Celanese’s product price increase
On March 9, 2018, Celanese (CE) announced that it would increase the price of an acetyl intermediate product. The prices of vinyl acetate monomer will increase by 200 renminbi per metric ton in China and $50 per metric ton in Asia outside of China. The price increase will be effective immediately or as the contract allows.
Vinyl acetate monomer is used to make different types of polymers and resins, coatings, and textiles. The price increase could be positive for Celanese. Although the impact was seen in part of 1Q18, it should be seen more effectively in 2Q18. Acetyl intermediates reported revenue of $717 million in 4Q17—an increase of 20.1% on a year-over-year basis. The price increase could improve Celanese’s revenue assuming that the volumes don’t decline.
Celanese stock gained 3.7% and closed at $108.55 for the week ending March 9, 2018. The gain caused the stock to trade 2.2% above the 100-day moving average price of $106.2. On a year-to-date basis, the stock has gained 1.7%—compared to its peers LyondellBasell (LYB), Eastman Chemical (EMN), and Westlake Chemical (WLK). They have gained 1.8%, 17.8%, and 12.6%, respectively. However, analysts have given Celanese a target price of $120, which implies a return potential of 10.5% from the closing price of $108.55 as of March 9, 2018. Celanese’s 14-day relative strength index of 62 indicates that the stock isn’t overbought or oversold.
Investors could hold Celanese indirectly by investing in the First Trust Materials AlphaDEX Fund (FXZ). FXZ has invested 2.0% of its portfolio in Celanese as of March 9, 2018.