Update on Celanese joint venture
On January 8, 2018, Celanese (CE) confirmed that it had received the statement of objections from the European Commission on its joint venture with Blackstone (BX) to form a new acetate tow supplier. Celanese mentioned it as a standard review procedure of a phase two investigation. Celanese said it would work closely with the European Commission for successful closure of the joint venture.
The joint venture was signed in June 2017. The agreement stated that Celanese would hold a 70% stake and Blackstone would have a 30% stake. As per the agreement, CE’s Cellulose Derivatives and Blackstone’s Rhodia Acetow businesses will form the joint venture. The new company is expected to generate $1.3 billion in revenues.
In another update, Celanese announced price increases of $0.05 per pound for its MIBK and MIBC in North and South America. The price increase will be effective beginning on February 1, 2018. The increase could help to push CE’s revenues up, assuming no drop in volumes. The impact could be seen in its 1Q18 earnings.
Stock price update
Celanese stock rose 2.9% to close at $111.34 for the week ended January 12, 2018. The gain in stock price has resulted in CE closing at an all-time high. The stock traded 6.4% higher than its 100-day moving average price of $104.68. Analysts have provided a target price of $112.47, which implies a return potential of 1.0% over its current closing price. CE’s 14-day relative strength index of 65 indicates that the stock is neither overbought nor oversold.
Investors can indirectly hold Celanese by investing in the First Trust Materials AlphaDEX Fund (FXZ), which invested 2.1% of its portfolio in Celanese. The fund also provides exposure to Cabot (CBT) and LyondellBasell (LYB), which have weights of 3.6% and 3.5%, respectively, as of January 12, 2018.