The crude tall oil derivatives market is expected to register a CAGR of around 5% during the forecast period. The major factor driving the growth of the market studied is the increasing demand for bio-based chemicals in end-user industries.

  • On the flipside, directing crude tall oil feedstock more into biodiesel applications is expected to hinder the growth of the market.
  • Tall oil fatty acid (TOFA) fraction segment dominated the market and is expected to grow during the forecast period, owing to the growing demand from mining chemicals, lubricants, and soaps and detergent applications.
  • North America dominated the market across the world, with the largest consumption from United States.



Key Market Trends

TOFA Segment to Dominate the Market

  • Globally, the key producers and consumers of tall oil fatty acids are the EU and the United States. This implies that there is little net international trade in tall oil fatty acids, which resulted in an import dependence of zero.
  • TOFAs have a production volume for use as lubricants of 2-kilo metric tons/annum in the EU and the majority of tall oil fatty acid production also takes place in the Nordic countries.
  • Kraton Corporation, Ingevity, Chemceed, Forchem Oyj, Spectrum Chemical Mfg Corp, Industrial Oleochemical Products, and Parchem Fine & Specialty Chemicals are the notable players involved in the production of TOFAs.
  • On October of 2017, the Environmental Protection Agency (EPA) enacted a regulation that establishes exemptions from the requirement of a tolerance for residues of TOFAs when used as inert ingredients (solvent/carrier) in the following circumstances:
  • In pesticide formulations applied to growing crops and raw agricultural commodities after harvest.
  • In pesticides applied in/on animals.
  • In antimicrobial formulations for food contact surfaces
  • Ingevity Corporation submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting establishment of these exemptions from the requirement of a tolerance. This regulation eliminates the need to establish maximum permissible levels for residues of tall oil fatty acids that are consistent with the conditions of these exemptions. These new exemptions have been encouraging the market growth in North America for the past two years.
  • However, the recent COVID-19 outbreak has restricted the manufacturing of TOFA’s end-use products like paints, greases, lubricants, etc. This is likely to restrain the growth of the market studied.



United States to Dominate the North America Market

  • The United States is the world’s largest and most powerful economy. In 2019, the economy grew by an annualized 1.9% in the third quarter of 2019. There were signs that the economy maintained a moderate pace of expansion as the year ended, supported by a strong labor market.
  • However, the drastic outbreak of COVID-19 in the country has led to a downfall in the economic growth, owing to a fall in consumer spending and business shutdowns.
  • The country is highly relied on, when it comes to R&D and innovation of advanced technologies. However, in the past decade, the country has seen the manufacturing sector drifting to other nations, such as Mexico, Canada, China, India, etc.
  • In this regard, the present government has been making efforts to revitalize the manufacturing sector in the country and make the country a manufacturing hub of high-end products.
  • In 2019, the United States recorded about a 3.7% decrease in automotive production, over 2018. Additionally, in 2019, the decline in automotive sales has been affecting the performance of the industry. This in turn led to decline in the production and sales of lubricants in the country recently. The refinery net lubricant production has reduced by almost 10% in 2018-19 in the country which in turn has reduced the consumption of crude tall in the country in recent years.
  • The trend is expected to remain the same in the automotive industry till 2021, owing to which some automakers, such as General Motors, have been shutting down their production plants in the country.
  • The demand for metalworking fluid in the country is significantly driven by the automotive and equipment manufacturing industries in the countries. The United States is well-known for the advancement and production of high-end technologies and equipment for construction and industrial use, which also makes the country one of the major consumers of metalworking fluids, further driving its production at a slow rate in the domestic market.
  • In addition, the production and demand for adhesives has also declined lately due to the drop in construction activity and no significant growth is expected before 2021.
  • Hence, all such trends in the country are anticipated to moderately increase the demand and consumption of crude tall oil derivatives used in the production of industrial products, such as biodiesel, metalworking fluids, oilfield chemicals, mining chemicals, paints, coatings, adhesives, etc., during the forecast period



Competitive Landscape

nThe crude tall oil market is partially consolidated, with the top five players accounting for nearly 47% of the market, and the remaining market is highly fragmented with the presence of many small players. Key players in the crude tall oil derivative market, include Kraton corporation, Forchem Oyj, UPM, Les D?rives R?siniques Et Terp?niques, and SunPine AB, among others.

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