Inside Celanese’s Price Hikes Products

On July 12, 2017, Celanese (CE) announced that it will be increasing the prices of a few of its acetyl intermediate products. The new prices will be effective immediately, or as contracts allow. Below is the list of price increases:

• Vinyl Acetate Monomer will be increased to $200 per metric ton in China, and the rest of Asia will see a rise of $50 per metric ton.
• Ethyl acetate will go up by 150 euros per metric ton in the Eurozone.
• Acetic anhydride will see a price hike of $0.025 per pound in the US and Canada, $60 per metric ton in Latin America, and 50 euros per metric ton in the Eurozone.

The impact of the price increase will be reflective in 3Q17 and could have a positive impact, assuming the volumes remain constant or rise. CE did not sight any reason for the price hike.

CE’s Acetyl Intermediates segment recorded revenues of $619 million in 1Q17, which marks a decline of 6.6% over 1Q16, primarily due to declines in volumes. It remains to be seen how this price hike will impact CE’s Acetyl Intermediates segment going forward.

Celanese stock had a good run last week (ended July 14) and gained 2.6% to close at $98.68. But it underperformed the PowerShares DWA Basic Materials Momentum Portfolio ETF (PYZ), which gained 3.5% for the week.

Celanese was trading 9.60% above its 100-day moving average price of $90.05. On a year-to-date basis, the stock has returned 25.3%. Its 14-day RSI (relative strength index) of 74 suggests that the stock has moved into an overbought situation. (Remember, an RSI of 70 and above indicates that a stock is overbought.)

Investors looking for exposure to Celanese can indirectly invest in PYZ, which has 3.2% of its portfolio in CE. The other top holdings of the fund include Chemours (CC), FMC (FMC), and Albemarle (ALB), which had weights of 4.4%, 4.1%, and 3.8%, respectively, on July 14, 2017.