Celanese Corporation (CE - Free Report) recently announced that it has launched a new Regulated Product (RP) category to better support the producers of tobacco products for U.S. consumers. Notably, the producers have been facing an increasingly complex and challenging regulatory environment. Per the company, the new category will encompass all acetate tow grades used in tobacco products sold in the United States.
The company will hike prices of all acetate tow products in the RP category by $1 per kg. This will be applied to all orders shipped on or after Jul 1, or as contracts permit.
Celanese will make investments to increase the level of regulatory support for the RP category. It will also improve product testing and end-to-end raw material and product traceability capabilities. The company expects further investments to gradually shift to a manufacturing process in line with Good Manufacturing Practices or future guidance specific to the tobacco industry.
Moreover, acetate tow products in the RP category will be supported by long-term supply obligations with regards to acetate tow security of supply and the sourcing of critical raw materials.
According to Celanese, FDA regulation of tobacco products in the United States has established a unique set of requirements for customers, which is not expected to ease in the near future. The launch of the RP category will enable the company to ensure that those specific requirements for tobacco products are met.
Notably, Celanese will not immediately change any existing commercial deals with its customers or alter its current acetate tow product offerings. The company will work with the affected customers to modify their agreements to meet the product and regulatory needs through the RP category.
Celanese’s shares have gained 12.6% in the past three months, outperforming the industry’s 3.5% rise.
Zacks Rank & Other Stocks to Consider
Celanese currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks worth considering in the basic materials space are The Chemours Company (CC - Free Report) , FMC Corporation (FMC - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained 33.6% in a year.
FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 19.4% in a year.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 66.9% in a year.
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