Kim Foley
Executive Vice President, Global Olefins and Polyolefins and Refining at LyondellBasell Industries
Thank you, Michael. Let's begin the segment discussions on Slide 10 with the performance of the Olefins and Polyolefins - Americas segment. During the third quarter, O&P-Americas EBITDA was $758 million, up 13% quarter-on-quarter and 50% year-on-year. Integrated polyethylene margins were supported by low ethane and natural gas costs, coupled with higher polyethylene prices following the successful July price increase.
During the quarter, the industry experienced increased cracker downtime, which led to lower ethane cost and tighter ethylene supply supporting olefins margins. LYB's U.S. crackers ran at 95% rates during the quarter, which includes the impacts of Hurricane Beryl in July. Our strong operational performance allowed us to capture the opportunity for favorable margins with our merchant ethylene sales and benefited integrated polyethylene margins. We estimate that the additional profitability from our merchant ethylene sales alone offset approximately $50 million of estimated EBITDA impact from Hurricane Beryl. The segment's third quarter profitability exceeded last year's results by 50% and reached levels not seen since the second quarter of 2022.
North American industry demand for polyolefins continues to exceed 2023, with September year-to-date polyethylene and polypropylene sales volumes up 7% and 4%, respectively. Industry exports of polyethylene are up 11% September year-to-date, with 46% of North American industry sale volumes sold in export markets. LyondellBasell's U.S. polyethylene business holds a stronger domestic market share than our local peers, with only 26% of LYB September year-to-date polyethylene volumes exported. As such, we did not experience any material disruptions during the brief port strike.
In the fourth quarter, we anticipate the typical seasonal trends of softer demand and customers' desire to minimize year end inventories could constrain price increase initiatives. In addition, sequentially, higher natural gas and ethane prices are likely to pressure integrated margins. Nonetheless, as of this week, our October North American polyethylene orders are the strongest we've seen so far in 2024. Despite volatile oil prices, the favorable oil-to-gas ratio continues to provide an advantage for North American producers relative to oil-based production in other parts of the world.
LYB remains well positioned as a leading producer in North America with strong customer relationships built over decades. During the fourth quarter, we will remain focused on aligning our operating rates to serve domestic and export market demands, targeting 85% utilization across the segment, with higher cracker utilization offset by lower polypropylene rates given the ongoing soft demand for durable goods markets.
Please turn to Slide 11 as we review the results of our Olefins and Polyolefins - Europe, Asia and International segment. In the third quarter, demand in the markets served by our O&P-EAI segment remains stable with no indications of macroeconomic recovery likely for the remainder of this year. The segment generated EBITDA of $81 million. Volumes declined as we began a planned turnaround at our largest cracker in Europe. Segment EBITDA improved sequentially as lower fixed and feedstock costs led to a higher integrated polyethylene margin.
In the European market, we are seeing increased talk of strategic evaluations and capacity rationalizations across our peers. As in the U.S., we expect seasonal softening of demand for olefins and polyolefins. The drive for minimizing year end inventories will also pressure European markets.
In China, we are encouraged by the recent stimulus initiatives, but we have yet to see where the initiatives are resulting in improved market demand. Operationally, planned maintenance at our large Wesseling cracker in Germany will continue into the fourth quarter. As a result of this planned maintenance and softer seasonal demand, we are targeting operating rates of approximately 60% during the fourth quarter.
We continue to make progress on our strategic objectives in O&P-EAI segment. Our European review is underway. In addition to starting the construction of our MoReTec-1 in September, we also acquired full ownership of APK in October, allowing us to integrate APK's unique solvent-based low-density polyethylene recycle technology as part of our comprehensive portfolio for building a profitable CLCS business.
Now let's turn to Slide 12 and review the results of the Refining segment. In the third quarter, lackluster demand and high industry operating rates compressed margins and resulted in an EBITDA loss of $23 million. Crack spreads for both gasoline and distillate fuels declined during the quarter. Our distillate hedging program offset some of the margin declines. In the near-term, we expect further margin compression as the Maya 2-1-1 crack spreads continue to fall. We intend to operate at approximately 90% of capacity in the fourth quarter. We remain focused on safe and reliable operations as we move forward shutting down the refinery during the first quarter of the year.
As Peter outlined earlier, our team is making good progress in evaluating strategic projects to transform the refinery site in support of our growth strategy. We have also kept the impacts of our people top of mind throughout this transformation. Since 2022 when we announced our intention to shut down the refinery, we have carefully managed staffing levels. As our staffing requirements decreased following the shutdown, we intend to retrain and redeploy as many affected employees as possible for the next stage of their careers with LYB. Nonetheless, some employees will end up leaving our company, and we will comply with all applicable laws and support our people as best possible.
Now let's turn to Slide 13 and outline more details on the operational and financial impacts from that refining exit. Following the holiday season, we plan to begin shutting down the first crude and coker train during January of 2025. Then in February, we expect to begin the shutdown of the second crude and coker train, the FCC, and other ancillary units. This staged approach is designed to ensure a safe, orderly and responsible shutdown of these complex operations. The refinery shutdown impacts both earnings and cash flow. We have been accruing costs related to the shutdown on our income statement since we announced our intentions in April 2022. However, once the shutdown begins in 2025, we will begin to realize the cash impacts depicted on this slide.
During 2025, we expect to release working capital that more than offsets the cash cost of shutting down the refinery. We expect a net cash benefit of approximately $175 million during 2025, assuming a Brent crude price of $80 per barrel. We expect the Refining segment will be reported as discontinued operations from the first quarter of 2025. Within discontinued operations, the ongoing costs related to the former Refining segment are expected to be less than $50 million a year. These are the estimated costs for keeping the site safe while maintaining operational capability for selected assets and infrastructure.
With that, I will turn the call over to Aaron.
