Celanese CEO says 'sluggish' global demand weighs on acetyl chain

US-based chemicals producer Celanese Corp. cited "continued sluggish global demand" as the primary factor weighing on the acetyls chain, CEO Scott Richardson said on the company's first-quarter earnings call May 6.

Richardson said consumption levels for paints, coatings, and adhesives in the Western Hemisphere are at "historic" lows, which is weighing heavily on demand for chemicals used in construction applications.

Should demand continue to weaken, Celanese would "reduce inventory," as well as operating rates, to compensate, Richardson said.

The company, which posted a net loss of $17 million in Q1, has not seen a significant impact from US tariffs, Richardson said, adding that Celanese's business model allows for a high degree of flexibility among regions.

"The scenario we've seen materialize is not unlike what we saw in the acetyl business in the 2008-2009 economic crisis, where demand fell extremely quickly and new supply came online in China," Richardson said.

Overcapacity in the acetyls chain is "contained in Asia today," Richardson said, adding that Celanese has moved its business model further downstream to adjust.

Celanese is "closely watching" falling oil prices, which typically results in weaker demand for most of the company's end-uses.

On a global basis, 65% of the company's acetyls sales are "not acetic acid or vinyl acetate monomer," Richardson said, but he did not specify what comprised the majority of sales.

Despite such weakness in consumption, Richardson said Celanese is "well-positioned" due to the company's flexible nature across regions, adding that margins in the Western Hemisphere have been relatively stable.

Platts, part of S&P Global Commodity Insights, last assessed acetic acid at $583/mt FOB US Gulf Coast May 1, stable week over week. Spot VAM was assessed at $1,115/mt FOB USG, also stable with the week prior.

Sources have said that demand-driving downstream markets, such as resins, coatings, adhesives, and sealants, have been suffering from a weak market environment and economic challenges.