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Celanese Increases Price of Acetaldehyde in Europe

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Celanese hikes prices of acetaldehyde

On February 9, 2018, Celanese (CE) announced that it would increase the list and off-list prices of acetaldehyde. CE expects to increase the price of acetaldehyde by 45 euros per metric ton. This price increase is effective immediately or as its contracts allow, and this increase is expected to impact its Europe region.

This action could help improve CE’s Acetyl Chain segment’s revenues. The previous price hikes helped the segment’s revenues increase significantly in 4Q17. The segment reported revenues of $888 million in 4Q17, an increase of 19% over 4Q16. This revenue increase was primarily driven by the price increase. 

The Acetyl Chain segment reported a GAAP[1. generally accepted accounting principles] operating profit of $176.0 million.

The effect of the price increase could be positive for Celanese and could increase CE’s revenues provided its volumes don’t fall. This impact would be visible in CE’s 1Q18 earnings.

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Stock price update

Celanese’s (CE) stock price fell 4.6% and closed at $100.21 per share. This decline in stock price resulted in CE trading 5.9% below its 100-day moving average price of $106.50. Since the beginning of 2018, CE stock has declined ~6.5%. 

CE outperformed the First Trust Materials AlphaDEX ETF (FXZ), which fell 5.1% for the same period. FXZ has invested 1.9% of its portfolio in Celanese.

Analysts appear to be bullish on Celanese stock and projected a target price of $120.00. This target price implies a return potential of 20.0% over its closing price on February 9, 2018. CE’s 14-day relative strength index (or RSI) of 35 indicates that the stock is neither overbought nor oversold.

FXZ also provides exposure to Eastman Chemical (EMN), Cabot (CBT), and Westlake Chemical (WLK), which weights in the ETF of 3.4%, 3.4%, and 3.3% on February 9, 2018.

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