ASIAN DEMAND GROWS FOR US CIGARETTES

ASIAN DEMAND GROWS FOR US CIGARETTES

Cigarette exports are expected to rise sharply this year, largely because of rising demand in some Asian countries, according to an Agriculture Department analysis.

In all, cigarette exports are forecast to be up 10 percent to 110 billion pieces in 1988, the department's Foreign Agricultural Service reported.Recent efforts to lower trade barriers in Japan, Taiwan and now South Korea are having a major impact on U.S. cigarette trade, the report said. Sales have yet to reach their full potential in Far East markets, with sizable

gains expected in 1988.

Much of the increase will be in Japan, which last year was the largest single foreign market for U.S. cigarettes, surpassing the longstanding leader, Belgium-Luxembourg.

South Korea, on the other hand, has the greatest untapped potential for rapid growth as a U.S. cigarette customer, depending on the outcome of a U.S. trade complaint, the report said.

Overall, U.S. cigarette sales to Europe are expected to increase slightly this year.

The growing popularity of U.S. blends of tobacco is a strong stimulus to further sales of cigarettes in Spain, and the Netherlands is expected to

absorb more cigarettes due to re-export demand from neighboring countries, the report said. Re-exports are also contributing to the expected rise in sales to Belgium-Luxembourg.

Gains also are expected in Turkey, Jordan, Cyprus and South Africa due to the increasing popularity of U.S. cigarettes, whereas slight decreases will occur in Morocco and Tunisia, the report said. In the Western Hemisphere, increased shipments to Central and South American countries will more than offset decline in sales to Canada.

Exports of unprocessed tobacco are expected to increase 4 percent to 203,000 metric tons this year, with larger shipments to Indonesia, Hong Kong and Taiwan due to the accelerating trend toward consumption of American-blend cigarettes in the Far East, the report said.

But in Western Europe, imports of U.S. leaf may drop due to declining cigarette use.

The exceptions will be Spain and Italy where the falling dollar, lower U.S. prices and a continued preference for U.S. blends will stimulate U.S. leaf sales, the report said. In Spain, higher prices for dark-type cigarettes will encourage consumers to substitute American blends, thus increasing U.S. leaf sales.