Acetate Tow

Cellulose Acetate market at a global level is expected to decline to 609 thousand metric tons by 2021. This can be attributed to the diminishing sales of cigarettes, which occupies about 82% of acetate tow market and ban imposed on cellulose acetate/cigarettes in New York and California in United States, New South Wales in Australia, Dubai, etc.

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    Acetate Tow market report transcript

    Global Market Outlook on Acetate Tow

    Acetate tow is also known as cellulose acetate tow. It is made from acetate flakes or purified natural cellulose. Natural cellulose reacts with the acetic anhydride flakes to form the powder. It is one of the esters of cellulose. It is among the chemicals that are used in the cigarette industry. These specialty solvents are acetate or acetic ester derivatives. Ethyl acetate (ETAC) tow is made from Ethyl ethanoate. Ethyl acetate has a chemical formula C4H8O2.

    It is used to make glues, as well as in nail polish removers. It has its application in the paints industry. The acetate tow solvents are used to make printing inks. 

    There has been a significant diminishing to 80-85% of acetate tow due to a combination of multiple factors like demand drivers, inventory adjustment, and new capacity coming online. The demand for acetate tow, which witnessed a decline in Western Europe, the US, and Japan, has also seen a downward trend in China over the past two years, owing to the ongoing deterioration of cigarette sales.

    • The Acetate tow market is expected to reach $6.33 billion by 2026.
    • The Acetate tow analysis of the market is done based on the categorization as fiber or plastic. The fiber category is superior in terms of its properties like mechanical strength and resistance to chemicals. It is also easily available in the market and used in various industries. 
    • The demand for cigarettes is high across the world. This has a direct impact on Acetate tow trends in the market. Consumers across the world prefer cigarettes with low tar content using longer cigarette filters. This has increased the demand for acetate tow, which is used in cigarette filters. The use of acetate tow helps to reduce nicotine and tar intake while smoking. This is the reason for the increased use of acetate tow.
    • China and India take the bulk of the global market for acetate tow. Both these countries are growing fast and the demand for acetate tow is increasing in their markets.
    • Apart from the cigarette industry, acetate tow is also used in the apparel sector where there is significant demand. It is used as an alternative to silk in the garment industry. It is much cheaper than silk and has similar properties, which makes it a popular alternative.
    • The main players in the market are Eastman Chemical Company, Celanese Corp, Tobacco Corporation, Daicel, Solvay, Mitsubishi Chemicals, and Rayonier.   
    • The global industry utilization for acetate tow has diminished significantly to 80-85% owing to a combination of multiple factors like demand drivers, inventory adjustments, and new capacity coming online.
    • The ongoing deterioration of cigarette sales has also resulted in an adverse effect on demand for cigarette components like acetate tow for filters.
    • China accounts for more than 50 percent of the acetate tow market and has a significant impact on the global demand and supply conditions. The destocking of supply has been one of the key reasons of the negative growth in the acetate tow market.
    •  China's filter tow imports have diminished dramatically, from 43 percent of its total demand in 2011 to an estimated 15 percent in 2016 and 9 percent in 2017. It was forecasted to fall further to 6 percent in 2018 and more in subsequent years.
    • It is essential for suppliers to work with customers to understand the evolving market conditions and requirements. Most of the tow specifications are driven by the specific needs of different customers and not by broad market trends. Specialty filters, in the future, will be more of a point, for brand differentiation, like tube and capsule filters.

    Acetate Tow Regional Market Dynamics–The Americas

    • Acetate Tow market is witnessing a declining growth rate in the US, owing to increasing health awareness. However, Latin America especially Brazil is expected to witness a good demand growth for acetate tow.
    • The top three producers of acetate tow are based out of this region and are looking for expansions in Asia due to the potential for growth in the region.

    Acetate Tow Demand – The Americas 

    • The US saw a decline in illicit trade in 2017, owing to the coordination between the country's regulatory agencies and tobacco manufacturers.
    • Tobacco companies, over the last two years, have continued to raise the prices of cigarettes in order to offset its declining volume sales.
    • In late 2017 and early 2018, Phillip Morris had put in efforts to introduce its Iqos product in the US.

    Acetate Tow Price Drivers

    Feedstock Softwood NBSK Prices

    • Acetate Tow prices are mainly driven by its feedstock Softwood–NBSK prices. This price hike is expected to have come on the back of firm demand and lower supply levels. As opposed to the usual trend of producers offering year-end discounts on purchases, this year saw price hikes due to a tight demand situation in China and other regions of the world.
    • Raw materials constitute about 80-85% of the total cost of acetate tow prices. Also, the seasonal patterns of softwood prices have an impact on cellulose acetate tow prices.

    Taxation on Tobacco Products

    • Government restriction on public smoking, reduction in consumption of tobacco products in order to reduce premature deaths from non-communicable diseases (NCD) have resulted in an increase in taxation on tobacco products.
    • Implementation of the smoke-free law in few countries and to reduce the consumption of tobacco usage to adopt Sustainable Development Goals, all the major consumers of tobacco have increased their taxation on tobacco products significantly over the last few years.

    Regulations in China

    • Tow purchases in China have recently moved down due to a variety of factors. Positive population and filter-specification trends have been offset by typical erosion drivers seen around the world.
    • Some China-specific factors which come into play are austerity measures and a substantial build-up of tow and cigarette inventory.