Global Market Outlook on Acetate Tow

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, 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 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 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 is forecasted to fall further to 6 percent in 2018
  • 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 specific needs of specific customers and not by broad market trends. Specialty filters, in 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

  • 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 further 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 the 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 discount on purchases, this year saw price hikes due to a tight demand situation in China and other regions of the globe
  • Raw materials constitute for 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 increase of taxation on tobacco products
  • Implementation of 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