Good morning everyone and welcome to Celanese Second Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Surabhi Varshney, Vice President of Investor Relations. Ma'am Please go ahead.

Thank you, Jamie. Welcome to the Celanese Corporation second quarter 2017 earnings conference call. My name is Surabhi Varshney, Vice President, Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; Chris Jensen, Chief Financial Officer; Scott Sutton, Chief Operating Officer; and Pat Quarles, President Acetyls Chain. Celanese Corporation's second quarter 2017 earnings release was distributed via Business Wire yesterday after market closed. 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 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 our 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 with the press release and on our website in the Investor Relations section under Financial Information. The earnings release and non-GAAP reconciliations have been submitted to the SEC on a Form 8-K. The slides and prepared comments have also been submitted to the SEC on a separate Form 8-K. This morning, we'll begin with introductory comments from Mark Rohr and then open-up for your questions. I'd now like to turn the call over to Mark now.

Thank you, Surabhi, and welcome to everyone listening in today. We have posted our prepared remarks along with earnings yesterday, so I'll limit my comments and then open the line for questions. First a few performance highlights. We successfully completed the Clear Lake, Texas site turnaround to repair and upgrade unit operations, on-time, on-budget and injury free. We also made significant progress with SO.F.TER and Nilit integrations and announced an agreement with Blackstone to form a new European-based cellulose acetate company to better support global customers and technology. In the second quarter, we reported GAAP earnings of $1.72 per share and adjusted earnings of $1.79 per share, both second quarter records. In the second quarter, we returned $237 million of cash to investors, with $172 million in share repurchases. By the end of 2017, we expect to have completed $500 million worth of share repurchases. And as you have probably seen, we just announced a new share repurchase authorization of $1.5 billion. The Acetyl Chain income came in at $132 million, that’s 19% higher year-over-year, driven by commercial agility and production flexibility. Product swaps and regular supply chain planning allows Celanese to participate in the market and overtime production limitations at Clear Lake as well as industry supply constraints. Income margin for the Acetyl Chain was 16% driven by pricing improvements. Materials Solutions increased net sales to a record of $709 million in the second quarter, as rapid growth in Advanced Engineered Materials outpaced the decline in acetate tow volume and price. AEM reported a second highest ever segment income of $142 million, 28% higher than the same quarter last year. Volume increased double-digits year-over-year driven by SO.F.TER. and Nilit, organic growth and greater penetration in China. As expected, segment income margin for AEM was 290 basis points lower year-over-year, with integration of recent acquisitions and growth in Asia. The team closed a record of 547 projects in the quarter, allowing us to increase a target for projects close in 2017 by 5% to roughly 2,000. In Consumer Specialties, segment income in the second quarter was $79 million, in line with our previous guidance. Tow price and volume were lower year-over-year driven by reduced industry utilization rates. We expect earnings for the third and fourth quarter 2017 to be around the second quarter level and with 2018 results would be in line with 2017. For the rest of 2017, there are a number of efforts are underway to utilize our unique commercial models and leverage our operational flexibility. Record numbers of projects commercializations and strategies to take advantage of raw material volatility will extend the second quarter success throughout the year. We are therefore increasing our expectations for adjusted earnings per share growth to be in the 9% to 11% range for 2017.

Thank you, Mark. I would like to request our callers to please to limit to one question and a follow-up. Jamie, please open the line for Q&A.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Robert Koort from Goldman Sachs. Please go ahead with your question.

Thanks very much and maybe this would be for Pat, but trying to get some better sense of exactly Mark that you -- so elegantly talked about commercial agility and production flexibility. Can you give us some more specifics on what the heck you did in acetic [indiscernible] stop quite a bit of volatility on pricing in raw there? And then how should we think about that business in the second half? I know earlier in the year you talked about a nice uptick in the second half, is that still something we can expect in acetic?

Let me -- I'll take the last question and Pat, it's -- it's quite better Pat answers your first Bob, but yes, we are seeing trends to that we had hoped to us, that gives us some comfort that we are going to be moving this business up in the third quarter. So, yes, I think that broad trend that we had reflected earlier in the year is there and that’s why we reaffirmed and also upped our guidance just a little bit. But Pat, do you want to talk about the commercial agility?

Sure. Hey, Bob. So, if you think about our priorities, we entered the second quarter, yes, there were a few things in front of us. Our turnaround, priority number one is don’t let it get by hurt as they come on to our side, we had over 1,200 new contractors on the site to help us complete that maintenance work. And we are very proud that the men and women down at Clear Lake, we were able to send those guys back home, everyday safely, so that’s a whole turnaround, that’s a great accomplishment. And of course secondly to meet the commitments that we made to our customers as a leader in Acetyls business globally. And we are able to accomplish that despite the turnaround by a variety of sourcing arrangements and moving of molecules around our systems. So, Mark mentioned, swaps, so we had agreements to co-producers to provide us some products. We actually even uneconomically had to move products out of China and out of Singapore to meet our commitments in the West. So, one of the reasons we talk about this $30 million impact in the second quarter, is related to that commitment to meet our customers' needs, and we were able to get through that without incident. So, that’s really it what sets us up for the improvement as we go in the third quarter, because we just won't -- not only we will not have work going on at Clear Lake, we won't have the inefficiencies of the needs to move those molecules around to meet market requirements.

And Chris, could you tell us what the tax assumption is for second half earning?

Yes, right now, we are assuming it will be the same as what we were using today, which the way we do quarters, it's -- the rate used in the quarters to regular expect for the year.

Our next question comes from Frank Mitsch from Wells Fargo Securities. Please go ahead with your question.

So just to be clear, so following this result of 106 million in AI in Q2 you are expecting continued improvement in Q3. Is that correct off to that number?

You got it, Frank.

And I thought I'd read -- this was last night, I thought I read that you thought a negative impact of the Clear Lake turnaround was close to 30 million, is that right?

Yes, that’s right. I mean the direct is 15 and indirect as Pat talked about the inefficiencies in our system. You can -- and some of that far to net, net of exactly, but so you call another 15 for that.

Alright, so that result in Q2 was constrained by that amount. Alright, terrific. And obviously AEM, nice results there on the -- how would you compare and contrast the organic growth of Celanese relative to the M&A you did? What's the growth been like, if you can parse it out between those two?

Scott, would you mind jump-in on that.

Yes, sure. Frank, if you think about what we did in Q2, I mean for the broad performance, we have M&A contributed, organic growth contributed. Organic growth is still contributed much more than M&A, certainly even more than our affiliates did. So, if I had to break it out to give you just a good view of it, and you look at organic volume growth, again Q2 '17 versus Q2 '16 was about 10% organic volume growth.

Our next question comes from P.J. Juvekar from Citi. Please go ahead with your question. And sir, your line is open.

You guys have done a great job in the AEM business, it's become an envy in the chemical industry. So, what drives this success? Can you talk about your $75 million of R&D, corporate R&D? How much of that goes into this division and how much of that goes towards new product versus say application R&D?

Yes, P.J., this is Mark. Well, let me back on this how about the success with the high low for just a minute, and Scott probably would watch the wedding on this as well. What I would say, we’ve done extremely well as we’ve really married the technology and commerce with our customers. So, we look at that having sort of multiple people in that box that are making decisions on a real-time basis when we pursue. And we have a lot of flexibility within our technology and sales groups to make sure that we are putting all the resources that accompany behind delivering on those things we say we are going to do P.J. So imagine the full force and the weight of selling these whenever we commit to the project A, B or C for our Ford or whoever we are working with, then we get it done right now. And so I think that’s the power, the inherent power, the model. From a technology point of view, most of our technology goes into in the AEM, mostly spinning the floor behind and it's largely developmental spending. So, I think if you use the industry standards, 85.15 or 90.10, there’s a small portion that’s going in futuristic work, but most of it is addressing contemporary things before us. Scott, do you want to add something to that or?

Yes, Mark I mean the only thing I would add to all that, permanently correct. I would just say that P.J., our go-to-market strategy is quite differentiated and we are really able to drag a lot of complexity out of customers and handle all these projects and find solutions that they might not otherwise be able to find, and certainly can’t find from a single supplier, and move that complexity to our side of the house and manage it well, and that really is the competitive advantage.

Thank you. And after acetate goes into this JV with Blackstone, what is the long-term future of the acetate into immediate business, Mark? And would you be looking to do a similar back the efficient deal in the future, if an opportunity comes?

Yes, that quite answers of your first question. I mean I think when we look at putting these two businesses together, P.J., what we really will have in place is we will have a business that can really focus on the tremendous amount of changes underway in the tow industry, much of which is promoting the use of more sophisticated tow materials of cellulose acetate material as well as new technology out there to find uses for cellulose acetate, some of which we -- we're pretty excited about. And I think our partners Blackstone also have something to be excited about, so that marriage of those things gives us a chance to create truly a sustainable business model. Out of that, we expect that model to continue to contribute earnings to Celanese and we expect to continue to see high levels of free cash flow generation. And in some time, we think it will be a standalone entity that will have all the strength and power that should have in a standalone entity. What we do that again? Sure. I mean I think it’s -- we already feel like we have got -- we have three number one businesses as we like to say. And if there’s a way in the chain business, we could bring in other assets of businesses and find ways to key it up to grow with the kind of pace we expect it to grow. We'd absolutely do that.

Our next question comes from Duffy Fischer from Barclays. Please go ahead with your question.

Two quick questions. One for Scott, on that 10% organic growth, the incremental margins on that, is that keeping pace with segment average?

Yes, hi Duffy and it is. I mean if you boil it down and you take out affiliates and you take out M&A, you would actually find that our margin in Q2 of '17 is a little bit better than our underlying margin in Q2 of '16. So, it's absolutely keeping pace.

And then just a second one, on the commodity side of the acidic. How do you guys see the cycle today, I mean, it's been a long time that we have been at a relative trough? Next three years, is there a chance that we can start getting some tighter operating rates and actually start to see a cycle in acidic acid?

Now, Duffy, you know we don’t talk about the business as the commodity business.

There are some commodity parts probably not yours.

Yes, as I have always said, China, we know, China is structurally over supplied in such a large way. So I'm not going to tell you, you are going to have this global tightening. And what we have to do to manage between the differentiations that we have in our cost structure between the three acid units around the world, and tie those together in a way in which we can capture a value as it presents to itself quickly. And that’s how we have to do it Duffy. I am not going to tell you that demand is going to certainly overcome or the supply coming out of China. It's not going to unfold that way. We are working hard in China to try and to drive conversations and outcomes that might put the supply side in a more sustainable position. But that also is a complicated process given the nature of China.

Our next question comes from David Begleiter from Deutsche Bank. Please go ahead with your question.

Mark and Pat on the same issue on China. I see you just announced some price increases earlier I guess last week in China. Is that a sign of any underlying strength in the Chinese market or maybe you can comment on the reasons for that Chinese price increase in acid deals?

Yes, thanks. It's really building out the comment I just made being quick. There is some interesting things going on inside China today that presented an opportunity for us to drive some value. And on the VAM business for instance and I talked last quarter about the implication of high ethylene price on our ability to compete versus the carbide suppliers in the first quarter and how we backed away from the market. That situation did reverse as we got into the second quarter. It allowed us to reengage with the market. As we sit today in addition to that competitiveness, we also see some supply outages. You got a lot of rain in central China that's driving difficulty getting product down the Yanji and to the coastal market, that’s providing an opportunity for us to drive value as well. And as those opportunities present themselves, we will really jump on it. And I would say similarly with acid where we're monitoring kind of what the supply dynamics are and when we will see something, we are going to jump on it. It may not last -- it may not last to quarter, it may not last to month, but as it last we are going to go grab it.

And Scott just in your business, how do you stand in the dynamic of price versus was raw in your business is AEM?

David, I mean, we are raising price in some specific areas and having some success at doing that. I mean you know go back to my earlier comment that there was actually a little bit of margin expansion taken out of M&A and affiliates and so forth. But I mean we are able to do that and we specifically been successful at raising price in China on some of our larger products.

Our next question comes from Mike Sison from KeyBanc. Please go ahead with your question.

In AEM, you talked about margins being lower year-over-year largely from acquisitions. Was there any squeeze from raw materials or were you able to kind of offset those with pricing?

Yes, so Mike and this is Scott. We do have that margin decline when you drove in all the M&A, that’s really what we’ve reduced it some. There is a little bit of margin squeeze going on, but we have been successful at raising price in certain areas particularly in China preference to previous comment. So, I mean we are able to come back that and that’s why you don’t see a squeeze in the underlying business.

Okay, great. And then Mark just in general acquisition for AEM. How is the pipeline, any particular areas in the plastics rope that you see exciting now going forward and maybe given the balance sheet position, any opportunities to look at something bigger?

Well, let me start with the background there. We feel pretty good about the pipeline. I will say that, that we thought that we had a couple of deals we are working and pulled away from is again, no reason other than the ownership is to elect not to sell. This sets us back just a little bit, but we have a number of indicative offers out that out there now that we are discussing to try to see close on some deals here. So, we are working that hard as we said, and you know Mike, we have made the comment that we need to -- there needs to be a continuation for us I think to continue to expand our business profile and market reach and access, so we can imply our sales to keep this growth going. So, we are working hard. We feel pretty good about the pipeline. And that’s really helped be in position to announce something we just can’t quite do that now.

Our next question comes from Jeff Zekauskas from JP Morgan. Please go ahead with your question.

When you described your acetate tow joint venture with Blackstone, you talked about it being accretive by $0.50 or $0.75 a share a few years down the road. Did those accretions calculation assume that there are no divestitures?

Yes, they assume no divestitures.

Okay. And second, your AI business did really nicely on a sequential basis maybe in EBITDA you are up 23 million. Can you talk about whether that came from Europe or the United States or Asia and/or what the weight for sequentially? And was it more of a VAM phenomenal or acid phenomenal, can you give us some color?

Well, we did here just a little bit. I mean our business predominantly from a profit value point of view is on our just side be Atlantic. So, generically speaking, that’s where the really value equation is driven. So, it’s almost always a case. We’re seeing the biggest uplift in that area. Pat, you want to comment just broadly directionally on how you saw that unfold?

Sure, yes. Jeff, I think acid and VAM both went in the right direction obviously to get that result almost equally, globally. Mark is right of course, we do made most of our money in the west. We did have a change in the circumstance for VAM specifically 1Q to 2Q, which I have mentioned earlier right. So, we did reenter and versus second quarter we did better in VAM than we did in the prior quarter. That was a sequential kind of a differential market driven improvement. Otherwise, I would say you just had that environment because of what we were doing in the market and impact to the outages that allowed general market inflation throughout.

Our next question comes from Laurence Alexander from Jefferies. Please go ahead with your question.

Just want to follow up on the discussion about the competitive dynamics in China and the degree to which they are being -- disciplined being forced on them by weather related issues. In the past you have suggested that there may have been an emerging trend of better just competitor disciplined in the region. Are you still seeing that or is that reversing?

Yes, I'm not sure I am okay drive that is supplier disciplined. I think the conversation we have had before was there were indications that these units that are kind of structurally impaired to use the technical term because they're just oversupplied in the challenges we all see in margin is leading people to consider option for rationalization or consolidation. But it's just hard to get that done in China, but it’s a start, right. If guys have social obligations beyond just financial, it's different than the way we think. And so they have to work these things through. So that’s what I was speaking to during the last call. And I would say those things still exists, it's just a process. And kind of here and now, the weather impact and so forth is that -- I would say that just as very reflective of the nature of our business that it hinges on people's ability to continuously run and meet market demand and the changing economics that happened inside China and our ability to manage our system around it to capitalize on that volatility.

And then secondly just on the increased number of projects that you are running. Is the average size of the project -- is it shrinking?

Lawrence, this is Scott. The average size really isn’t coming down that much, but what I will say is that with the acquisitions you do find that they have an initial smaller size project going into there. So, it's possible that the number comes down for a while, right. But then we get the cross synergies we pick up other projects, so it's sort of a temporary phenomenon, it's not a major concern.

Our next question comes from John Roberts from UBS. Please go ahead with your question.

Your implied back half guidance doesn’t seem to be all that different from were consensuses. Was it the start of the year, in spite of having a pretty good first quarter and second quarter? Or is there a key risk that you want to highlight for the second half of the year?

Well, I think I've gotten since up from what we have been saying, there mathematically, John, you are probably, right. But we think we are promoting to pushing up our guidance and our earnings in the second half of the year, which is what our original premise was, more robust outage as you may recall there. Key risk to I think really when you push in this kind of level with earnings, it's that business gets weak in the fourth quarter for some reason, we can't predict. That’s, I mean, that’s always a risk when you get into this from a trend point of view, that 9% to 11% we believe is fair. And we think -- from our point of view, we think that’s an improvement we try to signal improvement than we were before.

Our next question comes from Arun Viswanathan from RBC Capital Markets. Please go ahead with your question.

Just a question on consumer specialties. You had a little bit of a downtick there. What’s the new outlook for the remainder of the year and next year? Have you found potentially a base line there? Thanks.

Yes, Arun, we believe where we are now is roughly a baseline and of course we went through it as we had advertised that step down, it was going to occur in the second quarter so you have seen that. We will continually work to try to tune that up a bit by ways we can impact those earnings, and we’ll need to a little bit to be flat year-over-year. But we expect that run rate that you're seeing now as those good numbers ending to run out through this year.

And then as a follow-up I mean methanol cost potentially could be coming down in the second half. It’s already come down a little bit. How does that affect your ability to go out and get price in some of the derivatives? And what gives you the confidence that [IAL] will continue to go up in that environment? Thanks.

Yes, this is Pat. I think the way fair price methanol is that’s going to be volatile and it’s very difficult particularly in the second half of the year to have a strong outlook in which way it’s going. If I appreciate, it's right. We’ve been talking about MTO coming on stream in China on the coast buying 3 million to 4 million tons a year of new methanol demand. And that’s kind of matched against their ethylene and polyethylene alternatives. And with the way now it's coming, you have got coast. You know, candidly, I think it’s just a question mark as to how that plays through in the coming months. One thing we would anticipate is just the volatility piece of it. So, we have positioned ourselves on both sides of it to be prepared to drive either operationally or pricing margin-wise to get the best out of -- out of that volatility that we can. It’s going to be somewhat interesting to watch in these coming months as to how these dynamics play out.

Our next question comes from Hassan Ahmed from Alembic Global. Please go ahead with your question.

Mark, you talked a bit about the margin erosion on the AEM side of things and obviously not surprisingly it’s coming on the back of some of these acquisitions that you have made. My question basically is that again in your prepared remarks you talked about recovering some of that margin erosion from synergies. So, I am just trying to figure out where we’ll end up in terms of run rate margins, once those synergies are captured? Should we think mid 30s, high 30s, mid even back to 40% plus levels?

Well, with what several 100 basis points from a dilutive effect of this which it will come into portfolio, we were very open about that process. These companies we are buying have margin levels of roughly half of ours. So our strategy is to oversee the times to get those levels up to our existing levels. So, you expect, if we did any other acquisitions relatively push that margin back up over some period of time. If on the other hand, we are continuing to roll in acquisitions like this on annualized basis, I think you are going to see numbers more like where we are now. In other words, if there’s always a dilutive impact on a new term basis that we haven’t recovered, you won’t be able to push it out. So, I think somewhere between where we were and what we are today, is the long-term average for our company, but near term is going to be closer to this level.

Understood, understood. And then as a follow-up, you’ve talked about at least in the near term your expectations for some volatility in methanol pricing. As you look at your portfolio now, I know back in the day you talked potentially another methanol plant. But seeing some of this recent volatility, the influx of some of these MTO plant in the Lake, where do you guys stand now with regards to your global position in methanol? Would you sort of consider another methanol plant particularly as your cash flow continuous to improve?

Well, I think it's not -- it's not a top of our list where we'd like to invest our money today. We like high methanol prices, but we also like methanol volatility and we think certainly the coastal MTO facilities out there created the helm of that volatility. So net, net that’s good for us. So right now, we are not taking our position on that, we are just watching that market and continue to consider it. If there were to be another investment, we will probably watch our company to do it, but right now it's not very high on our list.

And our next question comes from Jim Sheehan from SunTrust Robinson Humphrey. Please go ahead with your question.

Can you talk about the process with the JV? Are you referenced that you are preparing to carve some assets out in preparation for that joint venture and making your contribution to it? How long do you think that process might take? And can you give ballpark for when you think that deal might close?

I think, Jim, we understand with given some specific dates, we're just really getting started in this process. So, I think if you'll be a little bit patient, we will share more of that probably in October timeframe after we're fully in it and have the ability to maybe to get a sense of the pace people are working out and things like that. The carve out process is just some of the many things we have got to do to prepare our assets, I mean, to compare ourselves as this transfer our assets into the new JV. So that process is a multi-month process and it will probably take us to the end of this year or next to complete.

Hey, Jim, this is Chris. Let me just add to that. When we said carve out in this particular transaction, this is not complicated from a physical asset separation perspective. We are really talking about systems processes and legal entity and tax structures.

And could you give us an update on your thoughts on portfolio management? There is a lot of global assets for sale, under what circumstances might you consider some transformational M&A? And in the context to that, do you consider the Acetyl Chain core to your business?

I am sorry can you ask that one more time.

Sure, Mark, I'm just wondering if you could update us on your thoughts on the portfolio in terms of whether you will consider larger M&A transformational deals, whether you will consider breaking up the Company? Is Acetyl Chain something that you considered to be core or would you consider different structure to create shareholder value?

Well, like we said outline, our purpose here is to create shareholder value, so we don’t look at ourselves as being constrained in any way to do that. We also said we are not going to do anything that’s coactively stupid or anything that destroy shareholder value. So, if you look at the deal we just did, as a sad part of that if selling these taken a position to sell that assets, let's say, the net of that probably would have been about the level of this dividend that we received. So, we've structured the deal in a way that's going to have a tremendous shareholder value creation as a result of it net, net. And you are taking what was already arguably one of the best, if not the best cellulose acetate business in the world, and you're making it even better by combining those two great businesses. So that kind of structure, would we do that again and again? Sure we would. It’s not easy to do but we certainly would. We believe that Materials is best-in-class in terms of the solution base formulas that we have. We have more bandwidth on our molecules than anyone else in that space and we have ways to continue to grow that. We would like to do a bigger deal in that space absolutely if do we find one to fit. If you look at the chain business, the chain business is awesome. At a time where no one can look at the industry metrics and believe you are able to generate this kind of margin off of that business, we continue to do it because of the unique nature and differentiated nature of that business. There are also ways we can expand that. So I think what you're happier selling these as you have a leadership team that’s fully driven to create shareholder value, and we don’t feel like we have constrained anywhere to do that. But we don’t want to do just bust down for the sake of buying it nor sell something just for the sake of doing it. It’s got to really translate in incremental shareholder value or we can’t do it.

Our next question comes from Vincent Andrews from Morgan Stanley. Please go ahead with your question.

Even more specific follow-up on this line of question. Mark, you've referenced you said last year I think at a conference said, if you were to separate the business unit, there would be it think a $125 million to $150 million of biz synergies specifically from raw materials and logistics. And you went onto say that the tax implications would be more substantial, which I took to mean more than 125 to 150. So could you just update us, if those are the right numbers to think about and what the tax complexity be, maybe in a range as well? Thanks.

Yes, so we continue to work on pulling those numbers down a bit. But on a gross level, the way I would look at it is, it has a negative present value somewhere between $1 billion and $1.4 billion, if you look at it from an impact to cash flow kind of basis. And, Chris, I don’t know if you want to add anything more to that?

Yes, Vincent, I would tell you the number Mark just threw out there and what we have talked about on run rate basis does include tax impacts. And we have done a lot of work over the last couple of years to actually minimize what those otherwise would be.

Okay. And Chris just a follow-up for you, I think your free cash flow guidance I think before was at least 850 and now I guess around 850 CapEx is the same. So is there a working capital issue or cash taxes or what’s creating that?

Our intention was not to signal if any difference than where we were last quarter.

Our next question comes from Aleksey Yefremov from Nomura Instinet. Please go ahead with your question.

Good morning thank you. You provided overall profit guidance for the consumer business. Could you give us some thoughts separately on your outlook for pricing and volume? Do you have any visibility on either one of these components?

Yes, in terms of what business please?

As our filter tow business.

Well, I mean look as Mark said, right, we think that there is a base line that we sort of hit and you should see that going forwards. So there is likely to be fairly consistent volumes going forward a little bit of potential price degradation that we are able to offset here going forward. It is still a really competitive industry. But net, net earnings sort of stabilizing

And question for Pat on methanol. I know you mentioned your prior view of tightening methanol market the essential projects. Why did that tightness not happen? And what is your I guess longer term view you mentioned also more volatility in the near term, do you think as we look out next 12, 24 months, do we still have a tight market or somewhere in the balanced region?

I think we made from what we are anticipating. We are absolutely seeing the new demand coming. I mentioned about 4 million tons in new demand associated with MTO on the China coast. So that is they are structurally. But the volatility dynamic now is the choices that they make economically between their ethylene and by ethylene alternatives. So that’s why structurally I think the market is in a better place than it used to be. And yes the volatility is going to be the principal driver because we have so much demand now tied to basically the ethylene or C2 chain versus just a straight Q1 chain. And that’s a new dynamic for this business.

Our next question comes from Ghansham Panjabi form Robert W. Baird. Please go ahead with your question.

This is actually Mehul Dalia sitting in from Ghansham, how are you doing. In AEM, you are increasing the number of projects to 2017. Is that particularly due to the cost pollination from recent acquisitions? Or is there any particular end market that is perhaps doing better from an adoption standpoint than you thought initially?

This is Scott. Look, I mean, it's really not about a specific end market, right. As an example Q2, right, we grew business in every single end market, it's more about improving the business model, getting more out of the organic business, continuing to enhance the acquisitions that we made, so it's very broad base. It's the best way I can answer that question.

In previous calls you have given some parameters for AEM in 2012 in terms of EPS contribution year-over-year. Can you give us any update on that, if there is any?

So, this is Scott again. It's really not a significant change to the guidance we gave before, but what we will say is that we are operating out on the ins of those. You see Acetyl is certainly pushing the upper limited and will -- engineered materials will push the upper limit like we are working hard to keep tow within the guidance we gave you before.

[Operator Instructions] Our next question comes from Kevin McCarthy from Vertical Research Partners. Please go ahead with your question.

My question relates to Ibn Sina. I think you are in testing phase there on the incremental POM capacity in the second week of June. Have you transitioned to commercial production? And related to that, would you give us an update on the likely timing of the step up in your ownership interest to 32.5% please?

Sure, Kevin. This is Scott. Yes, we really moved beyond the testing phase. We are in commercial start up now. We have made some material. It's not fully running at commercial rate. So there is still little bit more work to do here in the third quarter. Well, I won't give a specific time on our equity interest step up that will be some time in the period of the fourth quarter just too contractual lag effects that happens. There is still some milestones to go with getting fully in commercial production at POM.

Great. And then with regard to your AEM segment as a whole. What your stand on end used market mix particularly automotive mix in the wake of your two acquisitions? And maybe you could speak more broadly about how you would expect end used market mix as well as geographic mix to evolve over the next year or two?

Yes, so this is Scott, right. I will start with geographic question first. I mean we are growing Asia much more rapidly than we are growing the Americas and Europe, though the Americas and Europe are both growing. So one day that’s going to mix out to sort of one-third, one-third, one-third, it’s not quite there yet. In terms of the market segment, I mean auto is still our largest market segment but as we said before it’s come down quite a lot. I mean you can think of it in the range of a third or just over. There are other segments that are growing more rapidly forth. We are growing in every single segment but if you look at energy storage, consumer products, and particularly medical, that’s where we are seeing some of the higher growth rates.

Yes, building on that. If you look at -- just a little bit on that, if you look at although, you’ve seen numbers quarter-to-quarter 10% drop in Germany and yes we are still seeing our volume hold go up in those cases. So, we don’t look at it as markets as much as with the applications and technology. That’s how we persist.

And ladies and gentlemen, I am showing no additional questions. I would like to turn the conference call back over to Ms. Varshney for any closing remarks.

Thank you, Jamie. And thanks everybody for your questions and for listening in this morning. We will be around, if you have any further questions after the call. Jamie, I will turn the call back to you now.

And ladies and gentlemen, with that we will conclude today’s conference call. We do thank you for attending today’s presentation. You may now disconnect your lines.