Celanese and Blackstone form acetate tow JV

CELANESE is forming a joint venture with Blackstone to create a global acetate tow supplier – as they seek to cut costs in the face of falling demand for cigarettes.

Chemical company Celanese will own 70% of the new venture, while equity group Blackstone, which bought Solvay’s acetate tow business last year for around US$1bn, will own the remaining 30%. The JV will have around 25% of the world’s 810,000 t/y acetate tow production capacity, which is chiefly used to manufacture cigarette filters.

Demand for cigarettes in Europe, the US and Japan is in decline, forcing companies including Celanese to reduce or close 5 down regional production of acetate tow. Meanwhile, demand in China, which peaked in 2015, is now increasingly being met by new local producers, with imports of acetate tow falling from 43% of demand in 2012 to just 15% last year, according to figures from Celanese. This is expected to decline to 5% next year.

The deal brings together Celanese’s Cellulose Derivatives business, including its equity interest in Chinese joint ventures, while Blackstone will provide the Rhodia Acetow unit bought from Solvay.

Costs will be saved by optimising supply chains and through joint procurement of raw materials, energy, equipment and other services. On completion of the deal, Celanese will receive a US$1.6bn payment, which it will invest in organic growth, acquisitions, share repurchases and debt reduction.

Celanese CEO, Mark Rohr said: “This transaction gives us the opportunity to partially monetise Cellulose Derivatives and reallocate significant capital to higher growth businesses within Celanese to accelerate our growth momentum.”

Acetate tow is made by treating cellulose from wood pulp with acetic anhydride to produce flakes of cellulose acetate. This is then dry-spun into fibres for filters using acetone as a solvent.