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Celanese (CE) to Increase Prices of Acetyl Intermediates

Zacks Equity Research

Celanese Corporation CE recently announced that it will hike list and off-list selling prices for certain acetyl intermediate products. The price hike is applicable to orders shipped and will be effective immediately or as contracts permit. Also, the price increase is incremental to any hikes announced earlier.

Acetic Acid prices in the United States and Canada will increase by 2.5 cents per pound. Prices will increase in Mexico and South America by $55 per MT and the same will increase by $50 per MT in Asia outside China. In Europe, Middle-East & Africa (EMEA), prices are set to increase Eur 50 per MT, and RMB 300 per MT in China.

Also, the company raised prices of Vinyl Acetate Monomer by 5 cents per pound in the United States and Canada. Prices in South America and Mexico will rise by $110 per MT and in Asia (outside China) it will rise by $100 per MT. Prices will rise Eur 100 per MT in the EMEA and RMB 800 per MT in China.

Acetic Anhydride prices in South America and Mexico is set to rise by $50 per MT and Eur 50 per MT in EMEA. Ethyl Acetate prices will rise Eur 75 per MT in the EMEA. Prices of Emulsion Polymers will increase $50 per MT in Asia (outside China).

Celanese is undertaking price-increase initiatives in the wake of headwinds stemming from raw material cost inflation. The company is facing higher raw material costs across most business segments as witnessed in 2018.

Celanese’s shares have lost 1.7% in the past year, against the industry’s 5.2% rise.

The company is exposed to economic weakness across Asia and Europe, which is leading to a slowdown in demand. Notably, Celanese witnessed demand slowdown during fourth-quarter 2018, which is likely to persist through the first half of 2019.

Considering a slower start and expected moderation during the fourth quarter of 2019, the company issued downbeat earnings guidance for 2019. It expects adjusted earnings per share for 2019 to be roughly $10.50, reflecting a decline from $11.00 in 2018.

Zacks Rank & Key Picks

Celanese currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. KL, Ingevity Corporation NGVT and Materion Corporation MTRN, all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 114.4% in the past year.

Ingevity has an expected earnings growth rate of 17.9% for the current year. The company’s shares have rallied 47% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 10% in a year’s time.

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