CRUDE TALL OIL MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

The Global Crude Tall Oil Market size is expected to reach US$ 3 Bn by 2031, from US$ 1.93 Bn in 2024, growing at a CAGR of 6.5% during the forecast period.

Crude tall oil is a dark brown viscous liquid which is derived as a by-product from the kraft pulping process of pine wood. It is composed of rosin and fatty acids and is the primary extractive obtained from pine wood. There are three main types of crude tall oil namely liquid, solid, and distilled crude tall oil. Liquid crude tall oil is commonly known as crude tall oil and solid crude tall oil is obtained by vacuum distillation process. Distilled crude tall oil has further purified fatty acid content and lower rosin content.

Crude tall oil has several advantages as it is renewable, bio-based raw material source and considered as one of the most cost-effective chemicals obtained from wood pulping. It serves as a sustainable substitute for petroleum-based raw materials. The components of crude tall oil such as resinic acids and fatty acids have many industrial uses varied from metal working fluids and surfactants to drying oils. However, crude tall oil also has few disadvantages as the liquid type has a strong unpleasant odor and require proper treatment and handling. It is also volatile in nature with lower flashpoint hence precautions must be followed during storage and transportation. The distillation process increases purification but also the production cost of crude tall oil.

Global Crude Tall Oil Market Regional Analysis:

• North America has established itself as the dominant region in the global crude tall oil market over the past few decades. The North America market is expected to be the dominant market for crude tall oil, with a CAGR of over 40% during the forecast period. The U.S. accounts for the lion's share of the market due to the presence of well-established pulp and paper industry in the region. Major pulp and paper companies operating in North America produce huge volumes of crude tall oil as a by-product, which is further used in various end-use industries such as construction, paints and coatings, etc. In addition, the demand for bio-based products is growing rapidly in North America owing to stringent environmental regulations imposed by regulatory bodies such as Environmental Protection Agency. This has further propelled the consumption of crude tall oil-based products in the region. Moreover, the presence of leading crude tall oil traders and distributors aids in smooth supply chain operations across the continent. All these factors collectively make North America the most lucrative market globally.
• The Asia Pacific region has emerged as the fastest expanding market for crude tall oil in recent years on account of robust economic growth and increasing industrialization. The Asia Pacific market is expected to be the growing market for global crude tall oil, with a CAGR of over 30% during the forecast period. Countries such as China and India are major contributors to the Asia Pacific crude tall oil market. The thriving construction industry where crude tall oil and its derivatives finds extensive usage as concrete additives has been instrumental in driving the market growth in the region. Furthermore, rising exports of paper products from Asia Pacific to European and North American countries has augmented the crude tall oil production volumes. This offers new opportunities for existing as well as new market players. However, the presence of abundant raw material reserves and relatively cheaper labor costs gives domestic crude tall oil producers a competitive edge over import operations in Asia Pacific nations. This is expected to catapult the regional market to new heights in the coming years.
• The Europe market is expected to be the growing market for crude tall oil, with a CAGR of over 15% during the forecast period. The growth is attributed to the increasing demand for crude tall oil in various applications such as inks and toners, adhesives, metalworking, chemicals, electronics, and electrical. The renewable EU's 'Renewable Energy Directive' aims to confirm that at least 10% of their energy consumption comes from renewable sources, which is expected to drive the demand for crude tall oil in Europe.
• The Latin America market is expected to be the growing market for crude tall oil, with a CAGR of over 8% during the forecast period. The growth of the market in Latin America is attributed to the lack of awareness and the presence of alternative biofuels, which may impede the market growth.
• The Middle East & Africa market is expected to be the growing market for crude tall oil, with a CAGR of over 7% during the forecast period. The growth of the market in the Middle East & Africa is attributed to the increasing demand for crude tall oil in various applications such as inks and toners, adhesives, metalworking, chemicals, electronics, and electrical.

Figure 1. Global Crude Tall Oil Market Share (%), by Region, 2024

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Global Crude Tall Oil Market Analyst Viewpoint:

The global crude tall oil market is expected to witness steady growth over the forecast period driven by increasing demand from various end-use industries such as construction, paper and pulp, paints and coatings, biofuels and others. Asia Pacific currently dominates the global crude tall oil market and is expected to remain the fastest growing regional market owing to the strong growth of the construction sector in emerging economies of China and India. One of the key opportunities for market participants is the increasing adoption of bio-based and eco-friendly products across different industries which will boost the demand for crude tall oil.

However, fluctuations in the price and supply of crude oil from which tall oil is derived could pose a major challenge to market players. Availability of cost-effective substitutes such as vegetable and other plant-based oils may also restrain the market growth to some extent over the coming years. Strict environmental regulations regarding the forestry and paper industries in Europe and North America could hamper the production of crude tall oil. Nevertheless, development of new applications in biofuel production is likely to offer new avenues for market expansion.

In order to capitalize on the opportunities, companies should focus on geographical expansion and capacity expansions to cater to the rising demand. Market players must also invest in research & development activities to develop new applications and novel end products from crude tall

Global Crude Tall Oil Market Drivers:

• Growth in Bio refineries and Biofuel Industry: The crude tall oil market is expected witness significant growth due to expanding applications of crude tall oil in the production of biofuels and biochemical. There has been a continuous push towards developing a sustainable bio-based economy and reducing dependence on fossil fuels. Many countries have implemented regulatory policies and set mandates to increase the usage of renewable fuels in the transportation sector. This is positively impacting the establishment of new biodiesel and biofuel refineries that use vegetable oils, algae, and other biomass as raw materials.

Crude tall oil serves as a valuable raw material for these bio-refineries due to its balanced ratio of fatty and resin acids. The aliphatic compounds present in crude tall oil can be converted into biofuels like fatty acid methyl esters through esterification reactions. Meanwhile, the rosin acids have various applications as additives, emulsifiers and corrosion inhibitors in biofuels. Leading biofuel producers are increasingly utilizing crude tall oil or its derivatives as an affordable biomass-based feedstock. Additionally, many new entrants are setting up dedicated bio refineries focused on deriving multiple bio products from crude tall oil. This includes compounds for food additives, surfactants, lubricants, and biochemical.

The growing demand for sustainable and low carbon liquid transportation fuels is a major driver for investments in biofuels and associated bio refining projects. Successful commercialization and higher blending mandates for advanced biofuels will positively impact crude tall oil consumption. Ongoing research efforts to optimize crude tall oil conversion processes and develop its high-value applications will further encourage bio refineries to adopt it as a versatile resource. Overall, there exists immense opportunity for crude tall oil considering the push for renewable and green alternatives across different industries.

• Rising Consumption in Adhesives and Sealants Sector: Another key factor leading to higher crude tall oil consumption is the increasing usage of bio-based additives in adhesives and sealants. Stricter environmental regulations globally have put pressure on manufacturers to reduce volatile organic compound emissions from their product formulations. Meanwhile, many industries have goals to increase the use of sustainable ingredients and lower their carbon footprint. This growing trend provides significant opportunities for crude tall oil and its derivatives in the adhesives sector.

Rosin tall oil and tall oil pitch, which are obtained from crude tall oil, function as effective resin tackifiers in hot melt, solvent-based, and water-based adhesives. Their hydrophilic nature allows for enhanced adhesion to various substrates. Meanwhile, the oligomers and acids improve bond strength and flexibility of joint sealants. Leading adhesive producers are actively focusing on crude tall oil-based additives to replace petroleum-derived alternatives. A few have already commercialized product lines with over 50% bio-based content including rosin tall oil.

Additionally, the woodworking, furniture, footwear and construction industries extensively use plywood, particleboard, laminates and other wood composite panels. These sectors also offer high growth potential for crude tall oil-based adhesives. Ongoing research on upgrading crude tall oil into value-added intermediates like dimer acids, polyamides and fatty acid esters will drive their broader adoption in specialty adhesive formulations. With stricter eco-labeling and bio-preference policies, crude tall oil is anticipated capture a notable share of the rapidly expanding bio-based adhesive market.

Global Crude Tall Oil Market Opportunities:

• Advancements in extraction technology: Advancements in extraction technology could unlock tremendous opportunities in the global crude tall oil market. Tall oil is a byproduct of the kraft pulping process used in paper manufacturing. Traditionally, tall oil has been extracted through acidulation, which introduces impurities and limits the applications of the product. However, new separation techniques are now allowing for purer forms of tall oil to be produced.

For example, vacuum evaporation and vacuum distillation technologies allow crude tall oil to be separated into pure fatty acid and rosin products under controlled temperature and pressure conditions without the use of chemicals. This enables the individual components to be further refined for specialized industrial and consumer applications. As a result, a much wider range of end products become feasible such as tall oil fatty acid for lubricants and fuel additives as well as distilled tall oil for resins and adhesives.

• Growth of end-use industries in developing countries: The rapid industrialization and infrastructure development occurring in many developing economies presents a major growth opportunity for the global crude tall oil market. Many developing countries in Asia Pacific and Africa are witnessing significant expansion of their construction, paints and coatings, and automotive industries which are key end-use segments for crude tall oil derivatives. The increasing construction activities point to a surge in demand for concrete admixtures, which are prime application areas for crude tall oil.

Global Crude Tall Oil Market Trends:

• Rising preference for eco-friendly products: The rising preference for eco-friendly products among environmentally conscious consumers is significantly impacting the global crude tall oil market. There is increasing awareness about the detrimental effects of fossil fuel usage and consequent demand for sustainable alternatives. Crude tall oil, a sustainable by-product of the pulp and paper industry's kraft process, is witnessing more demand from the biofuel and bioproduct sectors due to its green credentials.

Many companies are investing in new technologies and processes to extract crude tall oil on a larger scale and convert it into biofuel as well as biodegradable and renewable materials. For example, major crude tall oil producers like Forchem Oyj of Finland and WestRock Company of United States have significantly ramped up crude tall oil extraction capacity from their pulp mills in recent years to cater to the growing requirement of crude tall oil from biofuel manufacturers and environmentally-conscious chemical businesses. They are also undertaking initiatives to optimize recovery of crude tall oil from black liquor and improve refining methods to increase the sustainability and efficiency of operations.

• Shifting focus towards bio-based and sustainable products: The demand for bio-based and sustainable products has been steadily rising in recent years as consumers and businesses alike have become increasingly environmentally conscious. Crude tall oil, a bio-based industrial chemical co-product of the kraft pulping process used in papermaking, stands to benefit from this trend. Tall oil derivatives such as tall oil fatty acids, distilled tall oils, and tall oil rosins are enjoying growing popularity as drop-in replacements for petroleum-based products in applications like adhesives, lubricants, binders, and surfactants. Several major corporations have set ambitious sustainability targets focused on increasing their use of renewable and recycled content in products and packaging over the next five years. This direct corporate demand as well as pressure on suppliers to demonstrate improved sustainability credentials is expected to drive significant market expansion for crude tall oil and its refined output streams.

Government policies are also playing a role in bolstering the crude tall oil industry. For example, in 2021 the European Commission added tall oil and its derivatives to its revised renewable energy directive, recognizing their potential as low-carbon substitutes for fossil fuels. This regulatory support increases the incentive for European businesses to transition existing petroleum-based processes over to tall oil-derived versions. European biodiesel producers in particular are known to rely on tall oil fatty acid methyl esters as a component. In Canada, national and provincial-level clean fuel standards similarly encourage the use of bio-based additives and blendstocks in gasoline and diesel, again creating opportunities for crude tall oil suppliers.

Global Crude Tall Oil Market Restraints:

• Fluctuations in Raw Material Prices: One of the key challenges faced by players in the crude tall oil market is fluctuations in raw material prices. Crude tall oil is produced as a by-product in the Kraft pulping process of coniferous trees. Therefore, its availability depends on factors like wood supply, logging costs, raw material transportation costs, etc. that are subject to price volatility. Since crude tall oil companies have limited control over raw material procurement costs, changing wood and logging prices can squeeze their margins. Any supply disruptions or shifts in demand-supply balance can subsequently impact crude tall oil production volumes and prices. Therefore, raw material cost unpredictability poses a significant restraint on the stable growth of this market. Companies have to diligently manage procurement dynamics and enter long-term supply contracts to mitigate related risks.
• Growing Emphasis on Substitute Products: Another notable challenge for crude tall oil market players is the emergence of viable substitute products. Strict environmental norms have prompted research into greener alternatives to fossil fuel-based materials and chemical feedstock. For instance, various plants and algae are now being studied for production of biodiesel which can replace crude tall oil. Some substitute materials that are challenging crude tall oil's stronghold include renewable vegetable oils, fermentation-based fuels, and waste cooking oil. Producers of these renewable alternatives are emphasizing on their sustainability credentials to gain traction. If they successfully establish themselves as viable and cost-effective substitutes, it can hamper crude tall oil demand growth worldwide over the long run. Manufacturers may need to continuously enhance crude tall oil's values proposition and invest in new applications to retain market position against substitutes.

In conclusion, while rising biofuel usage and diverse industrial applications will drive crude tall oil market opportunity, unstable raw material supply and emergence of greener substitutes can impede its growth to some extent if not mitigated strategically by industry players. Overall prospects appear positive provided companies address key challenges proactively.

Global Crude Tall Oil Market Segment Analysis:

• Raw Material Availability Drives Pulp Industry Demand: In terms of application, the global crude tall oil market is segmented into wood and paper, biofuel, adhesives, rubber, and others. Among these segments, wood and paper contributes the highest share of the market owning to abundant availability of pulp industry byproducts. Tall oil, a byproduct of the kraft pulping process used to produce paper products, remains one of the most readily available raw material streams for the pulp and paper industry. With worldwide paper production estimated at over 400 million tons annually, a steady supply of crude tall oil is assured from pulp mill residues. The wood and paper segment utilizes tall oil and its derivatives in various paper sizing, coating, and strengthening applications due to their cost effectiveness and performance benefits. Tall oil soap eliminates linting on the paper surface, improves paper machine runnability, and enhances the strength and quality of the final product. With global demand for paper expected to gradually rise in line with population and economic growth, wood and paper producers will continue relying on crude tall oil as an important natural additive. Sustainable forest management practices further ensure a long-term supply of this co-product.
• Expanding Biofuel Targets Stimulate Biofuel Demand: In terms of end use, the global crude tall oil market is segmented into wood and paper, biofuel, adhesives, rubber, and others. Among these segments, biofuel contributes the second highest share of the market driven by strengthening policy support for renewable fuels. Crude tall oil occupies a vital role as a sustainable feedstock in the production of various biofuels. The ester content in crude tall oil makes it well-suited for conversion into fatty acid methyl esters (FAME) through trans-esterification. These biodiesel products offer compelling environmental benefits and energy security compared to fossil-derived equivalents. With the European Union mandating that member states source at least 14% of transport fuels from renewable sources by 2031, biodiesel output from tall oil is projected to rise substantially. Other country like the U.S. and Brazil also maintain incentives for low-carbon biofuel generation. Rapidly evolving emitter technologies are further improving the cost efficiency of crude tall oil in integrated biorefinery systems. As governments worldwide place more emphasis on curbing vehicle emissions and lessening import dependence, the biofuel segment will likely capture a growing chunk of crude tall oil volumes.
• Formulation Flexibility Boosts Adhesives and Sealants Demand: In terms of end use, the global crude tall oil market is segmented into wood and paper, biofuel, adhesives, rubber, and others. Among these segments, adhesives contributes the third highest share due to the diverse binder applications crude tall oil finds. Fractionation produces components such as tall oil fatty acid, tall oil rosin and distilled tall oil, offering adhesives and sealants manufacturers substantial formulation flexibility. For instance, the rosin content acts as a tackifier to bond dissimilar substrates in hot melt formulations for woodworking and construction. Fatty acids boost adhesive penetrability while maintaining bonding strength. With its bio-based content, crude tall oil decreases volatile organic compound (VOC) emissions from adhesives, aligning with tightening regulations. End products based on crude tall oil also offer competitive pricing along with moisture resistance and thermal stability. Growth in packaging, furniture, footwear and automotive industries is increasing adhesive demand. Furthermore, formulators are continuously innovating with crude tall oil to deliver high-performance, eco-friendly sealants for specialized applications like flexible packaging. The adhesives and sealants segment thus relies on crude tall oil as a renewable and customizable adhesive component.

Recent Developments:

New product launches:

• September 2022, Neste launched a strategic study on transitioning its Porvoo refinery to a renewable and circular site and ending crude oil refining in the mid-2030s. Through co-processing and retrofitting of units, and benefiting from available refining assets, experience, and know-how, Neste targets to significantly grow its renewables and circular production in Porvoo long term. Neste is a Finnish company that produces and sells renewable diesel, renewable jet fuel, and other renewable products.

Acquisition and partnerships:

• November 2022: Neste agreed to acquire the used cooking oil (UCO) collection and aggregation business and related assets in the U.S. from Crimson Renewable Energy Holdings, LLC. Crimson Renewable Energy Holdings, LLC is a prominent company in the renewable energy industry, particularly known for being the largest producer of ultra-low carbon biodiesel on the West Coast. The company operates the largest biodiesel production facility in California, creating ultra-low carbon biodiesel to refuel communities and distributing it to the wholesale diesel fuel market throughout the Western United States. This acquisition further strengthens Neste's presence and operations in the U.S.

Figure 2. Global Crude Tall Oil Market Share (%), By Distillation Process, 2024

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Top Companies in Global Crude Tall Oil Market

• Citec Group Oy Ab
• Ingevity Corporation
• Georgia-Pacific Chemicals
• Forchem Oyj
• Kraton Corporation

Definition: Crude tall oil (CTO) is a dark brown, viscous liquid obtained as a by-product of the kraft process of wood pulping. It is a versatile material that maximizes the life cycle of wood-based raw materials and is a non-land based, non-food competing feedstock. CTO contains rosins, which include resin acids, fatty acids, fatty alcohols, unsaponifiable sterols, and other compounds. It can be further refined into various fractions like fatty acids, rosins, and sterols, which are used in a wide variety of applications and products, including detergents, soaps, adhesives, lubricants, paints, coatings, and biofuels.