Company Reports

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 53% of 2023 operating EBITDA), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost US natural gas. The company has expanded its acetic acid production capacity at Clear Lake in recent years to take advantage of the low-cost US natural gas-based feedstock. This should benefit segment margins as we expect US natural gas prices to remain well below natural gas prices in Europe, Asia, and Brent oil-based feedstock.

Celanese's first-quarter results showed that demand was recovering in line with our outlook for the cadence of the year. In the commodity chemicals acetyl chain business, volumes rose 11% versus the prior-year quarter, following inventory destocking that weighed on the first quarter of 2023.

Celanese's fourth-quarter results reflected the benefit of favorable input costs versus global competitors, which underpins our narrow moat rating based on cost advantage. Despite customer inventory destocking leading to a 3% year-over-year volume decline and 3% lower prices versus the prior-year quarter, operating EBITDA grew 34% year over year. The company benefited from lower prices for US natural gas, which is Celanese's primary feedstock, while prices are often set by marginal-cost producers that use higher-cost European or Asian natural gas or Brent oil-based feedstock. Having updated our model to incorporate the fourth-quarter results, we are maintaining our $160 fair value estimate. Our narrow moat rating is also unchanged.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 53% of 2023 operating EBITDA), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company has expanded its acetic acid production capacity at Clear Lake in recent years to take advantage of the low-cost US natural gas-based feedstock. This should benefit segment margins in the coming years as US natural gas prices remain below natural gas prices in Europe, Asia, and well below Brent oil-based feedstock.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 65% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

Celanese's third quarter showed mixed results that changed our 2023 and 2024 outlooks. Having updated our model for lower 2023 results and higher 2024 results versus our prior forecast, we maintain our Celanese fair value estimate of $160 per share. Our narrow moat rating is unchanged.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 65% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

In 2022, battery electric vehicles represented nearly 10% of global auto sales, up from a little less than 6% in 2021. Much of the growth occurred in China, which has been a leader in EV sales over the past decade. However, with national EV subsidies in China expiring in 2022 and far lower sales in the U.S. and Europe, the market questions if EV sales can continue to grow without subsides.

After updating our model to incorporate Celanese's second-quarter results, we maintain our $160 fair value estimate and narrow moat rating.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 65% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

We maintain our $160 per share fair value estimate for Celanese after updating our model to incorporate the company's first-quarter results. Our narrow moat rating is also unchanged.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 65% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

After updating our model to incorporate Celanese's fourth-quarter results, we maintain our $160 per share fair value estimate. Our narrow moat rating is also unchanged.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 65% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

We have two key takeaways following third-quarter results from the three narrow-moat specialty chemical producers we cover: Celanese, DuPont, and Eastman. First, specialty chemical producers' pricing power is intact. The specialty businesses of Celanese, DuPont, and Eastman all saw price increases at or above the level of cost inflation. This is consistent with our view that specialty chemical producers can pass along cost inflation. As cost inflation moderates in 2023, we expect the price increases will largely remain in place. On its own, this would allow producers to recover profits.

Celanese's third-quarter results were generally in line with our outlook for the year. Having updated our model to incorporate the earnings results, we maintain our $160 per share fair value estimate. Our narrow-moat rating is also unchanged.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 45% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.

Shares of Celanese, DuPont, and Eastman have plummeted this year as the market focuses on the near-term risks for the specialty chemicals industry. Cost inflation, a global recession, and a potential European natural gas shortage all threaten to erode profits in 2023. While these risks could weigh on near-term results, we think a smaller decline is more likely to occur, as reflected in our base-case forecasts.

In light of our broader forecast for an economic slowdown, we have reduced our outlook for the three specialty chemicals firms Celanese, DuPont, and Eastman. We have updated our models to assume lower 2023 and 2024 revenue growth rates in the specialty chemicals segments. For Celanese and Eastman's commodity chemicals segments, we continue to assume falling crude oil prices will lead to lower commodity chemicals prices and profits, as marginal cost commodity chemicals producers typically use Brent oil-based feedstock, which informs prices. Our long-term and midcycle assumptions are unchanged as we expect specialty chemicals firms will resume growth in line with their respective end markets following a slowdown.

Celanese is the world's largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions. These products are used in the company’s specialized end products or sold externally. Celanese produces these commodity chemicals in its acetyl chain segment (roughly 45% of 2022 pro forma EBITDA including acquisitions), which primarily serves the automotive, cigarette, coatings, building and construction, and medical end markets. Celanese's Clear Lake, Texas, plant benefits from a cost advantaged feedstock from low-cost U.S. natural gas. The company plans to expand acetic acid production capacity at Clear Lake by roughly 50%, which should benefit segment margins thanks to lower unit production costs relative to other geographies.