Hello and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. I will now turn the conference over to Mr. David Kinney, Head of Investor Relations. You may begin.

Good day, everybody, and thank you all for joining today's call. Before we begin the 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/investorrelations. Today, 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 also available on our Investor Relations website. Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures, such as EBITDA and earnings per share, excluding identified items. Additional documents on our Investor website provide reconciliations of non-GAAP financial measures to GAAP financial measures, together with other disclosures, including the earnings release and our business results discussion. A recording of this call will be available by telephone beginning at 1:00 p.m. Eastern Time today until November 27, by calling (877) 660-6853 in the United States and (201) 612-7415 outside the United States. The access code for both numbers is 13739196. Joining today's call will be Peter Vanacker, LyondellBasell's Chief Executive Officer; our CFO, Michael McMurray; Ken Lane, our Executive Vice President of Global Olefins and Polyolefins; Kim Foley, our EVP of Intermediates & Derivatives and Refining; and Torkel Rhenman, our EVP of Advanced Polymer Solutions. During today's call, we will focus on third quarter results, current market dynamics, our near-term outlook and our long-term strategy. With that being said, I would now like to turn the call over to Peter.

Thank you, David, and welcome to all of you. We appreciate you joining us today as we discuss our third quarter results. Starting with Slide 3. We have three key messages for today's call. First, LyondellBasell continues to generate resilient results despite challenging market conditions. Our team delivered exceptional cash conversion during the quarter. And our balanced approach to capital deployment was on full display, as we repaid maturing bonds, funded investments to grow and maintain our assets and rewarded shareholders through dividends and share repurchases. At the same time, thanks to great teamwork, we were able to bolster the cash on our balance sheet. Secondly, we remain focused on executing our long-term strategy. You will recall that our strategy is built on three pillars. The first pillar reflects our commitment to actively grow and upgrade the core businesses that are aligned with our long-term strategy. We are growing our Intermediates & Derivatives segment through the successful start-up of our new PO/TBA facilities, the largest single train propylene oxide plant in the world. In the third quarter, extremely strong margins for oxyfuels produced from our PO/TBA assets contributed to a record-setting quarterly EBITDA for our Intermediates & Derivatives segment. Kim will provide more details on this in a few minutes. The other half of growing and upgrading our core involve difficult decisions about businesses and assets that do not really fit with our long-term direction. In September, we announced our intent to close one of our two polypropylene production units in Brindisi, Italy. And our plans to exit the refining business and transform the site are very well known. These actions are examples of how the pillars of our strategy reinforce each other. We're actively managing our business portfolio to reallocate resources toward assets and businesses that support the growth of our core, while building the second pillar of our strategy, a profitable circular and low-carbon solutions business. We continue to make good progress in this area, producing and marketing over 250,000 tons of recycled or renewable-based polymers since 2019. As Jim Seward and Yvonne van der Laan discussed in our MoReTec webinar last month, we're looking forward to a final investment decision later this quarter on our first commercial advanced catalytic recycling plant in Germany. And we are not sitting still, in just the past few weeks, we've announced joint ventures in two different Dutch plastic waste recycling companies, a stake in a circular plastic venture capital fund and a joint venture in infrastructure and recycled plastic feedstock that supports our plans for an integrated circular and low-carbon solutions here in Houston and also a renewable electricity supply agreement in Spain. Our value enhancement program aligns with the third pillar of our strategy, stepping up our performance and culture. I am pleased to announce that our VEP is on track to exceed our target for $200 million in recurring annual EBITDA run rate by the end of 2023. As a reminder, last quarter, we increased our VEP target by $50 million, from our initial target of $150 million that we announced at our Capital Markets Day in March. The new phone value unlocked by the VEP supports our investments to grow our core, while building a profitable and game-changing circular and low-carbon solutions business. My third key message is that LyondellBasell's focused strategy is strengthening our business portfolio to ensure our company is well positioned to capture value today and into the future. Our track record of effective cost management, operational excellence and innovation all provide competitive advantages. With a sharper focus on core businesses that benefit from leading positions in growing markets with attractive returns, we can maximize the impact of these competitive advantages. I hope you share our excitement for the future of LyondellBasell. Let's turn to Slide 4 and begin the discussion with our foundational commitment to leadership and safety performance. Safe operations are fundamental to our core values and provide the cornerstone for our future success. LyondellBasell's year-to-date incident rate for employees and contractors is 0.14, which means that our safety performance remains above the top 75th percentile for our industry. I want to congratulate our team for their outstanding safety performance. Let's turn to Slide 5 and summarize our financial results. During the third quarter, LyondellBasell's businesses delivered resilient results and strong cash generation from our well positioned and diverse portfolio. Earnings were $2.46 per share. EBITDA was $1.4 billion. At the end of the quarter, our cash from operating activities was $1.7 billion, with $7 billion of available liquidity. Now let me turn the call over to Michael first, and then to each of our business leaders, who will describe our financial and segment results in more detail.

Thank you, Peter, and good morning, everyone. Please turn to Slide 6, and let me begin by describing how we are extending our track record of efficient cash conversion that supports our investment-grade balance sheet and strong shareholder returns. During the past four quarters, LyondellBasell generated $5 billion of cash from operating activities. At the end of the third quarter, our cash balance was $2.8 billion. Our team efficiently converted 102% of our EBITDA into cash over the last 12 months. Let's continue with Slide 7 and review the details of our capital deployment during the third quarter. LyondellBasell remains committed to balanced and disciplined capital allocation that supports investment in our long-term strategy, while providing strong returns for our shareholders. During the third quarter, our portfolio of businesses generated $1.7 billion in cash from operating activities. Robust cash conversion comfortably covered capital expenditures, paid down maturing bonds, and enabled a return of $448 million to shareholders through dividends and share repurchases. As Peter mentioned, our team is focused on growing and upgrading our core businesses while actively managing our portfolio with the completion of our new PO/TBA assets, our capital expenditures are now focused on investments in building a profitable circular and low carbon solutions business and smaller profit-generating projects as well as maintaining safe and reliable operations across our existing asset base. I would now like to provide a brief overview of the results from each of our segments on Slide 8. LyondellBasell's business portfolio delivered $1.4 billion of EBITDA during the third quarter. Our results reflected exceptional oxyfuel margins that fueled record quarterly EBITDA in I&D offset by lower margins from both O&P segments. Results in our olefins and polyolefins businesses were pressured by higher feedstock costs, new industry capacity and very challenging conditions in European markets. In our last earnings call, we shared our expectation that third quarter EBITDA would decline from second quarter results. Subsequent events led to results that exceeded our expectations, primarily in our I&D segment. During August and into September, unplanned downtime at several assets across the U.S. Gulf Coast. Oxyfuels industry triggered a significant improvement in margins that increased I&D EBITDA by 50% relative to the second quarter. Our third quarter EBITDA for the company did decline slightly, but clearly exceeded the upper end of our expectations. We continue to align our operating rates with market demand to optimize working capital. During the fourth quarter, we expect operating rates of 85% for our North American olefins and polyolefins assets, 75% for our European olefins and polyolefins and 70% for intermediates and derivative assets.

Thank you, Michael. Let's begin the segment discussions on Slide 9, with the performance of our olefins and polyolefin Americas segment. Third quarter O&P America's EBITDA was $504 million. Integrated polyethylene margins were pressured by higher feedstock costs and continued oversupply. Global polyethylene trade flows appeared to be slowly normalizing toward pre-pandemic conditions. Increasing export prices and volumes helped to support U.S. polyethylene contract price increases in both August and September. In the fourth quarter, we expect strengthening polyethylene pricing supported by stable domestic volume and continued export strength. We also expect potential headwinds from volatile feedstock and energy costs. The U.S. polyethylene market is well supplied with recent capacity additions entering the market. We remain focused on our disciplined approach to match LyondellBasell's operating rates with market demand. Roughly two-thirds of LyondellBasell’s North America polyethylene capacity is high-density polyethylene. So we are pleased to see high-density polyethylene inventories falling across the industry during September. In support of our growth in circular and low carbon solutions, we announced the venture capital investment in Lombard Odier Plastic Circularity Fund. The fund aims to reduce pollution from plastics by investing in companies offering innovative solutions to improve the collection, sorting and recycling of plastic waste. This fund is another example of our comprehensive engagement and collaboration across the value chain to increase the availability of recycled feed stocks. Just this week, we announced our investment in Cyclyx, a joint venture between Agilyx, ExxonMobil and LyondellBasell to accelerate the development of a nationwide circular economy for plastics. The collaboration aims to capture more plastic waste from landfills and provide infrastructure and recycle materials at scale in support of our plans to build an integrated circular and low carbon solutions hub in the Houston area.

Thank you, Ken. Please turn to Slide 11 as we look at the Intermediates & Derivatives segment. Exceptional oxyfuel margins resulted in record third quarter segment EBITDA of $708 million. During the quarter, unplanned industry downtime for oxyfuels production on the U.S. Gulf Coast led to higher blend premiums for oxyfuels relative to gasoline. When coupled with higher crude oil prices and relatively low cost for butane raw materials, oxyfuel margins expanded significantly in North America and Europe. The outstanding performance of our oxyfuels business during the third quarter is an example of how our diverse global business portfolio is capable of providing resilient results through market cycles. With our new PO/TBA asset, LyondellBasell's global oxyfuels capacity is now as large as our North American polyethylene capacity, highlighting the diversity of our growing portfolio. In our propylene oxide and derivatives business, additional volumes from the new PO/TBA asset were largely offset by the planned idling of two POSM assets in the U.S. and Europe for approximately two months at each asset. These actions reflect our disciplined approach to match production rates with the demands during challenging market conditions. Looking ahead, we expect the end of the summer driving season and the higher butane costs will cause oxyfuel margins to moderate towards levels seen in the first half of 2023. In line with our guidance from the beginning of the year, we are conducting planned maintenance during the fourth quarter at two of our existing propylene oxide assets. We expect to run our global I&D assets at approximately 70% capacity in the fourth quarter.

Thank you, Kim. Let's review the third quarter results for the Advanced Polymer Solutions segment on Slide 14. Third quarter EBITDA was $18 million. Margins decreased mostly due to the sales mix for the quarter and lower demand. This was partially offset by incremental volumes from our metal acquisition completed in July. In the fourth quarter, we expect demand to be similar to the third quarter across most APS businesses. With service levels to our customers now restored, our team is highly focused on refilling the growth pipeline for our business. And we are making good progress in increasing the number of sustainable solutions for our customers with high-performing recycled technical compounds from our newly acquired metal assets and product developments from across our existing asset footprint. Our expectations for the fourth quarter of this year are modest, but we look forward to steady improvement during 2024, as the projects in our growth pipeline begin to mature and make their way to the bottom line as we work towards the goals we discussed at our Capital Markets Day last March.

Thank you, Torkel. Please turn to Slide 15, and I will discuss the results for the technology segment on behalf of Jim Seward. Third quarter EBITDA of $146 million reflected higher licensing revenue and improved catalyst results. In the fourth quarter, we expect that revenue associated with licensing milestones will be unusually low, and catalyst volumes will decrease. As a result, we estimate that full year 2023 technology segment EBITDA will be approximately $30 million lower than full year 2022. As discussed in the beginning of this call, we are targeting a final investment decision for a commercial scale plant using our MoReTec advanced catalytic recycling technology before the end of this year, and hope to share more details in our fourth quarter telephone conference. Please turn to Slide 16, and I will discuss the near-term market outlook by regions and end markets. As you heard from our business leaders, we expect that challenging market conditions will persist through the remainder of the year and into 2024. In addition, we expect additional pressures from typical fourth quarter seasonality associated with holidays and year-end inventory management. In the Americas, pricing is expected to be supported by increased polyethylene exports and stable demand. Integrated polyethylene margins will likely be constrained by higher feedstock costs and new market capacity. We expect that European markets will remain highly challenged. Weak market demand, coupled with rising feedstock and energy costs, are likely to continue to compress margins. In China, markets are slowly improving, and targeted stimulus initiatives seem to be providing some limited benefits. In our end markets, demand for consumer packaging is slow but steady, supported by the consumer and industrial packaging markets. However, our customers continue to keep their inventory levels low. Building and construction markets are slow, but we're watchful for potential benefits in the United States, enabled by stimulus from the Inflation Reduction Act, the Bipartisan Infrastructure Law and the Chips & Science Act. We expect demand from automotive production will continue to gain momentum. The UAW strike has not yet materially affected our results. Oxyfuel margins are expected to remain well above historical averages, but declined from third quarter records to a level similar to the first half of 2023. Distillate inventories are expected to remain on the low end of seasonal averages and gasoline inventories have risen with the end of the summer driving season. We will continue to optimize our operating rates to remain in step with market demand. Now let me summarize the third quarter, our outlook and our long-term strategy for the company with Slide 17. Exceptional oxyfuels margins enabled record results from our Intermediates & Derivatives segments. O&P margins were pressured by higher feedstock costs and new industry capacity, amid stable but soft demand. Cash generation was outstanding, with $1.7 billion in cash from operations, which enabled us to return approximately $450 million to shareholders in dividends and share repurchases as part of our balanced capital allocation framework. Looking ahead to the fourth quarter, we anticipate seasonally softer demand across our businesses, but we remain confident in our proven ability to navigate challenging markets and deliver results. Our team will continue to remain focused on advancing value creation through the three pillars of our long-term strategy. Our third quarter results demonstrate the benefits from growing our core with new capacity from our PO/TBA assets, and we are upgrading our business portfolio by improving our focus on this core. We are reallocating resources away from non-core assets and businesses. At the same time, we are rapidly building a comprehensive business model to support the profitable circular and low-carbon solutions business, where LyondellBasell benefits from participation up and down the value chain. And we are transforming our performance and culture to embrace a comprehensive approach to value creation. Our value enhancement program is unlocking value at an accelerating pace. And I am confident we will exceed our 2023 recurring annual EBITDA exit run rate target of $200 million. We are laser-focused in our goal to deliver a more profitable and sustainable growth engine for LyondellBasell. With that, we are now pleased to take your questions.

Our first question comes from Jeff Zekauskas with JPMorgan. Please go ahead with your question.

Thanks very much. A two-part question. Can you talk about profitability of your Bora joint venture in China? How that's changed through the course of the third quarter and into the fourth? And I think in the quarter, you bought back a minimal number of shares. Do you have a weighting between dividends and share repurchase that you think about? Or why was the share repurchase so small?

Great. Thank you, Jeff, for your questions. I mean, the situation pretty much on Bora has not changed compared to the previous quarters. We continue to run at minimum capacity. Ken, do you want to add something?

Yes. I would just say that we did have a turnaround that impacted the asset in the third quarter, Jeff. But what we are seeing is signs of some domestic growth in the market there, which is encouraging. However, the growth rate is still not where we needed to be to absorb all of the new capacity. But that asset is approaching breakeven levels of EBITDA, which is great to see, but still a very challenging market in China.

And with regards to our capital allocation strategy, also here, nothing has changed. I mean, with regards to the share buybacks, Michael?

No, sure, Jeff. So what I would say is that our capital allocation priorities remain fundamentally unchanged. I think really pleased with our cash flow performance this year and this quarter, in particular. I think really good execution. Pleased with the amount of working capital that we're able to take out of operations this quarter as well. And then again, I said looking forward, our commitments to shareholders remain intact. I think this has been demonstrated by our previous actions. You know that we communicated a 70% payout target for free cash flow, that stands. That said, we don't put capital allocation on autopilot. We have a point of view. And then clearly, given all the risks and uncertainties as we sit here today, we're being a little bit more cautious in the near term.

Hi, good morning. You guys had a record quarter in I&D, with strong oxyfuels, and now the PO/TBA plant is online. Maybe there's still some weakness in derivatives, but how should we think about margin set up into 2024 across each of the chains? And what sort of ramp up in EBITDA should we see from the PO/TBA plant as it gets to nameplate?

Yes. Thank you, Patrick. Very good question. Maybe let me, first of all, highlight, again that, of course, with a very successful start-up of our new PO/TBA plant, the capacity mix in North America has, of course, changed. I mean, on one hand side, we have about 4.1 million tons of PE capacity in North America. And in oxyfuels, we have a global capacity now of 4.4 million tons. So I think that's important to highlight that with that successful investment, our portfolio mix has successfully changed. So with that, Kim, you want to say something around your outlook for oxyfuel margins?

Absolutely. Let me start by taking us back to Capital Markets Day. I think what we said then is mid-cycle margins for the cycle would produce an I&D EBITDA segment of about 1.6. So if you think about the new plant as an incremental $450 million, we're just north of $2 billion. Short term, this segment is challenged by weak durable demand and capacity oversupply, which impacts both volume and margin in our current environment. But on the positive side, we continue to see really strong demand for oxyfuels. Margins are above historical levels. So as we discussed in Capital Markets Day, again, it's the diversity of this segment, combined with our global low-cost asset footprint that provides positive EBITDA throughout the cycle.

The team has done quite a lot of very good work as well in global supply chain management by building up more flexibility in global supply chain and management on oxyfuels as well as on POs. So that will also help in the future.

Thank you. Good morning. Peter, you're having very good success with the Value Enhancement Program. What's the potential this program longer term? Can you get to $1 billion high run rate, do you think, in the '25 and beyond timeframe?

Thank you, David, for your question. I'm actually very pleased with how the LyondellBasell team has embraced the value enhancement program. I mean I've done these programs in the past at other companies, and it took longer. We have about 4,000 or 5,000 people now involved. We just went to Phase E in having smaller sites that have now rolled out the Value Enhancement Program, also with a huge amount of success. As we said, our original target was first year, a $150 million exit run rate EBITDA. We increased it to $200 million. Today, we actually said we're going to exceed that $200 million. We haven't changed our $750 million target. But as we have said in the past, I mean, this is not a project. It becomes part of the DNA. So it doesn't have a beginning and an end. So we can definitely say that it's not going to stop at $750 million as a consequence. So we will be able to capture more value. And we see that already happening because the sites that were involved in the first phase, they have already started going again, I mean, through new initiatives, new brainstorming sessions that they have captured. So we already start building up that certain, let's say, that first-level sites already have a new group of projects, new projects identified to continue to increase value and creation.

Yes. Thank you. What would you put the probability that your refinery is selected as the DOE-funded hydrogen hub for Texas? And if it is, would that influence your choice of where to put the MoReTec process? And would it also potentially lead you to operate the hydro treaters and hydrocrackers longer than that first quarter of 2025 to keep them functional for longer-term utility and renewable fuels?

Thanks, Steve. Good question. I mean, of course, we were very pleased that amongst the seven projects that have been announced to receive funding, that the Houston High Velocity project has been included in that. Our project that we have on HROs, our refinery, is part of that high velocity. So we get very good support. That's great. Of course, we continue to develop that project. There's still a lot of steps, I mean, that need to be taken until we are at investment decisions. But it gives, of course, quite a lot of support already to move them into the next step. Having said that, of course, in the transformation of our Houston refinery, we have multiple projects that we are currently looking at. One of those projects is the upgrading of plastic oil that would come out of our MoReTec 2 investment. Remember, MoReTec 1 is the colon hub. MoReTec 2 will be much larger than MoReTec 1. And here, we are looking at the Houston hub. So MoReTec 2 investment in Houston, leveraging upon our equipment like hydro treaters that we have in Houston to upgrade that plastic oil and then having the interconnection through our pipelines with our channel view steam crackers. That's the second project. The third project that we are looking at is leveraging those hydro treaters to see if we can produce renewable hydrocarbons in the hydro treaters that again would leverage feeding them into the steam cracker. So we have a multitude of projects currently that we have in a very early phase, but we are having very dedicated teams analyzing these projects, and we will then, of course, follow the usual CapEx stage gate.

Great. Thanks for taking my question. Could you talk about dynamics in polypropylene? I think the Lyondell volumes were actually the highest in quite some time in this area. What kind of trends are you seeing on global supply and demand for both this year as well as into 2024?

Thank you, Matthew. I'm going to give that question immediately to Ken.

Thank you very much for the question. The dynamics we're observing in polypropylene in terms of supply and demand are comparable to those in PE. There has been a significant increase in new capacity coming online in the past 12 to 18 months, particularly in China. The situation in China is now more balanced, and they have even begun exporting some polypropylene. This market is facing challenges, but we've noticed a resurgence in demand for polypropylene, with some quarter-over-quarter growth. One area that stands out in our division is the automotive segment, which is showing improvement compared to others like packaging. Additionally, we have seen some recovery in volumes for Catalloy, largely driven by commercial construction. Overall, we maintain a strong portfolio of assets, despite the challenging market environment.

Great. Thank you, good morning. I wanted to ask a bigger picture question on O&P EAI profitability. EBITDA has been quite challenged for maybe the past five quarters or so. I know you highlighted the polypropylene closure. But is there any larger scale asset shutdowns or restructuring being considered here? And is it simply a question of demand recovering? Or I guess how do you think about a potential pathway to get this segment back to its, call it, $1 billion or so historic EBITDA level?

Thank you, Mike. That’s a great question. As you mentioned, we are currently negotiating with union representatives regarding the shutdown of a specific line in southern Italy, particularly in Brindisi. As always, we are assessing all our assets, not just in the O&P sector but also in the I&D and APS sectors. You may have noticed some actions we've taken, such as idling our joint venture related to PO/SM a couple of times this year, similar to what we did at the end of last year. It's crucial for us to explore these different opportunities. However, we have made the decision to proceed with shutting down the one line in southern Italy.

Thank you and good morning. And congrats on the nice results. If I look back three months ago, the consensus was at $1.41 billion for the third quarter in EBITDA. And the company thought that that was probably too high and proactively went out with a guidance of $1.1 billion to $1.25 billion. Obviously, you outlined the reasons why the results came in better, actually right in line with that $1.41 billion. But my question is, having taken that tact in the third quarter, as we stand here today, the Street is at $1.1 billion EBITDA for the fourth quarter, it begs the question in terms of no guidance that I would assume that Lyondell feels more positive about that results. Any color you could provide would be great.

Thank you for your question, Frank. You are correct about what we discussed regarding Q3; we didn't label it as guidance. During Q3, several factors influenced the market, including some of our competitors facing challenges with their oxyfuels capacities, which they had to shut down. Meanwhile, our advanced PO facilities were operational, allowing us to benefit from this situation, not only through the available volumes but also with significantly increased margins in that sector. Our team has worked diligently to navigate these dynamics across various regions, demonstrating our business agility and maximizing value from our large capacities worldwide. This is essential for our strategy's first pillar of growing and upgrading our core operations. As for Q4, we anticipate normal seasonal patterns. Kim mentioned that oxyfuels margins are presently higher than our historical averages. We have the necessary capacities in place, but it's important to recognize that we cannot always exploit situations where competitors experience difficulties. Consequently, while we expect oxyfuels margins to remain above historical levels, they are not likely to reach the peaks observed in Q3. We will also continue to monitor what is happening in the polyethylene, polypropylene, and olefins markets and approach Q4 with caution.

Thank you, Just the Lombard ODA investment, is that purely a financial investment? Or do you have opportunity to interact with the companies and collaborate with the companies that are being invested in? And does that give you an edge on any potential new technologies or things like that?

Yes. Thank you very much, I mean, Vincent, for that question. We've been, let's say, more strategic when we are looking at these kinds of investments in funds. So, of course, based upon our clearly articulated strategy at the Capital Markets Day, when we look at the second pillar of our strategy, building up a profitable circular and low-carbon solutions business, it's clear that in that area, we are looking at enhancing also our knowledge on what is happening in the marketplace. So that fund ticks that box because we have more visibility on the market. In addition to that, of course, we also want to make sure that we are supporting these early-stage technologies, companies that are in that fund so that they can continue to grow. So it is not a pure just venture financial investments. It's much more also looking at it from a strategic and conceptual point of view.

Good morning, Peter. A quick one. Recently in the news, there's been a lot of talk about lower water levels in the Mississippi. So I was just wondering whether that's impacting you guys in any way or form or broadly the industry as well.

Thank you, Hassan, for your question. No impact, I mean, for our business.

Thanks, good morning everyone. Your cyclic announcement comes on the heels of many other acquisitions you've made in this area, and perhaps not one of them separately is very large. But I mean, it adds up to potentially quite a bit of capital. Could you provide any clarity on how much capital so far went into these acquisitions? And what would be the sort of the run rate going forward for how to spend on deals like this?

Yes. Aleksey, thank you for your question. The second pillar of our strategy, as I just mentioned, it's mainly focused at the beginning on building up these renewable and circular apps, one in Europe, and that is around Cologne, Wesseling Knapsack where we have our assets. And the other one is around Houston, so HRO channel view. The way how we have at the Capital Markets Day articulated our strategy is that we both go upstream in working together with partners, so also investing in the upstream to get access, I mean, to plastic waste because we do believe that getting access, I mean, to plastic waste is important. Then secondly, investing in both micro recycling and then also advanced recycling, leveraging, of course, upon the relationship that we have with start-up companies, but also upon our own advanced catalytic recycling technology, the so-called MoReTec technology, with the two first investments FID, that I have mentioned before. And then thirdly, also, we are looking at accessing the marketplace through our APS business. And here, we have done this Mepol acquisition so that we actually were closer to the brand owners closer to the OEMs, where the demand is actually coming from. So we have the entire value chain where we are taking positions and that's why you see all these smaller deals that we are making because there is no one company that is covering the entire value chain or that is covering, let's say, the upstream or the downstream in the value chain. We've said at the Capital Markets Day around 15% of our investments, maybe a little bit more than that 15% in the investments over the period of time that we were talking about, 2027, 2030. So pretty much, I mean, in that ballpark has not changed our view substantially but I said maybe a bit more than the 15% because we see that we have very good traction.

Yes, and then to specifically put a breadbox maybe around these investments, just to give people a bit more perspective. While they're important to the strategy, they're not material in amount. And so kind of what we've invested thus far is less than $200 million.

Yes, good morning. Maybe two questions on your I&D segment, please. First, as I understand your comments on oxyfuels, it sounds like you expect profitability to regress based on butane and maybe some other factors. Have you seen that already in October? Or is that just an expectation for the future? Would be the first question? And then secondly, are your POSM plants still down? Or have they come back up? And maybe you can help us with the timing of those outages 4Q versus 3Q in terms of sequential modeling considerations.

Thank you, Kevin, for your questions. I mean remember, I mean, oxyfuel margins what we said in Q3 were exceptional, but we continue because we are the lowest cost producer. We continue to be very comfortable, I mean, with higher margins than what we have seen historically. So I will lead it to Kim to answer in more detail your two questions.

Absolutely. Let's discuss the profitability of oxyfuels first. Key factors affecting profitability include the price of crude, gasoline cracks, the ratio of crude to butane, and the premium the market pays for octane in the gasoline mix. In the third quarter, there was a significant demand for that octane premium. As for October, we've noticed that this premium has decreased, alongside some volatility in crude prices. While we are still seeing margins higher than historical averages, they are not at the peaks we experienced in the third quarter. Regarding POSM operating rates, we previously indicated a guidance of 70% for the fourth quarter. Currently, we have two of our PO/TBA plants offline, but our POSM plants are operational to meet that 70% rate.

And as you can see, I mean, we have the investments on the PO/TBA plant is a very successful investment as we are running at 70% in total of our capacity. That gives us a huge opportunity also to continue to grow. And again, that fits them into the first pillar of our strategy, growing and upgrading the core because these are markets that are growing.

Thank you for your question. I would like to provide more insight into the polyethylene markets moving forward. As you mentioned, we experienced two price increases in August and September. However, we are still facing some difficult market conditions in China, along with the introduction of new capacity. Looking ahead to 2024, do you believe we have reached the lowest point in the PE markets, and can we expect to see sustainable price increases? How do you view this in relation to U.S. demand and your operational insights?

Before I pass it to Ken to address that question, I want to highlight that a positive trend we've noticed is the continuous increase in PE exports over the last quarter. This is certainly encouraging. However, it's also important to consider the additional capacity that has entered the market or has yet to be introduced due to some reported technical difficulties. Ken?

I'll just add to that, Arun, that we're seeing very good support for those exports with a high oil to gas ratio that we expect is going to continue, especially with the volatility around oil markets and gas production being relatively robust. So we do feel good about what's happening in the North American market. Europe is going to continue to be very challenged in terms of demand. That is still significantly down, mainly because of the inflation impacts but also the margins are challenged there with the higher naphtha pricing that we saw. So we've got good momentum coming out of the third quarter going into fourth quarter, seeing some signs of growth in China and really a very challenging market that's going to continue in Europe.

Yes, thanks. I would like to follow up on the last point regarding China. Could you provide an update on what you're observing in terms of inventory? Are we past the significant capacity additions there, or does that influence the trend as we approach next year? What is your perspective on this?

Thank you, Josh, and going to take to Ken because that's related, I mean, then to PE your question.

Yes. Josh, we will see more capacity coming online next year, which is why we will likely be at the lower end of the market. Overall, for the industry, I believe that in the first half of next year, and with some hope in the latter part of next year, we will begin to see market growth that can absorb the additional capacity. However, there will continue to be pressure from new capacity coming in, and that will be our major concern.

Yes. You see, I mean, from Beijing, there is continuously evaluations and incentives that are being put in place. We don't see the construction market now picking up yet. But if you then look, for example, in China, the motive has been 10% year-on-year increase and EV has actually has been closer in to 40%. But on the other hand side, I mean, we see the consumers continue to save a lot of money. So savings continue to be at a high level. But more and more of these incentives, one would expect and, of course, also that the confidence will grow in the population in the middle class. And that, of course, would have then its influence on their spending on durable goods as well.

Ladies and gentlemen, I'm showing no other questions at this time. I'll turn the floor back to Mr. Vanacker for any final comments.

Thank you, again. Very good questions. And let me highlight again that we are very pleased, I mean, with the results, considering the market environment that we are in Q3. Great job that has been done by all the teams. We, of course, continue to look forward to sharing updates over the coming months as we continue to also make progress on the implementation of our long-term strategy. We hope you all have a great weekend and a safe one. Therefore, I wish you a great weekend. Stay well and stay safe. Thank you.

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