Celanese increases prices of low-density polyethylene
On February 14, 2018, Celanese (CE) announced that it would increase the prices of low-density polyethylene (or LDPE). The price increase is expected to be $0.04 per pound. The new prices should be effective on March 1, 2018, or as the contract allows.
The price increase is effective for both list and off-list prices, and it is expected to be effective in the Americas region.
Celanese sells LDPE under the Ateva and VitalDose brands. These brands are primarily used in packaging, laminations, automotive parts, and hot melt adhesives. These uses are part of its Industrial Specialties unit under the Materials Solutions segment.
In 4Q17, Industrial Specialties reported revenues of $252.0 million compared to $219.0 million in 4Q16. The price increase could have a positive impact on Celanese’s Industrial Specialties business assuming the volumes don’t drop. The impact of the price increase is expected to be more visible in 1Q18.
Update on CE’s stock price movement
Celanese (CE) stock gained 2.7% and closed at $102.49 for the week ended February 16, 2018. Despite the strong gain, CE traded 3.7% lower than its 100-day moving average price of $106.43, which indicates prevailing weakness in the stock.
On a year-to-date basis, CE has fallen 4.3%. CE’s peers Eastman Chemical (EMN), Westlake Chemical (WLK), and DowDuPont (DWDP) have gained 8.1%, 0.2%, and 1.0%, respectively. However, analysts are positive on Celanese stock and gave a target price of $120.00, which is ~17.0% higher than its February 16, 2018, closing price.
In the past one-month period, CE’s short interest as a percentage of outstanding shares fell from 1.1% to 0.84%. CE’s 14-day relative strength index (or RSI) of 42 indicates that the stock is neither overbought nor oversold.
Investors can gain indirect exposure to Celanese via the First Trust Materials AlphaDEX ETF (FXZ). FXZ invested 1.9% of its portfolio in Celanese on February 16, 2018.