Eastman Chemical Company’s (EMN) joint venture with SK Chemicals Company Ltd. (a Korean chemical company) − Eastman Fibers Korea Limited − has opened a new acetate tow manufacturing plant in Ulsan, Korea.
The new plant will produce 27,000 tons of cellulose acetate tow, a material used in cigarette filters. According to Eastman, production from the new plant will increase its total cellulose acetate tow capacity by about 15%, ramping up to 200,000 tons per annum. Eastman will source cellulose acetate flake, a key raw material for the manufacture of cellulose acetate tow, from its Kingsport facility in Tennessee.
Eastman believes that the growing demand for cellulose acetate tow will be driven by Africa, Asia and the Middle East. However, the implication of high taxes has cut smoking rates in North America.
Earlier this week, Eastman had announced its plans to acquire Genovique Specialty Corporation, a major global producer of benzoate plasticizers that are performance-based intermediate chemicals for adhesives & sealants, coatings, and PVC markets.
Genovique owns manufacturing facilities in North America and Europe and a joint venture in China. The acquired assets will be reported under Eastman’s Intermediates segment. Eastman expects to generate meaningful growth synergies and strengthen the company’s leadership in the global specialty plasticizer industry in the long term.
Eastman generates healthy cash flows. The company’s operating cash flow amounted to $758 million as of Dec 31, 2009. The proposed Genovique deal shows the strategic use of cash in a potentially accretive way.
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