Celanese To Shut Down Mexico Facility To Reduce Fixed Costs
Zacks Investment Research | Jul 01, 2019 08:25AM ET
Celanese Corporation (NYSE:CE) recently announced further consolidation of production operations of its global acetate manufacturing operations by shutting the production facility in Ocotlan, Jalisco, Mexico. The move is aimed to strengthen the company’s competitive position, align production capacities with expected industry demand and reduce fixed costs.
In June 2018, the company stated that it will cease the production of acetate tow at the Ocotlan facility. Now, Celanese will also discontinue production of acetate flake at the facility, essentially shutting all production operations at the site by Oct 31, 2019.
Per management, manufacturers in China are undertaking plans to boost acetate flake capacity in 2020. As such, the demand for imported flake is likely to decline considerably. This along with the company’s ability to source additional volumes from the Narrows, VA site, supports the decision of completely shutting operations at the Ocotlan facility. Moreover, the decision enables the company to optimize cost and footprint, which are part of the long-term strategy for acetate business for maintaining competitive position in the market.
Notably, the company has undertaken steps to strengthen competitive position in the acetate tow market. Initiatives like reducing fixed costs, lowering raw materials cost and aligning with demand trends have enabled the company to achieve the same.
Celanese’s shares have lost 3.2% in the past year, against the Original post
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