Hello, and welcome to LyondellBasell's Second Quarter 2020 Teleconference. I am joined today by Bob Patel, our Chief Executive Officer; and Michael McMurray, our Chief Financial Officer. Before we begin the business discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.lyondellbasell.com. We will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions, and the alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are available at www.lyondellbasell.com/investorrelations. Reconciliations of non-GAAP financial measures to GAAP financial measures, together with other disclosures, including the earnings release, are also currently available on our website. Finally, I would like to point out that a recording of this call will be available by telephone beginning at 1 p.m. Eastern Time today until September 1 by calling (800) 879-4299 in the United States and (203) 369-3561 outside the United States. The passcode for both numbers is 7410. During today's call, we will focus on second quarter results, the current environment, our near-term outlook and provide an update on our growth initiatives. Before turning the call over to Bob, I would like to call your attention to the noncash lower op cost or market inventory adjustments, or LCM, that we have discussed on past calls. These adjustments are related to our use of last-in, first-out or LIFO accounting and the recent decline in prices of our raw material and finished goods inventories. During the second quarter, we've recognized pretax LCM benefits totaling $96 million compared to LCM charges of $419 million in the first quarter. Comments made on this call will be in regard to our underlying business results, excluding the impacts of these LCM inventory charges. With that being said, I would now like to turn the call over to Bob.

Thank you, Dave, and good day to all of you participating around the world. I hope that you, your colleagues and your families are all staying healthy during these challenging times. We appreciate you joining us today as we discuss our second quarter results. Let's begin with Slide 3 and review the highlights. LyondellBasell's employees leveraged our core strengths in operational excellence, cost management and commercial agility to generate $1.3 billion of cash from operating activities during an extremely challenging quarter. This represents an improvement of over $100 million relative to the second quarter of 2019 despite our significantly lower earnings. During the second quarter, our team rapidly responded to weakening market conditions by aggressively reducing inventory to match lower levels of demand that reduced cash working capital by $575 million. We developed plans to reduce CapEx by approximately $500 million during the year. This includes slowing down of our PO/TBA project. We also made significant progress on cost-reduction efforts towards our goal of a run rate of $150 million to $200 million in recurring annual savings by the end of this year. We have quickly adapted to changing conditions in our markets, workplaces and communities to ensure that our assets continue to operate safely and serve the dynamic needs of our customers. LyondellBasell's products support many of society's critical needs such as melt-blown fibers for N95 face masks, alcohols for sanitizers and packaging that prevents the contamination and spoilage of our food. I'm very thankful for the innovative thinking, tireless dedication and disciplined approach to health and safety exhibited by our employees around the world to ensure that we continue to serve our customers and protect our communities during these difficult times. Our second quarter EBITDA of nearly $700 million represents a decline of nearly 40% relative to the first quarter and almost 60% relative to the second quarter of last year. These results are reflective of pandemic-driven declines in demand and margins across many of the markets we serve, especially in transportation fuels and products used in automotive manufacturing and other durable goods end markets. Let's turn to Slide 4 and review our recent safety performance. LyondellBasell's commitment to health and safety has become even more relevant to our employees, contractors and communities during the coronavirus pandemic. We leveraged the early experience from our employees in the Asia Pacific region to develop protocols for workplace sanitization, facial coverings, social distancing, health screening and contact tracing to minimize the spread of the virus across our global facilities. Although we have limited influence in our surrounding communities, our processes have proven highly effective in limiting virus spread within our workplaces. Our employees have continued to deliver top-quartile, if not top-decile, safety performance while adopting these additional pandemic-related protocols. In June, our company was honored to receive the American Chemistry Council's highest distinction, the Responsible Care Company of the Year award. The award recognized our innovative practices and leadership in the areas of environmental, health, safety and security. This honor is a direct reflection of the dedication of our entire LyondellBasell team and their work to ensure that the health and safety of our people and the communities where we operate are always our highest priorities. The pandemic has generated a renewed appreciation for the value of our chemical and polymer products for society. At the same time, LyondellBasell has not retreated from our commitment to developing circular and sustainable business models for our products. Let's turn to Slide 5, where we highlight our progress on molecular recycling. LyondellBasell's mechanical recycling business model is focused on forming partnerships with waste management companies who can clean and sort plastic waste, enabling the production of premium recycled plastics. Nonetheless, we recognize that many plastic products are composed of multiple materials that cannot be easily sorted in the pure waste streams. Late last year, we announced our initiative to develop a new proprietary technology called MoReTec to convert mixed plastic waste into a feedstock we could use in our existing assets to produce new chemicals and polymers. On Slide 5, you can see we have already scaled up this technology from the laboratory to a pilot plant that we commissioned during July in Ferrara, Italy. Our aim is to advance our catalyzed process technology to an industrial scale that will enable the production of monomer feedstock from waste plastic that is competitive with naphtha-based economics. MoReTec could provide another option for satisfying the growing demand for circular plastics produced without fossil-based feedstocks. With that, I'll turn the call over to Michael, who will lead us through several topics related to our financial performance.

Thank you, Bob, and good morning, everyone. As Bob mentioned, our company continued to generate substantial cash during the second quarter. Slide 6 illustrates our cash flow performance over the past 5 years. During this time, we have consistently generated $5 billion to $6 billion of cash from operating activities on an annual basis. Over the last 12 months, more than 110% of our EBITDA was converted into cash from operating activities. With approximately $1.1 billion of capital expenditures dedicated to maintaining our assets and $5 billion in cash from operating activities, our free operating cash flow yield remained strong at 17.6%. Our team is aggressively managing inventories through dynamic markets while prioritizing cash generation and liquidity. Now please turn to Slide 7, where we provide further details on cash generation during the second quarter. You can see that our businesses generated $1.3 billion cash from operating activities, up more than $100 million from one year ago, despite our significantly lower earnings. During the second quarter, we increased our cash on hand to $3.2 billion with a $2 billion bond issuance in April at very attractive rates. Capital expenditures of $588 million declined more than 10% compared to the first quarter as we began to slow activities on the PO/TBA plant construction. In the second quarter, we paid $350 million in dividends to our shareholders. We ended the quarter with about $5.8 billion of cash and available liquidity. With strong cash generation and ample liquidity, we remain confident in our ability to fund our dividend, primarily from operating cash flows. As announced during the prior quarter, we rapidly developed strategies to respond to a variety of economic scenarios. Slide 8 illustrates our actions to reduce capital expenditures in 2020 by approximately $500 million. In addition to slowing the PO/TBA activities, we have also deferred planned maintenance during the pandemic. You may recall from our Investor Day last September that our plan was to reduce capital expenditures to $1.9 billion by 2022. We are accelerating this program and now plan to achieve this target 2 years ahead of schedule. Let's continue to Slide 9 and summarize the impact of these initiatives. The combination of lower capital expenditures, reduced discretionary spending and cash released from working capital is expected to improve our 2020 free cash flow by as much as $1.1 billion. We are also pursuing further optimization of our low-cost structure by accelerating cost-efficiency initiatives. With our disciplined approach to capital deployment and about $5.8 billion in cash and available liquidity, we believe the company is well positioned for this dynamic market environment. Before I turn the call over to Bob, allow me to provide an update on the annual financial modeling guidance that we discussed last quarter. We now expect that our 2020 effective tax rate will be lower than our previous guidance of a mid-teens percentage rate. The lower effective rate is related to both reduced profitability and favorable impacts from the U.S. Coronavirus Aid, Relief and Economic Security, or CARES Act. The net impact of the CARES Act on the company for the full year is expected to be favorable. The 2020 cash tax rate is expected to remain in line with our previously committed estimate of a mid- to high-teens percentage rate. With that, I'll turn the call back to Bob for a more detailed discussion of our segment results.

Thank you, Michael. Let's turn to Slide 10 and review our second quarter performance. As mentioned previously, my discussion of business results will be in regard to our underlying business results, excluding the impacts of these LCM inventory changes. Our global footprint and diverse business portfolio continue to provide resiliency in this challenging market environment. EBITDA for the second quarter was nearly $700 million. The global response to limit the spread of COVID-19 reduced demand and margins for many of our products. Our Olefin and Polyolefin segments rapidly responded to increased demand for our products used in consumer-driven packaging and health care while reducing production for polymers used in durable goods applications with falling demand. Our Intermediates and Derivatives, Refining and Advanced Polymer Solutions segments were impacted by the significant reduction in demand for transportation fuels and polymers utilized in automotive and other durable goods segments. The resiliency of our business portfolio continues to benefit from our relatively high participation in markets with consumer-driven demand for nondurable products and our global market reach. Let's review our second quarter results, starting with our Olefins and Polyolefins Americas segment on Slide 11. Second quarter EBITDA was $210 million, $267 million lower than the first quarter. The pandemic reduced demand for polyethylene from export markets and polyolefins for durable goods markets, resulting in margin and volume declines. Olefins results decreased approximately $230 million compared to the first quarter. Margins declined on lower coal product prices, particularly for butadiene and other C4s. As discussed in our first quarter call, we reduced our ethylene operating rates to about 75% of nameplate capacity for the second quarter to address weaker demand. Ethane made up 60% of our ethylene cracker feed slate during the quarter as weak demand for butadiene and other coal products offset the advantages of cracking low-priced naphtha feedstock. Polyolefins results decreased about $45 million during the second quarter, driven by declines in both margins and volumes. We believe the pandemic-driven declines in demand bottomed during the second quarter. We are seeing improvements in pricing and volumes as global economies reopen and demand for polyethylene exports and durable goods returns. We expect to operate our U.S. ethylene crackers at nearly full rates of 95% of nameplate capacity during the third quarter. With that, let's turn to Slide 12 and take a look at recent developments in feedstock costs around the world. As illustrated in the chart, during 2019, the cost of ethylene production in both North America and the Middle East remain highly advantaged relative to naphtha-based costs in Europe and the rest of the world. This has been the familiar shape of the global cost curve since U.S. shale oil and gas production came online over the prior decade. The small amount of ethylene produced by methanol to olefins technology in China is typically on the high end of the cost curve. In March and April, crude oil prices rapidly fell in response to both reduced fuel demand from the pandemic and increased crude production as Saudi Arabia and Russia sought to pressure higher-cost oil producers. When naphtha-based costs became favored during March and April, some speculated that the curve would have remained inverted, eliminating the U.S. shale gas advantage. As economies began reopening during May and June, the cost curve quickly regained slope and reasserted the advantage of Middle East and North American feedstocks. North America has an abundance of ethane and other natural gas liquid resources. While events may occasionally depress oil prices and temporarily invert the cost curve, we continue to believe that North American producers will typically have an advantage for the foreseeable future. Looking at the polypropylene market on Slide 13. We are seeing indications of increased demand from the automotive market as well as continued strength in packaging orders. Approximately 15% of LyondellBasell's North American polypropylene business serves the automotive market by either providing base resins to our downstream Advanced Polymer Solutions segment or through direct sales to third-party manufacturers of vehicle components. In the first half of this year, automotive manufacturers shut down production to limit virus spread and then reopened, first in China, later in Europe, and then the United States. China's progress can be seen by June 2020 new vehicle tire demand that is 11% higher than the same month last year. In Europe and the U.S., June 2020 new vehicle production remains down by 31% and 26%, respectively, relative to pre-COVID forecasts. The progress in North American automotive demand for polypropylene can be seen in the chart on the right that tracks our order books for these applications. Demand has risen sharply during June and July as automotive manufacturers resumed production. In addition, LyondellBasell's polypropylene orders for consumer-driven packaging applications have remained at the elevated levels we have seen through the pandemic with 20% higher demand from packaging markets during the first half of the year. Now please turn to Slide 14 to review the performance of our Olefins and Polyolefins Europe, Asia and International segment. During the second quarter, EBITDA was $219 million, $6 million lower than the first quarter. Despite reduced demand as a result of the pandemic, integrated profit margins remained relatively stable. Olefins results decreased approximately $75 million driven by a decrease in both margin and volume. Ethylene margin decreased as reductions in ethylene and pulp product prices outpaced declining feedstock costs. Volume decreased following strong production in the prior quarter, coupled with lower demand in the second quarter. Our European crackers operated at 84% of capacity during the quarter. Combined polyolefin results increased more than $20 million compared to the prior quarter. Margins improved and were partially offset by a decrease in polypropylene volumes due to reduced demand from automotive and other durable goods markets. Higher margins in our joint ventures contributed to an increase in equity income of approximately $55 million. Increased demand for melt-blown polypropylene used in N95 face masks and other medical applications drove improved demand and margins for our PolyMirae joint venture in South Korea. In the coming quarter, we expect margins to decrease due to higher feedstock costs. We expect that our European crackers will operate at about 90% of nameplate capacity during the third quarter as some of our competitors in the region are expected to be down for planned maintenance. Please turn to Slide 15 for an update of our new Chinese integrated cracker joint venture with Bora. Over the past few weeks, the construction team handed off the project to the operations team for commissioning during August. Although most of the ethylene feedstock will be naphtha supplied by our partner's adjacent refinery, the cracker also has flexibility to utilize LPG feedstocks from global sources, and this slide shows the first delivery of an LPG cargo to the cracker a few weeks ago in preparation for our start-up. Our equity contribution to the joint venture is expected to occur during the third quarter. This joint venture investment allows LyondellBasell to rapidly expand in the world's fastest-growing market for our products. Please turn to Slide 16. Let's take a look at our Intermediates and Derivatives segment. Second quarter EBITDA was $121 million, $160 million lower than the prior quarter. As we expected, second quarter results reflect a significant reduction in gasoline and other durable goods demand that impacted both margins and volume for oxyfuels and related products as well as propylene oxide and derivative volumes. Second quarter propylene oxide and derivatives results decreased approximately $55 million due to lower volumes from reduced demand for polyurethanes in automotive, construction and furniture markets. Intermediate chemicals results were relatively flat. Oxyfuels and related products results decreased approximately $95 million as a result of lower margins and lower volumes. Margins were compressed by lower gasoline prices. Volumes declined due to lower demand for automotive fuels and isobutylene. We anticipate that demand for transportation fuels will improve in the third quarter. Profitability for our oxyfuels and related products business is expected to follow but not to the typical high levels we normally realize during the summer driving season. With that, let's turn to Slide 17 and look at some positive indicators in the demand for transportation fuels. In the U.S., stay-at-home closures largely occurred over the months of March and April, with the reopenings beginning in May. This can be seen in the chart as vehicle miles traveled bottomed during April. Summer driving and reopening increased vehicle mileage for June to be about 95% of what it was in February. In addition, increased consumption is reducing gasoline inventories, allowing for a gradual improvement in refinery operating rates. While we may need to moderate reopening progress to control virus spread, the trends support improving supply and demand balances for transportation fuels that should be constructive for profitability going forward. Now let's move on and review the results of our Advanced Polymer Solutions segment on Slide 18. Second quarter EBITDA was $23 million, $92 million lower than the first quarter. Volumes declined significantly as a result of pandemic-related shutdowns at automotive manufacturers. We temporarily idled production at several of our small compounding plants in the APS segment to respond to reduced demand. Second quarter pretax integration costs were $16 million. Compounding and solutions results decreased approximately $75 million due to lower volumes driven by decreased demand for polymer compounds from the automotive sector. Advanced Polymers results decreased about $10 million due to lower demand in the construction and automotive end markets. Automotive manufacturers partially resumed production at their facilities in the latter part of the second quarter. As a result, we expect third quarter profitability for the segment to benefit from returning demand for our polypropylene compounds utilized in automotive end markets. During July, we restarted most of our idle plants, and we plan to operate our compounding capacity at rates that match downstream automotive demand. Now let's turn to Slide 19 and discuss the results of our Refining segment. Second quarter EBITDA was negative $14 million, a $66 million improvement versus the first quarter of 2020. Results were pressured by a significant reduction in transportation fuel demand as the U.S. implemented measures to reduce the spread of the virus. In the second quarter, margins improved as prices of coke and sulfur co-products from our refinery held up relative to the falling prices of crude oil. We also benefited from mark-to-market gains from a hedge on a portion of our crude oil purchases. These improvements were partially offset by a decrease in the Maya 2-1-1 industry benchmark frac spread to an average of $13.27 per barrel. Average crude throughput increased by 11,000 barrels per day to 237,000 barrels per day with the resumption of operations at our fluidized catalytic factory unit during April. We anticipate that reduced demand for gasoline and jet fuel will continue to pressure our Refining margins until demand approaches pre-COVID levels. We are planning to operate the refinery at 85% to 90% of nameplate crude throughput during the third quarter. Please turn to Slide 20 as we review the results of our Technology segment. During the second quarter, Technology segment EBITDA was $112 million, an increase of $56 million compared to the prior quarter. Licensing revenues increased. Catalyst volumes also increased as customers stopped inventories early in the pandemic. Our Technology segment licenses polymer production technologies for new manufacturing plants that enable subsequent catalyst sales to licensing customers over the lifetime of the asset. Individual contract terms and the timing of project milestones result in an uneven pace for licensing revenues. Based on the anticipated timing of upcoming milestones, we expect that third quarter licensing profitability will be comparable to the same quarter last year. Let me summarize this quarter's highlights and outlook on Slide 21. During the second quarter, LyondellBasell's leading and advantaged global positions continued to deliver resilient results during a challenging market environment. We demonstrated commercial agility by pivoting production towards increased demand from packaging and health care markets while aggressively managing inventories for products affected by shutdowns in the automotive and other durable goods manufacturing. Our foundations in leveraging low operating costs and optimal asset utilization serve us well during any point in the cycle. Our capital deployment strategy continues to provide support for our dividend through efficient cash generation and disciplined allocation of capital expenditures for required maintenance and selective profit-generating growth. All capital deployment decisions remain grounded in our commitment to an investment-grade credit rating. We believe the pandemic-driven decline in demand bottomed during the second quarter. Demand and margins for transportation fuels will eventually rebound as global economies continue to reopen. Markets for discretionary durable goods are improving but will likely take longer to recover from the downturn. We expect that strong consumer-driven demand for our products in packaging and medical applications will continue over the near to medium term. LyondellBasell is addressing these challenges by moving rapidly and decisively to reduce costs, minimize working capital and moderate capital expenditures while prioritizing liquidity and maximizing free cash flow. These actions to bolster cash generation, coupled with recent market improvements, position us well to maintain the continuity of our dividend through this downturn. We continue to look forward and position the company to benefit from opportunities as the global economy rebounds. We're now pleased to take your questions.

When we look at your ethylene production capacity, it looks like you're likely a producer of hydrogen, potentially hundreds of thousands of tons a year, and perhaps some of that gets used in the refinery operation, and our assumption is most of it is burned for fuel value. But I was just wondering if you had a view of whether that's the best use for all of that hydrogen potentially to qualify for a color of hydrogen other than gray, and whether you thought about that. Perhaps reducing the carbon footprint from natural gas combustion is the best use of that, but welcome your thoughts on that.

Steve, this is Bob. Indeed, we do produce a lot of hydrogen off of our crackers, especially the ethane crackers. We have some integration with the refinery, as you noted. We also sell some crude hydrogen to the industrial gas companies who then refine the hydrogen. So there's a mix. Some of it is fuel, some of it is sold to industrial gas companies, and then the balance goes back to our refinery. And we'll look at that over time as we see industrial gas companies finding new uses for hydrogen to see if we can sell more to them and recover.

What's the timing of the TBA plant? I think, originally, you were going to spend about $2.4 billion to build it. How much have you spent? How much more is there to go? And I think, originally, you thought that the returns were a little bit over $400 million of EBITDA. Have you changed your view of the returns?

Yes, Jeff. So we've essentially delayed the project by one year. So originally, our schedule was to complete the project in Q3 of '21 and to commence commissioning. Now we'll complete in Q3 of '22. We're still updating our capital forecast on that project. So once we have a better number, we'll provide that to the investment community. We're not really prepared to do that today. And then to your question about earnings. So indeed, I mean, we've talked about $400 million to $450 million of EBITDA. And so if you consider 2023 as the first full year of operation, we would expect that kind of that mid-cycle margins for PO and for MTBE, then we should be in that range of $400 million to $450 million of EBITDA contribution.

This is Bhavesh for John. So Bob, as we think about your different businesses, it seems like most of them are prime for a nice snapback in terms of earnings from the 2Q levels. So from what you are seeing this month, where do you expect the fastest recovery in terms of the businesses? And what's the magnitude of earnings recovery we should think about as you think about the near term?

Sure. There's a lot to consider, and I'll break it down for you. Our O&P business performed well during the lockdown, especially in areas like packaging and medical. Currently, we're operating at almost full capacity in the U.S., while in Europe, we're at about 85% to 90% of our O&P capacity. I expect this to remain consistent through the quarter. For I&D, we're also operating between 85% and 90%, depending on the region and product. It's important to note that in I&D, our product often goes into more durable goods related to the auto industry. The recovery in that sector is ongoing but at a slower pace, similar to fuel demand, which has improved from the lows but is still significantly below pre-pandemic levels. In the refinery segment, we are facing two main challenges: the demand recovery for gasoline and jet fuel is still quite a distance from pre-pandemic levels, and the light-heavy differential remains very narrow, which poses a significant challenge for our refinery operations. Overall, I anticipate ongoing difficulties in the Refining segment.

Did you see any feedstock limitations at your Middle Eastern joint ventures? And did you see this issue impact the industry overall?

Alex, not really. We didn't see much impact. If there was, it was marginal for maybe a week or two, but not sustained. The challenge for our Middle East assets, really in the early part of Q2, was the flatter cost curve and also lower relative prices in China for polyethylene, which both have now moved in the right direction. So we see full availability of feedstock today and much better margins in our Middle East assets.

So the question on Slide 12, which is quite helpful when you show the regional production costs, you show that ethane advantage sort of returning back from April to June time period. But on the same slide, the delta between the low cost and the high cost has come down, especially if you compare that back to 2019 levels on that chart. What does that mean to you? I mean does that mean that the profit available for the low-cost player are less than what they were before? Can you just interpret that slide for us in terms of sort of the slope?

The slope of advantage isn't as steep as it was a couple of years ago, but we still believe there's a significant benefit. Currently, margins are primarily influenced by the situation in China. Demand for polyethylene in China is quite strong, showing considerable year-over-year growth through Q2. Prices have reacted accordingly, and this robust demand growth in China is likely to be a major factor affecting global polyethylene prices in the near future. As long as oil prices don't rise significantly, we expect the cost curve to remain similar to its current state.

Yes. And P.J., this is Dave. I think what catches your eye on that chart is the MTO coming down sharply with lower methanol prices here in July. And as you know, that's a relatively small portion of global ethylene supply. So not as impactful as it might look on that chart.

Bob, could you give us your view on ethane prices sort of what's happened over the last quarter in terms of the increase and the widening of frac spreads and what you think is going to happen in the back half of the year with ethane exports and maybe propane exports and how the U.S. NGL feedstock price perspective could be in the second half?

Yes, Vincent. During the quarter, we experienced a rise in ethane prices, influenced by certain producing basins shutting down while others were restarting. This fluctuation was tied to the timing of these basin activities. Looking ahead, it's reasonable to expect ethane prices to remain in their current range. There are discussions about some drilled but uncompleted wells in the Permian coming back online, which could increase ethane supply. Presently, there are still 500,000 barrels a day of ethane being rejected, indicating sufficient availability. The price impact seems to stem more from local dislocations rather than supply shortages. As for propane, exports have been robust, and there is an ample supply of propane globally. Given the current economic climate and modest demand for propane worldwide, we don't anticipate a significant rise in propane prices compared to ethane. Therefore, we believe the current feedstock prices are likely to persist into the fourth quarter.

Bob, as ethylene chain margins have compressed, what impacts do you anticipate on the new supply of ethylene in coming years? Perhaps you could comment on what you see happening with new projects in the U.S., China and elsewhere and also in terms of existing high-cost assets like MTO and some of the higher-cost naphtha-based production in Asia and Europe?

Sure. So coming back to one of the prior questions about the cost curve, I think that if we look at IHS or others who forecast oil price, it seems that the recovery will take some time to get back to the kind of cost curve that we had back in '16 or '17 even. Likely, with less slope on the cost curve, there will be less investment. We've already seen some delays in the U.S. that have been announced of new projects. I would expect that, that would continue. In China, our working assumption is that largely what's been announced will get built. Now there could be a little bit of delay, but it's fair to assume that what's on the books will come online. Elsewhere in the world, though, whether it's the Middle East or it's U.S., I would expect very modest, if any, expansion, given the outlook for especially advantaged feedstocks. And then with MTO, as Dave mentioned earlier, it represents a very small percentage of global capacity, and it always tends to be the swing. When it's in the money, it will run; when it's not, it will shut down.

Bob, some of the recent U.S. polyethylene price strains have been due to strong U.S. exports. But we are going to see about 3 to 4 ethylene crackers, including yours, come on stream in the back half of the year. Do you think that could weaken U.S. exports and then weaken U.S. polyethylene pricing as a result?

Well, David, considering the current inventory levels in Asia, particularly in China, where port inventories are at five-year lows and U.S. exports are at their peak, I don't believe these few new crackers will significantly impact the current market conditions. As I mentioned earlier, growth has resumed in China, with polyethylene growth rates year-over-year in the 4% to 6% range. There is still a recovery ahead, especially since China is experiencing some virus hotspots. Overall, I remain optimistic about the outlook through Q3.

Bob, a question around the I&D segment. Obviously, historically, it was one of those segments which quarter after quarter showed pretty stable margins. And obviously, things have changed over, call it, the last 2 quarters. My question is, as I take a look at the volumes by product within that segment, the styrene side of things, the asset use side of things continues to be stable. But obviously, PO/TBA and the like have seen significant sort of corrections, right? So now the question is that, is this primarily because of the unique nature of this downtake, i.e. it's obviously the auto industry that's gotten hit fairly hard. And as we are seeing signs of recovery in that industry, should we expect a snapback in these products? And should we expect a reversal to those sort of stable margin levels? And how quickly should we expect to see that?

Sure, Hassan. We've always considered our I&D segment to be one of the more stable parts of the company. I believe it will regain that status after the pandemic and once vaccines are available. We've never experienced a time when both U.S. and European auto manufacturers were completely shut down, so we lack historical context for this situation. Currently, we are observing a recovery in auto sector demand, but it hasn't returned to previous levels. Additionally, fuel demand within TBA has been severely impacted due to the lockdowns, again presenting a situation without historical precedent. I expect both segments to stabilize post-pandemic. I believe that I&D will return to the stable profile we appreciate about that business. The timing hinges on the progress of vaccines and therapeutics, as well as their distribution. Recovery isn't just about the discovery of a vaccine, but also when they are administered to the public. I think we should consider a full recovery likely in the second half of 2021, possibly extending into 2022.

Hassan, this is Dave. And I'd just add that even though the vehicle miles traveled has returned to what was in January and February before the pandemic, it's nowhere near the typical summer driving season. That's what we really need to get those oxyfuels margins back. We're currently in maybe winter-like oxyfuels margins, and it would be nice to be in a typical summer season.

I wanted to ask for your perspective on polyethylene. Could you help us understand the market? Specifically, what contributed to the increase in June? How do you view July, and do you think we can maintain some of the recent price gains? Or do you believe that the improvements in the export market were primarily responsible for driving the price, and if that weakens or if we see increased supply, we might not maintain those prices?

Sure. So the June increase really was underpinned with lower inventories and the return of exports. The industry really ramped up exports in May, June. And I think that continues. So let me give you some context on inventories. Today, the industry inventories, as reported, are somewhere between 3 and 5 days below previous median values. So very low inventories. I think that the $0.04, of course, is in. $0.05, we think, looks very firm. Operating rates are very high across the industry. That also helps to support the increase. And then the next $0.05, beyond the $0.04 and the $0.05 that are already implemented, we think that, that $0.05 also has a pretty good chance of going through. And by the way, the $0.04 and the $0.05 that have been implemented, most of the realization will be in Q3 for those increases given how the market works.

Congratulations on the Responsible Care Company of the Year.

Thank you.

I wanted to follow up on the cash generation. You obviously had a nice quarter in the second quarter, and you've been taking steps to build up a nice cash hoard here. So it kind of begs a question of uses of cash. You had also established a nice track record of raising the dividend. And obviously, Lyondell has been known historically for buying back stock. I was wondering what your latest thoughts on potentially dividend hikes and/or buying back stocks. When might you be in a position given your outlook? And given the success of the $0.05 that you just talked about, might we see some action on that front?

Yes, Frank. Thank you. So let me first more broadly answer that question by talking about our capital allocation priorities. Our priorities are very simple. It's investment-grade rating through the cycle and continuity of the dividend through the cycle. So those are the two most important things that we're solving for as we kind of run the company through this unusual period. So in terms of dividend, I think, Frank, given the uncertain outlook, too early to really say whether we would do something to increase the dividend or not. Our priority is about continuity of the $4.20 that we paid today. Buybacks. Again, same thing. There's quite a bit of uncertainty until there's a vaccine available and disseminated around the world. So we're going to be somewhat conservative when it comes to increasing dividend or buybacks, just given the uncertain outlook and to make sure that we deliver on the two priorities that I mentioned. So that's kind of how I think about uses of cash.

Just a question on the China JV, so as it's ramping up now. First one is just the map the contract you have with your partner, how is that going to get priced? And then as it ramps up, how should we think about that impacting your results? How long will it take for it to start kind of dividend-ing to you guys? And then do you have any offtake that would actually impact your sales number?

Yes. So Duffy, on the naphtha pricing itself, you should assume it's plus or minus at market essentially for Northeast Asia. And in terms of earnings impact, really minimal earnings this year because we're going to be in the commissioning stage. And just given our experience with our Hyperzone plant that we've been ramping up rates on, we shouldn't expect earnings from Bora for the remainder of the year. But the commissioning is underway at that JV.

Similar question. Are you exporting any polyolefins to Bora to help them seed the market in advance of the start-up? And did the improvement in the Technology segment also include Bora?

The Technology segment did not include any benefits from Bora because we received payment for our licensing progress a while ago. Regarding premarketing, we currently market polyethylene and polypropylene in Asia, so we have a good understanding of how to place the additional volume. We did not need to send more volume for seeding the market, as we have been exporting to Asia as a normal part of our operations.

For OP Americas, your EBITDA margin was in the mid-teens. I would assume it improved significantly in June. Can you provide insight into how much better it was? Additionally, considering your plant operations were nearly at full capacity in July, how much do you expect EBITDA margins to improve in the third quarter compared to the second quarter?

Yes. Mike, I think you can look at IHS-posted price change, if you will, on polyethylene. That will be a guide. Now the $0.04, some of that tends to be realized in July as well. So not all of the $0.04 will be realized in June. And same with the next $0.05 that's being implemented now. It kind of goes across two months. Probably the biggest improvement in margin that we're seeing is from the C4 market improving somewhat. It's coming off bottom. It's not great, to be frank, but it's better than what it was back in March, April. So a combination of stabilizing ethane price, better C4 and higher polyethylene as we realize these increases as kind of the drivers for polyethylene margin.

Just wanted to ask about after the pandemic is all over. We've seen increased demand from packaging, decreased trends from industrial so far and decreased recycling. But as we're looking, say, 6 months from now, how do you see this sort of squaring out? Is this packaging demand permanent? Can we actually see a sustained boost? And what about the other pieces?

Yes. I believe that some of the demand for packaging will be more permanent. You may have noticed that certain bans on single-use plastics have been reversed due to the hygiene benefits they provide. While there will be some lasting improvements, I wouldn't expect all of it to be focused on packaging. There will be some positive change. Regarding other sectors, like automotive, we anticipate a quick recovery once a vaccine is available and we move past the pandemic. Overall, it seems to be a net positive for packaging and medical sectors.

So your Refining results came in better than our expectations. I was hoping you could quantify the hedge benefit in Q2 and just talk about whether that might reverse in Q3, just given higher crude prices. And then also, could you talk about what's allowing you to run the refinery at levels so much higher than the U.S.? I think in Q2, you were at 88% utilization. U.S. is closer to 72%. So I guess, is that a function of like any Middle Eastern barrels or any sort of wider crude discounts rolling through?

Yes, earlier this year, we secured a favorable Maya-Brent differential and hedged approximately 10% to 15% of our volumes from April through December. By the end of the quarter, we noted a positive mark of about $3 to $4. Since we did not achieve hedge accounting, this impact was fully accounted for in the second quarter. As a result, we do not anticipate this benefit recurring in the third and fourth quarters.

Yes. And then in terms of the crude run rates, Matthew, it's more about the configuration of our refinery and the fact that we don't make as much jet or gasoline because we're a heavy crude processing refinery. So for us, it was more about finding incremental barrels to get from 85% to 90% that had positive contribution margin. But I think the heavy processing setup of our refinery probably favored us incrementally.

Okay. Thank you. Well, let me offer a few closing remarks. Our consistent focus on cash generation and disciplined capital allocation will help us steer through any point in the cycle. We're really well equipped for the current challenges. We've leveraged our leading portfolio and our advantaged positions toward our goal of delivering sustainable value for our shareholders. We look forward to updating you on our next earnings call in October. Thank you. And with that, we're adjourned.

This concludes today's call. Thank you for your participation. You may disconnect at this time.