Crude Tall Oil Derivatives Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

Key Highlights

• In 2020, the pandemic severely impacted industry growth due to supply chain disruption across various industries. However, ramping automotive production post-pandemic propelled the overall industry growth.
• The major factors driving the market's growth are the increasing demand for bio-based chemicals in end-user industries and the rising application of crude tall oil derivatives in the automotive industry. On the flip side, directing crude tall oil feedstock more into biodiesel applications is expected to hinder the market's growth.
• The oil and gas project expansions in Asia-pacific and North America will likely offer new growth opportunities during the forecast period. North America dominates the world, with the largest consumption from the United States.

Crude Tall Oil Derivatives Market Trends

TOFA Segment to Dominate the Market

• Globally, the European Union (EU) and the United States are key producers and consumers of tall oil fatty acids. This implies little net international trade in tall oil fatty acids, resulting in zero import dependence. Tall oil fatty acids 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 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.
• In October 2017, the Environmental Protection Agency (EPA) enacted a regulation for exemptions from the requirement of a tolerance for residues of tall oil fatty acids 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, and in antimicrobial formulations for food contact surfaces.
• Ingevity Corporation submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting the 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 market growth in North America for the past two years.
• With the growing automotive industry, the demand for lubricants is also expected to increase. The surging automotive production and sales in various regions, including the European Union, the United States, and the Asia-Pacific, drive the demand for lubricants.
• During the first three quarters of 2022, nearly 8 million cars were manufactured in the European Union, 5.8% more than during the same period in 2021. In contrast, 1.2 million commercial vehicles were registered in the European Union from January to September 2022, a year-on-year decline of 17.6%.
• North American output increased by 11.8% during the first nine months of 2022 - to nearly 8 million cars. Additionally, in the United States, automotive production increased to 9.17 million units in 2021 after the pandemic in 2020. Furthermore, in 2022, from January to September, cumulative volumes in China increased by 8.2% to more than 15.3 million cars registered. Additionally, Chinese car production rebounded strongly to reach 16.4 million units from January to September.
• Therefore, these factors are projected to boost the consumption of total oil fatty acid in lubricants, propelling the overall industry growth.

United States to Dominate the North America Market

• The United States is the world's largest and most powerful economy. In 2021, the economy increased by an annualized 5.7%. There were signs that the economy was the strongest since 1984. 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 shifted the manufacturing sector 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 2021, the United States recorded about a 4% increase in automotive production over 2020. This led to the country's inclining production and sales of lubricants. In 2021, the refinery's net production of lubricants stood at 168 thousand barrels per day, up by roughly 10.5 percent from the previous year in the country, reducing the consumption of crude tall in the country in recent years.
• The automotive and equipment manufacturing industries significantly drive the demand for metalworking fluid. The United States is well-known for advancing and producing high-end technologies and equipment for construction and industrial use, making the country one of the major consumers of metalworking fluids, further driving its production at a moderate rate in the domestic market.
• Strong growth in the oil and gas industry in the last few decades in the country has propelled the industry growth. Oil production in the United States amounted to some 711 million metric tons in 2021, a slight decrease compared to the previous year. Additionally, US crude oil production was 11.7 million b/d in 2022 and is forecasted to reach 12.4 million b/d in 2023, surpassing the record high set in 2019.
• Hence, all such trends in the country are anticipated to increase the demand and consumption of crude tall oil derivatives used in producing industrial products, such as biodiesel, metalworking fluids, oilfield chemicals, mining chemicals, paints, coatings, adhesives, etc., during the forecast period.

Crude Tall Oil Derivatives Industry Overview

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