end of the year or at the beginning of the year.
And that's what happened this year. So we had a big turnaround in Germany at the end of 2024 in OM6 in Wesseling, and then the Channelview turnaround I mentioned before at the beginning of the year. So there's roughly $200 million of cash that we have to pay for services that were already delivered. But we're doing everything we can, obviously, to try to minimize the impact for this year. And as we, you know, prioritize CapEx, there are also some projects where we had to take a difficult decision to delay.
So the first one was Flex-2. This is the ethylene-to-propylene conversion project. And then the second is any final decision also on MoReTec-2 , which will be the second chemical recycling plant. The first one, as you know, is in Germany. So I'll say that the program is on track. And for next year, we have $500 million that we're targeting as well. So CapEx will be at $1.2 billion in terms of spending. Our minimum CapEx is roughly $1.1 million, and one is also the sale of the European assets, which I'm sure we'll talk in the future, that has roughly $100 million of CapEx associated with it. So going forward, LyondellBasell's maintenance CapEx is around $1 million-$ 1.1 million.
And so next year, we do maintenance CapEx and then a little bit of growth CapEx, which is to finish MoReTec-1 , so chemical recycling in Germany at our Wesseling hub. And then the second is some also operational improvements to our Hyperzone technology, the PE here in the U.S., and the rest, again, you know, incredibly tight focus on fixed cost and working capital management. In terms of the outlook, this slide will change slightly from what we said during our Q3 results. So North America, I think you continue to see the ACC statistics came out a couple of days ago. You see the inventory days on hand for the industry have continued to come down from August at 45 days, now 43 days last month at 40 days.
And also operating rates are coming lower around 83% back, you know, from 90%, mid-90%s, also two months ago. All operators, and we're all running for cash and optimizing. We're matching rates with demand, which is normal, but it's also a good sign, right, that there's an industry showing a little bit more discipline. Europe, on the other hand, has shown to be weaker. Prices have continued to compress. CMAs showing that for PE, $70 per ton have compressed. For PP, roughly $40 per ton have also compressed. So that's where we see the biggest challenge for now and also the biggest change from what we said during Q3. Asia, I think just, you know, the same continues to just have the pressure from the new capacity additions in the region and TBD, all the future impact, I would say, from any anti-evolution.
In terms of our end markets and segments, packaging has been resilient and continues to be resilient. We're happy with that. Building and construction, housing market continues to be depressed where the existing home sales have not moved, and that's an important sector for us. Automotive, I'd say it's also not getting any worse, if that's good news. Through our APS business, also, we've increased our share gain, which is, you know, good news for us. On the oxyfuels side, we had a very strange Q2 or summer driving season. Q3 with the industry outages has improved a little bit, and we'll just face the normal seasonality as driving season also comes to an end here in Q4.
And with that, maybe we can go to Q&A, but maybe I can also give a little bit of an outlook. So what does that mean really for Q4 and the end of the year, right? So at the end of Q3, we said that we had a number of outages that were gonna happen in Q4, roughly $110 million, and that we announced during our Q3 call. That $110 million was broken, $40 million, in OPAM for the Matagorda turnaround, which is our largest PE plant. We also had $40 million of the impact of the Wesseling maintenance. So it's OM6 or cracker in Germany. And then we also had $30 million of impact in IND from the acetyls turnaround. So that's the $110. So what's new from there?
You probably saw in the news that we had an upset at the Louisiana Joint Venture, the Leap Joint Venture. So that's roughly another $30 million. We had an issue with a gas compressor, so that the plant is down and should be coming up here at the end of the month, so that by the end of the year, basically. It's a big piece of equipment, so roughly $30 million impact there. You've also seen the ethane going up to roughly $0.30 per gallon. So there's price compression there. In terms of then on the PE pricing, October settled flat, same as November, but October, you also see the -$0.02 on the NTP. And that probably combined the effect of higher raw materials plus the lack of pricing, I would say, powering PE. It's probably roughly another $80 million for OPAM.
For EAI, I think you can expect that Q4 will be at the same level as Q4 of last year. So then we just talked about the margin compression that we saw from CMA. IND, I think just the normal seasonality that we continue to see as Q4 is weaker traditionally for Oxyfuels, despite the good performance that we have seen here in Q3, and they've held up. And then technology, no change there. Basically, Q4 will be at the same level as Q1. So a little bit of an uptick there on payments regarding licenses. And APS continues to do its transformation. So, overall, that's, you know, the main changes from Q3.
Okay. Okay, so a bunch of stuff in there I'd love to unpack. First one is just, you know, if you look at 2025, you know, in whole over the year, how does that set up in your mind as a baseline to jump off into 2026? You know, what gets better, you know, if you look today versus the average of the year, you know, what may improve or, you know, get worse between now and next year, but just how do you use 2025 as a baseline to think about 2026?
Yeah. So I'll say 2025, obviously, was a strange year. Liberation Day didn't help. That caused chaos, I would say, in the PE market. And for two or three months, we really didn't see pricing evolve in the natural way. So that, that's one effect. And then the other big one was, I would say, oxyfuels. We had the big refinery in Nigeria, then Dangote started up. They actually started up very well, to much of our industry surprise. But then, around September, they had sort of operational issues and some, you know, problems with labor, etc., and they came down. I think they won't be as good running in the near term as, you know, for just the normal operational issues. So when you look into 2026 now, what helps us or what doesn't hinder us?
So we won't have the big turnaround. Channelview took roughly $200 million out of our earnings. We also cannot predict the weather, but in 2025, we also had the Enzo winter storm that was roughly a $60 million impact. So let's assume that doesn't happen again. If we have a normal oxyfuel season, that should obviously help. APS continues to make good progress. So I would say that sequentially from 2025 to 2026, just based on the absence of items that consumed cash, we should be $400 million-$450 million better, at least from 2025 to 2026.
Okay.
Demand continues to be good. You know, as we said, 3% demand growth for last year, this year, and probably next as well. We don't see things falling off, and of course, if we got help from housing restarting in any way, automotive getting a little bit better, peace in Europe in any way, shape, or form helps consumer confidence, and there's quite a bit of polymers into reconstruction.
Specific stuff gets you $400 million-$450 million better year- over- year next year. When you think about where we're at, say, with just structural margins today in polyethylene, you know, U.S., Europe, polypropylene, how does that compare with kind of last year at this time going into 2025? Because I think where people have some worry is just, you know, the oil to gas ratio looks like it could be worse next year than this year. So should investors think about another couple hundred million dollars being negative to offset this, where maybe the run rate is + $200 million for next year, or just, you know, how do you think about the negative offsets from the structural changes in the industry?
Yeah. I would say in terms of the oil to gas ratio, I mean, roughly we're right now at 15 oil to gas ratio with, you know, it's wintertime. So naturally, natural gas goes up, and with that, ethane has gone up. If you see the crack spread right now is at zero, but ethane storage is at almost all-time highs, right? We're looking at the stats, 80 million barrels in storage. So, that's good news, and we're one of the main uses for ethane, as you know. The long-term average of oil and gas has roughly been 18-ish. So at 15 is not out of the ordinary. And I think this is, as I said, with the winter seasonality and spikes in natural gas, this is just the ratio has compressed.
But I think we're sort of in good shape, and we don't think that it comes any lower, and you know, our breakevens are well into you would need high single digits for us to be a breakeven. So there's quite a bit of room, and we will still be competitive with any of the Asian and Chinese, and of course, any European production.
Okay. So you don't see the oil to gas as a big risk for next year, just year over year?
No, I think that there's enough natural gas in the U.S., and, you know, when the margin improves a little bit, I think we'll see more drilling. There are a lot of wells that are drilled, and you can connect quickly. So you can see these blips and deviations from that might last a few months, but it won't be a structural change or disadvantage for the region.
Fair. And then let's jump to the cycle, because that's what we get the most incoming calls on. Obviously, supply and demand has weakened. Operating rates have come down over the last couple of years. On paper, you know, the consultants still have a number of new projects coming up, you know, next year, 2027, 2028. And the stuff next year, you would think mostly has steel and cement in the ground at this point. So what are your, I guess, for this year, how much new capacity do you think came on globally in PE this year? What do you think demand will grow? And then what's your best estimate for those two numbers for next year?
Sure. So I would say maybe we take a step back, and if we think of not necessarily where this started, but just to see how demand has evolved, right, if you think, and also to put into context why the durable cycle should come back. So after COVID, everybody went into, you know, a buying pattern and cycle, right? We got dishwashers and refrigerators and furniture, and we were remodeling our houses. And that durable cycle has eventually to come back. It's called a five to six-year cycle. So we are at the end of that cycle, and things should improve in the durable sector here in the next year, call it, right? After COVID, we saw obviously a big spike, and then during, I would say, 2021, 2022, demand did not increase, was around zero.
And then for the past two years now, we've been consistently at 3%, and that will continue. There's obviously been quite a number of rationalization across the world. In Europe, in particular, it's the most aggressive. We've seen announcements from South Korea, from Japan. We obviously were looking at closely at what anti-involution means for us, although we do see encouraging signs from China and, you know, the articles from PetroChina closing more refineries and crackers, etc. But on net, net, we will still add. So I would say that supply probably for the next couple of years increases roughly 9%, and demand, I would say, increases around 6%, and I think we argue usually the consultants are a bit more pessimistic, or unless it's announced, they won't count it.
We know also that some of the capacity additions, especially if they're in China, these additions will not run at full rates. They could be 60%-65%. It's a little bit misleading when you see all the additions of the nameplate, because by this point, China should be self-sufficient and even, you know, shortly thereafter exporting. We see that they continue to import roughly 20%-30% of their material needs, and that polyethylene in particular does matter quite a bit where you are in the cost curve.
Okay. That 9% that's coming online, you know, over the next couple of years, what's your, you know, because obviously it's newer, it's bigger scale than the average. Do you think it will run closer to full out, or will it run more like what the Chinese average is over that period?
Because it depends where it is, right? So there are a couple of projects, one coming in the U.S. Gulf Coast this year, that probably runs full. Very good assets, good, good operators. If the capacity is put in China, I think it still runs in the 65%-70%. If it's Middle East or U.S., runs full. China, I would argue still 65%-70%.
Okay. And you guys have a joint venture in China, a cracker. Maybe just kind of help people understand what the economics of that have been over the last couple of years. Is it getting worse, getting better? Is it just kind of, you know, been at the bottom? And then, you know, does that cracker in particular have a plan to get better next year, or is it mostly just kind of hunkered down at the current levels?
Yeah, I mean, it's been very difficult for us during that joint venture. It's, we impaired it at the end of Q4 last year. Right now, it's roughly sometimes some months makes a little bit of breakeven. It depends also quite a bit on our partner on, on our raw material situation. But it's, I would say the situation is not getting better, and it probably is breakeven at best.
Okay. And would you say within China's cost curve, where does that plant sit, you know, in all the plants in China? Is it in the better half?
I'd say it's good second quarter.
Okay. So if an investor says, "Okay, you guys are cheap enough, you know, it feels like we're at the trough. How do I make money in Lyondell? I mean, how long do I need to own it before we start to see recovery? Kind of, what drives that recovery? You know, what's your pitch to them? How does this, you know, company, how does this industry get better, you know, without waiting three or four or five years out?
I'm obviously biased, so I think we're a great opportunity. But look, we are an incredibly good operator, honestly. We run safely, reliably. We run very lean. We've taken a lot of portfolio actions to also improve our profitability. We shut down the refinery. We sold the ethylene oxide business. We are executing the sale of the European operations, and so with that, just portfolio moves alone, profitability should improve by, call it, 3% or 4%. We've been very diligent on controlling the controllables. You know, as I said, we're cutting CapEx. We have working capital management like nuts, fixed cost reductions. And there's more to come once, you know, the European sale closes, then we can go into a next round of having a fit-for-purpose organization.
And then there are a number of also projects that we've delayed, call it Flex-2, which has, you know, very good returns. MRT- 2, we recently started the POTBA plant in 2023, which is running at a little bit above nameplate capacity. And there are many other projects that really haven't fully reached potential, full potential, because we have, we're not there at mid-cycles. But think of Hyperzone, think of the transformation on APS, think of all the projects that we do under VEP that have a lot of scrutiny. But of course, you need mid-cycle margins to really show the potential. So there's a lot of growth that is, call it, trapped in the system. But of course, we need, it's really a demand story, especially housing, automotive, and durables that need to come back, because packaging, as we've said, has been quite stable.
We see, you know, little by little, also steps on, on rationalization across the world. I think you saw it on our slides, Q3, 21 million tons of ethylene capacity that are coming out of the system. You know, you can speculate how much more with anti-involution, perhaps another seven million tons come out of the system. But there's action and things are happening.
And then, what's the update on the European kind of asset fix? You know, we're in the process. And then what does that do to the P&L, you know, on the demarcation day when the deal goes through?
The project is going well, so we are still expecting to close by the first half of 2026. We have received all necessary regulatory approvals. We have received works council approvals as well. We are on track. What happens at the moment the transaction occurs? We'll have to inject $350 million to capitalize these assets and so that they move to equity in good shape. There'll be a working capital component that's in with those assets that will also move. That's a non-cash item. The other item that we have in terms of cash, we said during the 8-K filing, $100 million-$150 million of separation costs. Those roughly $80 million we have spent already in 2025, and the balance will be during the first half of 2026.
This is to do all the you can imagine financials, IT carve-out. You know, there's a lot of stuff you have to do to get these four assets stand-alone and up and running.
Okay. And at today's rates, what does it do to the EBITDA of remaining segment once that asset is hived off?
This asset has contributed very little EBITDA, so you won't see.
Okay. So no change really?
Correct. And then the footprint that we have in Europe is really one that will allow us to be good and profitable in the region for the long run, right? Overall, you keep the IND assets, so the two POTBA plants, one in France and the Netherlands, and then we continue to have the hub in Wesseling with, you know, two smaller crackers, higher value-added PE products. And that's also where we're building the chemical recycling facility to have it all in the combined hub and then take real advantage of the integration, plus the smaller catalyst technology sites.
Okay. And maybe you, since you brought up POTBA, this year was a weird year for oxy fuels in general. Maybe give us kind of an after-action review. What happened? Why was it weird? Is there a chance that it repeats next year, or was it kind of a one-year issue? And then how to think about that business going forward?
I think it was an interesting year also in the sense that the refinery in Nigeria started up and that they needed, you know, 700,000 barrels per day. So it's one of the largest refineries in the world, and they needed to find a home for their octane component. They saw a lot of octane going around the world, especially in Europe and coming to the Americas as well. That just disrupted the market, especially because they started so well and the market didn't expect it. Oil prices declined faster than everybody was, you know, forecasting. That also had an impact. The combination of those two elements basically eroded the MTBE premium, and at some point, the octane was negative. That should normalize here. I think, you know, Dangote will have its ups and downs.
We also saw a few cargoes from China coming into Latin America in particular, and that has stopped. So it's again remains to be seen whether that is structural or not. And we also had Dos Bocas, the Pemex refinery that, you know, had its ups and downs, but I think they have their own operational issues. But for now, next year, we should see a more normalized driving season. We continue to see very good demand from Latin America and Asia. So I really think that this was a blip in the oxyfuels market.
Okay. Just a whole slew of stuff. I guess I definitely want to get this in because it's probably what we get the most incoming questions on, which is the dividend, the balance sheet. You know, so kind of help people think through. I think the question they ask me most is, you know, we'll pick an EBITDA, you know, again, might be up 20%, might be up 5%. But how much of the dividend is LyondellBasell willing to put on the balance sheet to kind of paper over this period of a trough before the cycle recovers? You know, how much can they do, you know, without risking the two, you know, going away from investment grade? So kind of what's the answer to investors for that? You know, how much do you defend the dividend? How much can go on the balance sheet?
How are you thinking about it in the near term?
Sure. So I think first and foremost, I'll remind everybody where we started the year, right? So $3.4 billion in cash, because we knew obviously we would need it. We were going through the low end of the cycle, and I'm very glad that my predecessor left the balance sheet in such good shape. As the year progressed, obviously things didn't materialize. We have weaker results and EBITDA in general for the year. We launched our cash improvement plan. The total $1.1 billion for 2025 and 2026 obviously helps. We're turning every single stone, doing smaller divestitures of assets that didn't contribute money, the portfolio cleanup that we spoke about, and we also have, as you know, a very large investor base that are income focused, roughly 30% or more, and for them, the dividend has been important.
So we have turned every single stone and done everything that we can really in terms of cash preservation and cash generation, you know, to keep the balance sheet in good shape. We're also very committed to our investment grade rating, and that's something we're willing to sacrifice. It helps us operate the company in the best shape possible, gives us access to liquidity. And our board has been very supportive that that is the way to go. I think at some point, if we have to recalibrate the dividends, to maintain the investment grade, it's something that continues to be on the table, but it's something that will look, you know, every quarter gets closed up very closely, especially during this part of the cycle.
Okay. And I guess for investors, what's the right metric for them to look at that investment grade? I mean, is there, you know, a net debt to EBITDA ratio LTM that it shouldn't fall? But, you know, is it a forward forecast? Is there some, you know, changes that the rating agencies, you know, make, let you do kind of behind the scenes? How should we on the outside, you know, track it, whether we're getting too close and maybe this is the quarter that we need to recalibrate that dividend?
So I mean, the overall metric that we want to keep is we haven't deviated from what we said at capital markets day. So this is the LyondellBasell view, right? To have two and a half times net debt to EBITDA throughout the cycle to keep our minimum cash balance around the $1 billion-$1.5 billion so that we can operate with less. But the target continues to be $1.5 billion . And then the rating agencies each have, you know, their own specific metrics, but obviously leverage is important. The free cash flow generation is important. And they also understand the cyclicality of the business, right? So they will give you leeway, I would say, or, as you go through the cycle.
If you, I'm not saying breach, but if you start becoming a little bit weaker on EBITDA or free cash flow generation, but if they see a path that you come out, then they'll be a little bit more tolerant. We're not managing the specific rating to, I'll call it, triple B or triple B minus. We want to be investment grade. I think it's a very slippery slope and dangerous game to be targeting a specific rating. So we don't want to do that. The idea is investment grade, keep the balance sheet in the best place possible, and let's not take actions on our end with financial policy that would accelerate a potential downgrade.
You've done a fantastic job on cash generation recently. Once the business starts growing again and EBITDA moves back, let's say, towards a normalized rate, what's it still the 80%? Is that kind of the right level through this cycle for cash generation off EBITDA? Or structurally, with the changes you've made, you've bumped that higher, or maybe it's 85% now. How to think about that once the EBITDA starts coming back?
Yeah. I think in the long run, the 80% is still a fairly good, metric for us. Obviously, there will be quarters like Q3, in which we had 135%. I think you should expect also well above 100% here in Q4, especially as we release quite a bit of working capital. But through the cycle, 80% is a very good and healthy number, and we'll continue to target that.
And in a lot of other chemical chains, historically, when conditions have gotten similar to the level of badness that they're at now, we've seen rounds of consolidation. We've seen people kind of give up on the industry. We haven't seen that in polyethylene. Do you think that's yet to come? Could we see some major rounds of consolidation? Does that make sense for the industry? Is it needed by the industry? Or do people still dream of kind of the economics of the 2010s? And, you know, we all kind of get back to a $0.30 per pound, you know, polyethylene margin, and that's really normal. So people don't want to give up at the trough.
Yeah. I mean, it's normal to think about consolidation in this part of the cycle. I think we see some of that happening, you know, BGI, for example, and ADNOC consolidating there. You see consolidation also, especially in Asia, Japan, and South Korea. So yeah, I mean, I don't discard it, and it could happen, but we're very focused on making sure that LYB is in the best shape possible.
Okay.
You know, stand alone, and we're taking all the measures that we can, as you can see, you know, be the lowest cost producer, most effective, and have good growth projects on the pipeline too.
Okay.
oh, sorry.
No, no. Yeah, maybe jump, because we still do get a few questions on ESG stuff, not nearly as many as we did two years ago, but the MoReTec technology, the construction of the plant, you know, how are things there as far as, you know, timing, budget, you know, on time, on budget, and then as you're talking to customers, you know, you've had a peer now, they're more in the polyester chain, but they've struggled to place some of the volumes from their plant that they brought on. Are you seeing similar pushback from your customers in this low, you know, kind of demand and price-conscious world where people don't want to make the jump to, you know, kind of a lower carbon footprint plastic at a higher price?
Sure. That's a great question, but we see things differently and so first on the investment, MoReTec One continues to be on track. It will start in 2027, as I said and just to put it in context, it's a relatively small plant, I would say 50 KT of that, I would say probably more than half of the plant is already sold and committed, which is good news and what happens, you know, our competitors, as you said, on a different part of the chain on PET. But the beauty of our MoReTec technology is that we can take the mixed plastic waste and what we continue to see is very good demand by global brand owners, and they want to have the fully circular plastic, right? And we see more pressure on mechanical recycling, for sure. Those prices have come down.
But in terms of chemically recycled plastic coming from pyrolysis oil, we still see the demand, and we still see the healthy margins, you know, roughly $500 per ton over virgin. So we haven't seen a slowdown there. Now, we're also; this plant is in Germany, and Germany, Europe in general, has had a very supportive environment for recycling, right? They recently passed PPWR, so the Packaging and Packaging Waste Regulation, and they're mandating recycled contents that companies have to abide by. And so that helps provide a good environment. Now, in the U.S., you know, highly unlikely we see any sort of federal mandate on that front.
But these same global brands, you know, have their goals, and there might be delayed a little bit, but the demand and the basic supply-demand imbalance, especially on pyrolysis oil, is there and will persist for a few years to come.
Then maybe just, as we're kind of getting close to time here, a couple of your smaller businesses. But first, you know, polypropylene doesn't get nearly the airplay that PE does because it's a smaller contributor. But, you know, where do you see polypropylene? You know, that seems to be even worse in China than PE as far as the additions. But how do you see the health of that supply-demand playing out over the next couple of years, and how is your business positioned there?
Sure. So polypropylene is a dormant giant for us, right? It's basically at zero margin for now. There's a bigger supply-demand imbalance, and different from PE, the cost curve is a lot flatter, and that's also what sort of doesn't help. Really, what we haven't seen is durables coming back for PP, right? And that's what's really hindering the revival we see now. The ACC statistics think operating rates are in the 70%. Propylene is also very low, but as I said, the cost curve is fairly flat. You can do it with PDHs almost everywhere. And so where do we invest in polypropylene? In the Middle East, where you have that feedstock advantage, but it's a very challenged market until durables come back, really, and supply-demand balance comes more, you know.
And then just the last one for me, acetic acid. Seems like we've built some new plants for the first time in a very long time. That, you know, it had a nice run from 2010 to maybe 2022. Now feels a little bit challenged. What's your view on supply-demand for acetic acid and for your business over the next couple of years?
We really like our acetyls business. We're actually investing there. We're debottlenecking. We're going through a new catalyst change technology. We move away from precious metals and move into more of a silica-based catalyst. We have the debottleneck. We have a good position there and good niche. We sell mainly to North America and Western Europe. It's really a business that, you know, makes roughly $200 million EBITDA at mid-cycle margin. For us, it's a nice profitable business, and we haven't seen really any further degradation of markets or demand. We like it.
Terrific. Well, Agustin, thank you so much for coming and spending a little bit of time with us.
Thank you so much.
Thanks for the invitation.