Celanese sees little impact from methanol surge

23 October 2007 18:18  [Source: ICIS news]

HOUSTON (ICIS news)--The recent sharp increases in methanol prices around the globe are not a concern for Celanese’s fourth-quarter earnings, a company executive said on Tuesday.

“The model we have in place does mitigate the impact of methanol volatility,” said chief executive David Weidman, discussing the company’s quarterly results in a conference call. “We tend to be hedged very well across the globe.”

The average North American contract price for barge methanol rose by 71.5 cents/gal, or 74%, to 167.5 cents/gal in October, according to global chemical market intelligence service ICIS pricing. Scarce spot barges were also trading at a large premium, with a November deal concluded last week at 245 cents/gal FOB (free on board) US Gulf.

Weidman added that the methanol volatility may cause some earnings shift within the company. Asian earnings would be negatively affected by higher market-based methanol costs, while the company expects to benefit from its relatively stable long-term contract methanol pricing in North America.

The company’s engineering plastics business will face cost pressures, he said. The business consumes methanol to produce formaldehyde-based resins.

Methanol is also a feedstock for the production of acetic acid, which Celanese uses as a feedstock for most of the products it makes.

The company entered an exclusive, long-term contract with Southern Chemical in 2005 to supply its North American methanol requirements.

By: David Barry
+1 713 525 2653

< previous article(ICIS Chemical Business podcast November 2, 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly