CEH Report

Table of Contents

Abstract

The global supply of cellulose acetate fibers is dominated by a relatively small number of companies, all of which are producers of cigarette filter tow. Some other companies produce textile fibers, but most have only small capacities compared with tow producers. The number of companies producing both tow and textile fiber has dwindled in the last ten years and continues to do so. Through 2008, only Eastman, Mitsubishi Rayon and SK Chemicals continued to produce both. The announcement in early 2009 of a joint venture between Eastman and SK Chemicals marks the end of textile fiber production in the Republic of Korea when the new Eastman Korea tow plant is opened in 2010. Textile fiber production in the Republic of Korea will be transferred to the Eastman location in the United States.

The worldwide economic slowdown in 2008 and continuing on into 2009 has had a very detrimental effect on the sales of cellulose acetate fiber for textile applications. Some of the smaller producers may have a difficult time staying in business unless the world’s economies make a strong positive turn in 2009 and cellulose acetate uses in apparel and home furnishings applications reverse historical directions. World textile fiber production capacity utilization in 2008 was at a level of 57%. At these levels of plant utilization it is difficult to maintain the viability of the business.

The following pie chart shows world consumption of cellulose acetate fibers:

Tar and nicotine levels in cigarette smoke are being mandated for further reduction in many parts of the world, leading to increased usage of filter tow. Cost reductions in the manufacture of cigarettes, for example smaller circumference, and mandated tar and nicotine reductions bringing about longer filters, continue to move the tow industry to the manufacture of lower total deniers, with a detrimental effect on capacities. Because of the restructuring of the cigarette industry toward lower-denier tow usage, the operating capacities of the tow producers will continue to drop from nameplate capacities. Improvement in dope preparation and the resultant dope quality may lead to slight increases in spinning speed, which will recover spinning capacity.

Areas of the world such as Asia Pacific, CIS, the Middle East and Latin America have had fewer laws and focused opposition to smoking. Most of the developing countries have little or no legislative control of cigarette consumption. While these factors are influencing smoking on a regional level, the expected result on a worldwide basis is that smoking will continue to grow, but at a slightly lower rate. Global cigarette production and consumption are predicted to continue to rise, despite the continued fall in world consumption per capita.