Jon Puckett - VP, IR Mark Rohr - Chairman and Chief Executive Officer Chris Jensen - Senior Vice President, Finance.

Laurence Alexander - Jefferies Duffy Fisher - Barclays John McNulty - Credit Suisse David Begleiter - Deutsche Bank Frank Mitsch - Wells Fargo Kevin McCarthy - Merrill Lynch Bob Koort - Goldman Sachs Vincent Andrews - Morgan Stanley Jeff Zekauskas - JPMorgan PJ Juvekar - Citi Hassan Ahmed - Alembic Global.

Good morning, and welcome to the Celanese First Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jon Puckett. Please go ahead..

Thanks Drew. Welcome to the Celanese Corporation first quarter 2015 conference call. My name is Jon Puckett, Vice President of Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; and Chris Jensen, Senior Vice President, Finance.

The Celanese Corporation first quarter 2015 earnings release was distributed via Business Wire yesterday after market close. The slides for the call and our prepared comments for the quarter were also posted on our website, www.celanese.com, in the Investor Relations section.

As a reminder, some of the matters discussed today are and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation’s future objectives and results. Please note the cautionary language contained in the posted slides.

Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included on our website in the Investor Relations section under Financial Information.

The earnings release, non-GAAP reconciliations, presentation and prepared comments have been submitted to the SEC in a current report on Form 8-K. This morning, we will begin with introductory comments from Mark Rohr, and then we will field your questions. I’d now like to turn the call over to Mark..

Thanks Jon; and good morning to everyone. Our prepared remarks were released with earnings, so I'll keep my comments fairly brief and then open the line for your questions. Over the last several years we have driven record earnings by building capability to support our core value generated propositions, the Acetyl Chain and Material Solutions.

We’re now taking additional steps to better align all of Celanese in support of these two value drivers. In the Acetyl Chain we created value by leveraging the fully integrated and industry leading technology across an unmatched global platform to supply acetic acid and derivatives.

This business is uniquely positioned to rapidly respond to market needs to best support global trade flows in a sort of a very broad array of customers, and in doing so we distanced ourselves from others in this space.

In Material Solutions, our foundation of chemistry and polymerization technology is combined with leading application expertise and deep customer engagement to create products and applications for diverse and highly valued end markets.

These two business cores are made even more successful by sharing technology, production assets and research resources, allowing us to be more responsive to market needs while operating at lower cost than others.

Our growth strategy has been based upon these two value equations since late 2012 and since then we have delivered double digit year-over-year quarterly earnings growth for eight over the last ten quarters.

So, organizing more completely around these cores is the next logical step to bring further gains and efficiency and higher earnings for our shareholders. Now let’s move on to consolidated results.

I am very pleased to report first quarter adjusted earnings of $1.72 per share representing a 34% earnings growth sequentially and 29% growth year-over-year.

This record quarterly performance also reflect the swift actions taken to help address the impact of raw material deflation, the precipitous falling of foreign exchange rates as well as anemic growth in some of our end markets. Our teams did a tremendous job of maintaining the pricing in the face of significantly lower raw material cost.

We also successfully offset a significant decline in the euro to dollar exchange rate with productivity programs as well as lower energy cost, and we expanded our adjusted EBIT margin to 24.1%, a quarterly record and an increase of more than 600 basis points from the prior quarter and the prior year.

I’d like to thank all of our global teams who worked so hard and deliver these results amidst a challenging business environment. As we look to the remainder of 2015 some of these headwinds we outlined last quarter have increased. For instance the euro has weakened roughly another $0.07 to $0.08 since January.

We also expect lower MTBE prices of Ibn Sina joint venture will impact affiliate earnings for the remainder of 2015. However, our building the first quarter to mitigate these and other headwinds to strong commercial performance along with specific productivity initiatives gives us confidence and we can manage this volatility going forward.

And as a result we have increased our 2015 outlook for adjusted earnings to a range of $5.60 to $5.90 per share. With that, I’ll now turn it over to Jon for Q&A.

Thanks Mark. We’ve got a lot of folks on the line. We want to get to as many questions as we can, so please limit your questions to one question and one follow up and Drew, I will turn it over to you now..

[Operator Instructions] At this time we will pause momentarily to assemble our roster. The first question comes from Laurence Alexander of Jefferies. Please go ahead..

Good morning. Just two quick ones.

Can you quantify your total FX assumption that you're looking as a headwind for this year? And have you seen any noticeable acceleration in any regions in your end markets?.

On the currency for the remainder of the year it’s probably it’s more in the $0.60 to $0.70 range and that would the assumption driving that would be €1 with $1.05 for the second, third and fourth quarters. And then, Mark you want to cover the acceleration in end markets..

Yes I’d say that’s a hard one Laurence. We are seeing certainly Europe is doing better and we’re seeing some enthusiasm on the part of European car manufacturers and it’s a pretty strong growth. I think Germany was up 7% year-over-year for instance and although it’s a pretty strong growth.

We’ve seen China come back a bit from what was a very anemic first two months of the year and that’s been encouraging as well. So I’d call up those two areas, Lawrence..

Okay, thanks. And just to clarify the FX hedge.

What was the FX hitting Q1 then?.

15 to 20..

Yes $15 million to $20 million, so that’s it..

Okay, thanks..

Okay, thanks Laurence. Drew, let’s move to the next..

The next question comes from Duffy Fisher from Barclays. Please go ahead..

Yes, good morning congratulations guys..

Thanks, Duff..

The thing that investors have been focused on over the last quarter is the tow business and kind of the destocking. Volumes seem to have come down about what you guys were projecting.

Did the underlying business perform as you would have thought in that environment? And what kind of signals are you getting from your end customers about how that destocking is going and when we might see that abate?.

Yes Duffy great question. We communicated a lot in January of course end of last year as we ended last year and into January, about this destocking initiative and the results that we have seen in January are exactly as I mean as close as you can be exact, but best could reflect the outlook given to us by our customers.

And so we feel pretty good about that, and I think that’s consistent with our destocking initiatives based on what we knew about their end markets. If you roll it forward we’re seeing some improvement as we enter into the second quarter which again was consistent with improvement in terms of our orders, which is consistent – what they had told us.

So we continue to predict that we are going to have this first half impact, the first quarter being the most dramatic impact and get back to more normalized rates as we hit the back half of the year..

Great, thanks.

And then assuming let’s just say we hit the midpoint of the guidance for the year that $5.75 and then look into 2016, is that a good base line into building into next year or might there be some kind of transitory spread benefit in that $5.75 that we need to mitigate a little bit as we get into next year?.

Yes I’m not sure we have the answer to that question Duffy..

I think Duffy you are asking about puts and takes as we would enter next year….

Yes moving into next year..

And you know as we outlined at the beginning of this year, we tried to be as real transparent about what headwinds we would have. And so, Mark, I'll let you clean this up but wherever we end the year is going to be a basis to how we build the next year.

And so, you know Duffy and we’ll try to highlight what we think is a headwind and what we think might be either a tailwind or an action item that we are pursuing to try to drive growth..

Yes I think Duffy I would – not going up too far on this, but I would expect 2016 as a lot better year than 2015 if you, then we’ll have resolved methanol will be, you know that would be fully behind us and fully functioning.

And it looks like with the steps we’ve taken that that headwind as we let folks know last year will have been mitigated as we get into next year for the most part you would expect that there is some inflations starting to occur and if this year is marked by deflation that will be back side to that and so there will be some inflation.

Inflation is probably good for us and we’ll be operating more fully around these two cores which is going to generate a lot of new opportunity for us. So my belief is it’s a good foundation and my belief is there will be a lot more tailwinds and headwinds as we go towards 2016..

Terrific. Thank you guys..

Thanks, Duffy. Drew, let’s move to the next question..

The next question comes from John McNulty of Credit Suisse. Please go ahead..

Yes, good morning. Thanks for taking my question. With regard to the new segmentation, the Materials Solutions and Acetyl Chain segmenting I understand the customer focus aspect of it for the Materials Solutions part. But I guess it appears that all four of these assets are pretty well integrated into the Acetyl Chain.

So, I guess how did you decide on where to make the cut in terms of say, putting Industrial Specialties in the Acetyl Chain and then maybe keeping consumer and/or AEM out of it, maybe is my first question?.

Well I think what we really have spent our time looking at and we started this actually in 2012 and started practising in 2013 is the ability to lever the interconnected relationships to the raw material chain upto the customers.

And we found that there is a lot more leverage the closer you are to earth, wind and fire than there is with the further down you get. So, that kind of runs not completely but it runs a lot of its course through the emulsions business pretty well.

So that became the nature of drawing a circle around that and we actually drew that circle John a couple of years ago and we’ve been working at.

But what we didn’t do is fully commit ourselves to our an organisational alignment that really would have supported that and that’s the process we are going to now and that’s a lot of unique value options between ourselves and our customers won’t do that..

Okay. And then just as the follow-up, it sounds like the organizational alignment, it all makes sense the way you're laying it out.

Can you talk to the physical alignment of the plants? And do they work in a similar fashion where the Industrial segment and the Acetyl businesses basically kind of all lock together and the Materials Solutions businesses may not be locked to them? Is that how we should think about it or not?.

No you have they are not totally locked. We have some places we have integrated complexes where they are fully integrated and contain all aspects of our portfolio of businesses. Generally speaking when you get past the big Acetyl complexes we have remote plants in the industrial specialities area around the world.

So there is a logistics component associated with this, but that’s also a benefit of the full integration because we quite often would sell products to competitors of ours in these downstream markets. So, we are now ranging swaps, we are now changing that trade flow in a favourable way that’s adding value..

Great. Thanks very much..

Thanks John. Drew, let’s move on.

The next question comes from David Begleiter from Deutsche Bank. Please go ahead..

Thank you.

Mark, on AM, can you discuss your ability to retain more of this pricing in Q2 and beyond as raws have dropped here? And of the $0.30-$0.35 decline you highlighted for Q2 versus Q1 would that be perhaps, two-thirds in AI and one-third in AM?.

Yes so clearly the more speciality oriented the business, the more opportunity you have to retaining margins. So I there is you know it’s never easy but I think directionally retaining raw materials and engineered materials is easier material segments is easier for us to do than just necessarily in Acetyl Chain.

We have some linked quite often with pricing on raw materials. So I think we’ll go a good job retaining it there. If you look at the drop quarter to quarter, Chris you want to comment on that, that $0.30..

From what you – as you go Q1 to Q2, the Q1 to Q2 if you think about the big movers there, so we’ll have better cellulose derivatives volumes like we’ve told you moving towards a nice back half of the year.

There’s the even scene of ventures, so this shows us and the engineered materials segment it’s MTBE and Methanol the earnings you can think of the earnings of that venture being fairly co-related with Brent Crude and we actually reported on a three month lag, so you are going to see a pretty decent size decline on then in the second quarter going through the remainder of the year assuming that Brent stays kind of in this range where it is.

So you’ll have a little bit further currency headwind going in Q1 to Q2 as well and I think you are going to expect the corporate spend that shows up in that other segment to be higher in Q2 than it is in Q1..

So it starts at roughly two thirds, the Acetyl Chain one third the material chain..

And Mark just quickly now that we have these two cores, the natural question is do they belong together longer term given that they will be valued by definitely by investors eventually, how do you think about that situation?.

Well I think you know what I’d say we’ve been practising this for a while and we see ways to unlock more and more value. But with our objective here and we are being very vocal about that is we expect that to be fully realised – the value of this to be fully realized by investors.

And so we are going to work hard to get that full value realization out there and have the investors benefit from that as fully and completely as it is humanly possible. So we are driven to do that David.

And so we hope that as we go through this process that will start to happen and certainly it’s our expectation to continue to drive earnings the way we have been and in that process reduce volatility as well, so we are committed to see that that value is unlocked and realized David..

Thank you..

Thank you..

Thanks David. Drew, let’s move on to the next question..

The next question comes from Frank Mitsch from Wells Fargo. Please go ahead..

Yes good morning and great start to the year fellows..

Thanks Frank..

On the productivity actions you talked about last quarter about $60 million and now you are just talking about an incremental $40 million to $50 million obviously seems rather high.

Can you give us some examples of that and you know what segments we should be monitoring to see those productivity savings?.

Yes Frank, that’s I guess what I would say is look at all of them because they are all working on it. This is a deep focus initiative where all of our general managers and all of our functional leaders are engaged.

Mark is personally involved driving this from the top, lots of iterations or discussions on what we do differently to support this core business model going forward. So you are going to be able as you move through time here to point anywhere and see some benefits from these initiatives..

Right. So across the board is how we should think about that nothing more focussed on this segment or that segment.

All right fine, and then in the release you talked about pricing in the consumer specialities business being down 2% sequentially and also referencing a legacy flake contract having an impact there, can you talk about what’s going on from a raw material and end product pricing perspective in that business and essentially you know prices are sort I guess typically early in the year and that’s it, so we should be thinking about pricing year-over-year being off for the balance of 2015, correct in this segment..

I think that’s right. This is a price mix combination here and so a good chunk of that is mix, you know the effect of the legacy supply arrangement we have and that arrangement is near the end of its, of its term and it kicked up a little bit higher volume this year and so that was a delta then year-over-year more negative.

Pricing was offset at the end of last year and we kind of already commented on that so you are not going to see pricing change Frank in this segment as you go forward. And there’s really not a correlation between pricing and raw materials in this business.

So there’s still opportunities for us to drive a little bit of raw material value enhancement we think as we go through this year that will show up..

Thank you so much..

Thank you..

Well thanks Frank. And Drew, let’s go ahead to the next question..

Next question comes from Kevin McCarthy from Merrill Lynch. Please go ahead..

Good morning. This is [Indiscernible] calling in for Kevin..

Good morning..

Good morning. So you’ve made good progress on free cash flow and deleveraging.

Should we continue to see deleveraging trend to continue and if not how might your capital deployment plans change?.

So like we’ve talked about in the past, we’re highly focussed on strengthening our balance sheet overtime and if you look back to 2014 we did a lot that year. We returned over $400 million of cash to shareholders. We took debt down by somewhere around $230 million and we also put $100 million into this U.S. pension plan which is not fully funded.

That’s what we did last year. That was a pretty high amount of cash outflow to use for that and what was a really good strong cash flow here so it made a lot of sense. We are focussed on doing those things going forward..

So like we’ve talked about in the past, we’re highly focussed on strengthening our balance sheet over time, and if you look back to 2014 we did a lot that year. We returned over $400 million of cash to shareholders. We took debt down by somewhere around $230 million, and we also put $100 million into this U.S. pension plan, which is not really funded.

That’s what we did last year. That was a pretty high amount of cash outflow to use for that in what was a really good strong cash flow year, so it made a lot of sense. We are focussed on doing those things going forward. If you go back to what I said in the prepared remarks, right now a lot of our cash is -- really almost all of our cash is overseas.

And in order to use that cash for U.S. purposes similar to other multinational companies, we have high cash needs in the U.S. returning cash to shareholders, debt reduction, pensions, a lot of cash needs here.

So that makes it difficult to do as much this year as we did last year, not to say that we are not working on ways to do that and we will find ways to do that, but I think you can expect that activity generally to be a little lower this year..

Great, thanks. And a follow up on your Bishop project.

Just wondering how the estimated cost of that would compare to your project at Clear Lake?.

Yes, so it would be more expensive because there is not as much onsite equipment, and the utility systems that we could easily use, so there’s more investment in base facilities in Bishop, but not a lot. So, I think it’s probably -- I’m speaking to you a little bit out of tongue here, a bit of tongue and cheek because we haven’t finalized that work.

But you should think in terms of 10% to 15% or 10% to 20%, not 30% or 40% or 50% if that makes sense. But there is a lot of work yet to do on that. We do have the permit applications underway, but to be very honest, we really want the energy market to settle out a bit.

We want methanol markets to settle out a bit, so you shouldn’t have a view that we are going to start construction on this thing soon.

But we do have a great relationship with Mitsui, we are excited about the partnership here to really evaluate it and we are also very pleased with the long term supply arrangement that we’ve entered into with them over a five-year period, so that should give you some scope or some of the considerations we've got on whether we build or not..

Great. Thank you..

Thank you..

Thanks Wei Vang. Drew, let’s go to the next question..

The next question comes from Bob Koort from Goldman Sachs. Please go ahead..

Thanks very much. Good morning..

Good morning, Bob..

Mark, could you talk a little bit, I guess there was some anxiety maybe as you’ve shut down some of your European assets and actually were shipping into the region that you have transactional challenges you know beyond just the translational issues of currency.

Can you give us an update of how that’s progressed, and then secondly, it looked like you rejiggered a little bit of your agreement with Mitsui at Clear Lake, can you just tell us what the particulars and basis for that was?.

Bob, I’ll take part of that first question, and then I’ll let Mark talk and whatever he’d like to say about our plans in Europe, but I think you’re talking about transaction flows and how that flows through currency. So when we talk about euro exposure, at least three quarters of that is related to that issue where we have production in the U.S.

Also, you have dollar based costs and then you are selling a lot of this product in Europe, so you have Euro revenues. So it’s not any different than we have described it before.

That right now is our business model, and as you’ve seen in spite of having that tremendous headwind in the Euro, the businesses have done a really nice job of these productivity initiatives and their pricing to offset that stuff, but that model is probably here to stay for the foreseeable quarters in terms of the disparity between where we produce and where we sell.

Just that you know, there some offsets to that elsewhere in the business where you have U.S. dollar based revenues and local currency costs and we've actually gotten a little bit help in some other instances to offset some of this, but the big number is the euro..

Yes, Bob, most of these products that were moved from the U.S. to Europe are not produced in Europe by anyone, and certainly not produced in the EU by anyone. And so, everybody has got the same incentive, I think to -- roughly the same incentive to moderate the FX impact.

We pushed really hard in the first quarter to do that and we had really good success. And to be honest, we've not priced in lot of that going forward in this perspective we put out for the year, in part because we did lose volume in some areas and we didn't see as much support by some as we like to see.

So, we're going to continue pushing and hopefully others will do that and that would represent some upside for us for the year if we can be pretty successful over that. With regard to our production facilities in Europe, yeah, we continue to work.

We have phenomenal team in Europe and phenomenal facilities in Europe, some are disadvantages or a main disadvantage even with the change and the favorable change from a European point of view in FX in energy, so we're going to continue to look at what the right footprint is in Europe and work with our employees there to address that over time..

Anything else on Mitsui?.

Mitsui, I think, well the nature of the question is, we have entered this agreement. We're excited about it. We think it gives us access to competitive methanol for the next five years, and that completely –does not completely eradicate the headwind, but we'll take a little bite out of it, but we think over time..

Great. Thank you..

Thanks, Bob..

Thanks Bob. Let's move on to the next question..

The next question comes from Vincent Andrews of Morgan Stanley. Please go ahead..

Thanks. Just kind of a broader question on capital allocation; now that you're buying a lot of the remaining volume that belongs to Mitsui out of the plant that you guy JV'd and you're thinking about building another one.

I guess I'm just trying to understand the point of the JV structure, and I guess maybe I tie that -- you know you've got this $850 million offshore and that's helping your tax rate to be low, so how do we think about decisions you're making on capital allocation versus keeping the tax rate low and how has that all come together?.

Vincent, I'll go back to the Mitsui. So that's a U.S. based venture. We've made decision to build one plant. That plant should be operating around October of this year. And we're also entered into a long-term agreement with Mitsui to evaluate the opportunity to build the second plant in Bishop.

We haven't made a decision to build that, we’re set to evaluate that. And as part of that, we have an agreement to -- supply agreement from the plant at Clear Lake to make up some of the balance -- to make up all the balance we have of methanol. So that's what we have in play.

And so, you should look at this as an announcement we're getting ready to invest another $4 million in Bishop, we have not made that decision yet..

Let me take a crack at the broader capital allocation question as it relates to where our business is and where is our cash. This situation that we're in right now with most of our cash being overseas, it's not new. That's what happens in a multinational business model.

And across time, we have figured out ways to deal with that so that it has not been a constraint in terms to our ability to invest where it made sense for the business to invest. And I expect that we're going to be able to continue to figure that out in the future. So I wouldn't want you to have a view that says we cannot invest in the U.S.

because that cash is overseas, that wouldn't be the way that we look at that..

Yes. I guess my question is really just more like should we be expecting your tax rate to go up over time as you need to repatriate future income, not necessarily the money that's over there.

And I guess I just was thinking on the Clear Lake facility, you know you're now paying Mitsui, for you know presumably a price that's above cost when you could have just been taking that product across yourself if you just own the plants, I just was really trying to understand why the continued desire to JV?.

Let me take the tax rate question first, and what will happen over time. The tax rate is going to go up over time, because we plan to make more money over time and that always pressures your tax rate, because your marginal tax rate is higher than your average tax.

I don't expect in the near term to being repatriating cash and taking a tax hit in order to do that. So, I'm going to separate what you see in tax rate movements from having to do with the cost of repatriating money..

Okay. Thanks very much..

Thank you, Vincent..

Okay. Thanks, Vincent. Let's move to the next one, Drew..

The next question comes from Jeff Zekauskas of JPMorgan. Please go ahead..

Hi, good morning..

Good morning, Jeff..

First question I've got is when you look at your other activities line; I think it was a cost of something like $17 million in this quarter versus $30 million last year, and the number can really bounce around. And I think your depreciation charges this quarter were 60 – I think your D&A were $67 million versus $75 million than year ago.

Can you explain some of those positive variances?.

On other activities, are you referring to the segment is that what you're looking at?.

Yes, that's exactly right..

Yes. So, just as reminder, what's in there, its corporate costs, corporate functions, it has our global pension interest expense, the return on assets for the $2 billion plus that we have invested in the pension plan. So there are numbers of things there that can make that volatile quarter-to-quarter.

So what is it that you saw in the first quarter? So I would say first as we've talked about, we're driving productivity hard and that relates to the functional spend that you see there and that's reflected in the result in the first quarter, but there is also some timing on some favorable items that impacted that.

So, while you'll see some volatility quarter-to-quarter, I think generally you can look for this year and expect that to be somewhere in the mid-20s. Part of that is the timing of our annual merit increases across the company, it happens here in the second quarter..

Okay. And if you could also….

Can you ask the question on depreciation again if you wouldn't mind?.

Yes, exactly. Yes.

I think that depreciation in the quarter was 67, depreciation and amortization was 67 versus 75 in the year-ago period, and maybe that was tilted down by $3 million less than amortization costs, but why should your depreciation go down so much?.

So, I don't have the details in front of me, but part of that is currency. So your entire European assets base is being depreciated and transferred into U.S.

dollars at a different exchange rate?.

Right.

And for my follow-up, just conceptually, is it roughly the case that your adjusted gross profit in the first quarter was more or less equal to your adjusted gross profit in the fourth quarter and that the difference in earnings between the fourth and the first quarter are all the different overhead items through SG&A? Is that roughly correct?.

I don't think I follow what you mean by adjusted gross profit..

In other words if you look at your gross profit, ex non-recurring items, whatever that absolute number was, I thought it was roughly $382 million in the fourth quarter of 2014, and I saw that in this quarter it was roughly $383, is that correct that those two numbers are more or less the same in your opinion or are they very different?.

Yes. I don't have a reconciliation sitting in front of me because we generally don't look at adjusted gross profit. We do that at an EBIT level. But just to remind you what is the driver in general behind gross profit here is the margin expansion that we've had quarter on quarter..

Okay, great. Thank you so much..

Okay. Thanks, Jeff. Drew, let's move to the next question..

The next question comes from PJ Juvekar from Citi. Please go ahead..

Yes. Hi, good morning..

Good morning, PJ..

Good morning..

So, you had a big benefit from lower raw materials in this first quarter especially in Acetyls. So, how much of this benefit is sustainable if Acetyl chain is running at 70% utilization globally.

And then do you think that Acetyls have sort of decoupled from methanol, and as methanol come down Acetyl did not come down as much, and that's driving the profitability.

So can you just talk about sort of that long-term outlook?.

Yes. I think, PJ, it’s a hard question to answer directly. I think there, if you look at what we do is we try to decouple it all the time. We work very hard to move our products in the markets and get a proper return for those products.

And so, we have every time as you know decoupled our contracts and given ourselves more freedom to price and you've seen some of the benefit of that in this first quarter. What we are always dependent on though is for others to be thoughtful about how they price, and generally I would say that well, I'd say some mixed bag right now.

So, if the industry doesn't try and doesn't care about driving margin, it will be hard for us to maintain that.

However, we've been running in 70% capacity utilization for a long time as an industry and you've seen the ability of the industry to drive higher and higher pricing, so my kind of gut is PJ it’s going to be somewhere between replication and nothing as we go through the rest of this year..

Okay. Thank you.

And then, on this new methanol launch in Bishop, what's the rationale there? Do you think that methanol is going to be tight and you'll rather control your own supply? Is that the rationale or is it just that?.

Well the rationale is always just to make money PJ, and what we're trying to say here is we've entered into an – it’s hard to fully evaluate these projects. And so, we've got a great partner in Mitsui who has the same long-term invested interest as ours, which the last think I would do is invest money and not get a great return on it.

So we put together a phenomenal project in Clear Lake that is going to be the -- we think the most cost competitive methanol plant. Certainly, it will be the most cost competitive methanol plant in U.S., and one of the most cost competitive in the world when you look at it from a logistic point of view.

That's going to be a phenomenal investment for us and for Mitsui. And so, what we've agreed to do is to ask ourselves can we replicate that in Bishop. That's what this announcement says. It doesn't say, we've decided to replicate it.

It says that we're going devote ourselves to looking at it, and as part of that process, we entered into five-year agreement, and keywords there, five-year agreement to take some of the volume that Mitsui has out of the Bishop plant and roll it into the Celanese system, and we're doing that in a competitive fashion. So, we want to work with Mitsui.

We want to see if we can develop a project, but we are not committed to it, and we would not do it unless it makes sense, economic sense in a very strong way..

Thank you..

Thank you..

Okay. Thanks, PJ. Drew, let's move on to the next question. Let's have this be the last series of questions..

And the last series of questions will come from Hassan Ahmed from Alembic Global. Please go ahead..

Good morning, Mark..

Good morning, Hassan..

In your guidance, you guys talked about the methanol headwinds being $0.10 to $0.15 lower than what you guys had originally focused.

So now probably part of the reason obviously is lower natural gas prices, but you know in this guidance, what you baking in, in terms of methanol prices?.

Well, we are generally based on lower natural gas, and that's how we ran it..

Fair enough, so because it's….

From a raw material input point of view, remember we gave a range of $75 million to $125 million. And then last, we said, it will be towards lower end of that and now we're saying we're going to be $20 million or so below that, but that's all being driven by natural gas prices and that could be a little worse than that or a little better.

Sure, I mean, it could be, but we're – that how we're doing, just raw material based..

And are you thinking about sort of methanol kind of being relatively flat with where we are right now?.

Yes. I think so..

Fair enough..

And if you take it, we're just taking the marginal difference, so I think that's right..

Fair enough. And as a follow-up, another thing that you talked about on the Clear Lake side of things was that you've increase the staffing numbers obviously to get the plant up and running on time, and you talked about how there’d be some higher costs.

Now you know some of these newer facilities that have come online, I mean we've seen inflation anywhere between 10% to 30%; so just purely ballpark, is it closer to 10% inflation that we’ll see less than that, closer to 30%, just any guidance around that?.

It's closer to 10%. What we're seeing is – we're seeing in pipe fitting and welding crafts. We're seeing an operational of about 80% of efficiency, so that's about 80% of the level of efficiency that we would expect out of those crafts, and so you compensate that by having more men and women there doing the work.

And that’s one of many many trades and one of the many many systems, so we think a 10% range is certainly what we believe and that’s what we are rolling out internally as we look at it..

Super. Thank you so much..

Thank you..

Okay, thanks Hassan and Drew, I’ll let you wrap it up, folks thanks for your time this morning and we’ll be around for calls later today. Have a great day..

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