China acetic acid propels Celanese ’08 earnings

22 April 2008 18:26  [Source: ICIS news]

HOUSTON (ICIS news)--Celanese has raised its 2008 earnings projections based on stronger than anticipated acetic acid pricing at its Nanjing, China plant, chief executive David Weidman said on Tuesday.

Weidman said in a first-quarter earnings conference call that the stronger price levels at the Chinese plant led the firm to raise its 2008 earnings projections from $3.40-$3.70 per share to $3.60-$3.85 per share.

Dallas, Texas-based Celanese reported on Monday a 13.6% rise in first-quarter operating profit to $234m (€147m) from $206m a year earlier despite sluggish demand in certain North America consumer segments and negative impact of high raw material and energy costs.

Weidman said he expects acetic acid pricing in China to stay in the $600-$650/tonne range for at least the next year, compared with what he termed traditional levels in the $500-$550/tonne range.

The higher acetic acid pricing could last through 2010 because of current crude oil levels, Weidman said.

Crude oil, which has topped $118/bbl this week, traded slightly below $60/bbl a year ago.

"That's baked into our guidance," Weidman said. "It's expected to remain at these elevated levels throughout 2008."

US Gulf acetic acid contract prices were $750-$800/tonne during the week ended 18 April, according to global chemical intelligence service ICIS pricing.

Keith Fitz-Gerald, analyst with the Money Map Reporter, called Celanese a "gem" in a recent report and pointed to its 30% share of global acetic acid production.

Fitz-Gerald noted that Celanese has surprised the market in eight of the last nine quarters and said it is "just getting warmed up."

"There are no guarantees this will continue but the right building blocks are there," Fitz-Gerald said in his report.

He added that chemical firms such as Celanese have been "notoriously cyclical" in the past but he believes those days are over.

"In fact, the data suggests the days of highly cyclical chemicals companies is coming to an end, as the global community increasingly decouples from America," Fitz-Gerald said.

($1 = €0.63)

For more on acetic acid visit ICIS chemical intelligence

By: Lane Kelley
+1 713 525 2653

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