Celanese to Increase Capex to $500 Million in 2020 as Company Develops Texas Projects

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Celanese Corporation (NYSE:CE) (Dallas, Texas) will ratchet up its capital expenditures next year to $500 million as it concentrates on organic growth projects, executives with the specialty chemicals producer said recently. Permitting was finalized during the third quarter for the company's planned methanol and acetic acid expansions in Pasadena, Texas. Industrial Info is tracking $1.45 billion in project activity by Celanese.

Capital expenditures for 2019 will amount to $400 million, said Chief Executive Officer Lori Ryerkerk in last week's prepared statements for the just-ended third quarter earnings results.

The acetic acid and methanol projects at the company's Clear Lake complex in Pasadena "have received necessary permits, engineering work is progressing quickly, and major equipment is ordered," she continued. The projects are part of Celanese's "global acid reconfiguration" plan.

Chief Financial Officer Scott Richardson said: "With construction in full swing starting in 2020, we expect annual capex of around $500 million for the next few years."

Industrial Info has tracked the methanol unit project since 2014. The planned 1.3 million-ton-per-year addition is a joint venture (Fairway Methanol LLC) with Mitsui & Co. (Tokyo, Japan). Celanese tentatively plans to sell its share of the methanol outtake from the project. For more information, see Industrial Info's project report.

Industrial Info is tracking more than $15.7 billion worth of capital methanol projects in the U.S. and Canada.

Click on the image at right to see a graph showing U.S. and Canadian methanol project activity by state and province.

"Asian or foreign-inspired dollars are typically behind the [methanol] investments in North America," said Trey Hamblet, Industrial Info's vice president of Chemical Processing Industry research, during the 2019-2020 Global Chemical Processing Outlook webinar in July. "Even those that are being developed by a U.S.-based or North American-based companies have long-term offtake agreements with someone on the other side of the world in China... and it is largely being driven by demand in China and its methanol-to-olefins (MTO) processes."

Industrial Info is tracking 40 MTO projects, with 22 of them located in China. "That methanol demand must be met by someone, and we [North American producers] have a very inexpensive natural gas price component," Hamblet said.

However, the methanol market "has been challenged quite a bit in recent years," Hamblet said.

The methanol market is tied to the price of oil, which has remained low and in turn has "held the reins on the methanol market, although I think that based on some of the individual projects we are tracking there is some momentum for some of these, as China gets firmer in committing to some of the MTO plants that would require methanol plants to feed them," Hamblet continued.

Celanese's planned 800,000-ton-per-year acetic acid addition would be completed in 2022, and would be expandable to 1.2 million tons per year. For more information, see Industrial Info's project report.

Celanese continues to develop the projects, despite expectations that lackluster market conditions will continue through the rest of 2019. Earnings for the just-ended quarter were $265 million, down from $402 million in third-quarter 2018. Also, the company was negatively impacted by an unplanned outage at its Clear Lake complex due to a fire at a carbon monoxide unit. For more information, see September 21, 2019, market brief - Celanese Plant Suffers Explosion, Fire.

Methanol production was back to full rates as of last week, and production of other chemicals were at partial rates and will remain so until the carbon monoxide unit is repaired in the fourth quarter, Ryerkerk said.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.