Mark Costa : Hi, David. Thank you for the question. It’s one of the bright spots of the year and one we’re excited to talk about. Fibers has obviously been on a tough journey since 2014 when the market structure loosened up for a variety of factors. But the situation has evolved and changed over time. First is on the demand side. We historically thought about demand declining in the 2% to 3% range. But what we’ve seen over the last few years is it’s only declining around 1%. And partly, that’s driven by the strength of the heat-not-burn segment of the marketplace that is growing at 15% a year, offsetting some of the other decline on the cigarette side. China has also stabilized to being pretty much flat to slightly up in demand over the last several years.
So you’ve got stabilization of demand, the heat-not-burn market growing. And the heat-not-burn devices require quite a bit more tow per smoking experience than a cigarette. So that’s also helping. If you look at in the last decade, we’ve only been down about 10% of demand as you sort of put all these factors together. And we uniquely at Eastman also have the benefit of the textile growth, providing stability and margins to our business. On the supply side, there’s also a lot that’s changed in the last decade. So you can see about 15% of capacity has been shut down or repurposed. That’s assets that have been retired, the impacts that Russia has had on capacity in their country as well as us repurposing some of our assets towards the textiles growth.
And the move to like the slim cigarettes, especially in China, as well as two free cigarettes has actually had a significant impact on the effective capacity. It’s much more difficult to make those products, so you lose a lot of capacity, at least 10%, maybe 15% of capacity is lost with that. So the industry has gone when you put those factors together to being pretty high in capacity utilization, where the conversations and then the focus with our customers is how we are reliable, secure supplier for their needs. You have to remember the value of tow and the final price of the cigarette is a very small percent. So making sure they have it to sell their product at very high margins is incredibly important to them. And that’s not the focus. So that’s allowed us to get quite a bit of price up last year, so already good momentum, seeing some of that benefit already in the fourth quarter of last year that indicated the trajectory we’re on for this year.
So we give you factors as sustainable and improving the earnings quite a bit. So I would say this year is going to be at least $275 million when we put all those factors together. The other thing that it does is it gives us a much more solid base for our overall cellulose extreme and very strong cash flow to support the investments we’re making in the circular economy, not just the polyester side, but we have a huge number of opportunities on the cellulosic side, with our recycling capabilities to take plastic waste into that product also being biodegradable is allowing us to realize why growth in our Naia textiles, we told you a lot about. So you’re going to hear a lot more this year around Aventa food service that has a huge market opportunity to replace polystyrene and the microbe.
So the cellulose extreme is shifting to being pretty attractive and sort of when we put it all together, growth business.
David Begleiter : And just on cash flow. You mentioned increased to $1.4 billion this year due to a number of actions you’re taking. Can you just sort of on patty taking and specifically working capital release this year?
