Crude tall oil (CTO) is a byproduct of the kraft pulping process used by many pulp mills that use pine trees as their raw material. It is a mixture of fatty acids and resin acids obtained during the alkaline extraction of pine wood. CTO finds wide applications in varied industries including construction, oilfield chemicals, mining, rubber, soaps & detergents, paper size, etc. owing to the presence of fatty and resin acids in its composition. The growing demand from end-use industries such as construction, mining, and chemicals is anticipated to drive the global crude tall oil market during the forecast period.
Key Takeaways
Key players operating in the crude tall oil market are Citec Group Oy Ab, Ingevity Corporation, Georgia-Pacific Chemicals, Forchem Oyj, Kraton Corporation. The major players are focusing on production capacity expansion and new product launches to strengthen their global presence.
Some of the key opportunities in the Crude Tall Oil Market Demand include growing demand from the construction industry for concrete admixtures and increased use of crude tall oil in biofuels production. The market players are also exploring opportunities in emerging economies of Asia Pacific and Latin America owing to growing industrialization.
The key global players are exploring expansion opportunities in high growth regions including Asia Pacific and Middle East & Africa. For instance, Citec Group Oy Ab acquired the crude tall oil facilities of UPM in China and Finland in 2021 to expand its global footprint.
Market Drivers
Increased demand from the construction industry: CTO is widely used as an additive in concrete to impart better workability and water resistance. The booming construction sector globally is expected to drive the demand for CTO.
Expanding application in biofuels: With rising focus on renewable fuels, CTO is finding increased usage in the production of biodiesel and other biofuels. This is expected to propel the CTO market growth during the forecast period.
Market Restraints
Fluctuating raw material prices: The prices of pine pulpwood used for CTO production are prone to fluctuations depending on supply-demand forces. This adds unpredictability to CTO prices.
Stringent regulations: The disposal of tall oil pitch generated during CTO production is associated with strict environmental regulations. This hinders the growth prospects to some extent.
Segment Analysis
The crude tall oil market is dominated by the Dimer Acids segment currently holding around 40% share of total market. Dimer acids segment is dominating as crude tall oil is used as a raw material in producing dimer acids which finds application in polyamide resins, oilfield chemicals, adhesives etc. The dimer acid segment is expected to remain the dominating sub-segment during the forecast period. The tall oil fatty acids segment is the second largest segment in the crude tall oil market accounting for over 30% share. Tall oil fatty acids are used in manufacture of alkyd resins, oilfield chemicals, metalworking fluids etc. Growth in end use industries is supporting growth of this segment. The tall diesel/fuel oils segment holds around 15% share in global crude tall oil market. It is used in production of fuel oil and diesel blends which acts as an alternative source of fuel. Investments in research for new applications is promoting growth of this segment.
Global Analysis
The North America region currently dominates the global crude tall oil market accounting for over 35% share, followed by Europe. Both the regions are expected to maintain their dominance during forecast period. Mature end use industries such as paints & coatings, construction, automotive in North America and Europe are driving crude tall oil consumption in these regions. Among countries, the US holds leading share in North America crude tall oil market. China is emerging as the fastest growing regional market growing at a CAGR of over 6% during forecast period. Increasing investments in construction, automotive and infrastructure development projects are promoting growth of end use industries in China. Growth in end use industries is supporting market growth in China. Rising exports from China are also contributing to growth of APAC crude tall oil market.
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