For the Quarter Ending June 2023
The prices of tall oil in the US witnessed an upward trend in the second quarter due to resurging in its inquiries from various downstream sectors balanced with enough inventories within the domestic market. A significant increase of 37.89% is seen in June compared to levels noted in April. The incline in Tall Oil prices was driven by a higher-than-expected US export owing to higher domestic and international inquiries from importing nations. The US manufacturing PMI (Purchasing Managers Index) dropped to 46.3 in June, from 48.4 in May and 47.1 in April, suggesting a contraction of the production sector leading to limited availability of tall oil coupled with more demand from pulp and wood industries, keeping the prices on the higher side. The consumer price index (CPI) increased by 0.2% in June compared to 0.1% in May, reflecting that inflation has slowed down in June due to a hike in interest rates by US Federal Reserve. Although the inflation rate was down, prices remained high because more rate hikes were possible in the third quarter.
The tall oil prices in China demonstrated an upward trend in the second quarter. A significant increase of 16.86 percent was noticed in the prices of tall oil in June 2023, contrasted with the levels seen in April. There are several factors responsible for this trend, such as increased demand from consumers, reduced availability of tall oil in the global market, and lowering of trade activities. The prices of tall oil increased because Russia, the world's main exporter, announced that it would begin cutting oil production in July to maintain the stability and balance of the oil market. The OPEC+ (Organization of the Petroleum Exporting Countries) countries have also agreed to extend the oil production cuts they announced in April until the end of 2024, reducing the amount of oil they produce worldwide. In addition, China's exports also shrunk in May and June, reducing the high amount of oil available in the Chinese market. In addition, increased demand from end-users in the pulp and paper industry supported the bullish trend. Also shipping costs also increased in June, which further increased prices in China.
In Finland, a significant increase of 6.06% is seen in the tall oil prices in the second quarter compared to the levels observed in April. Due to its use consistent surge in demand owing to its major application in lubricants, adhesives, paints, and plastics, the prices of Tall Oil sustained its positive market trend across the domestic market. Moreover, higher inquiries from foreign markets additionally supported the upsurged price trend for Tall Oil for this month. In June 2023, Finland's Manufacturing PMI was revised downwards to 43.4 in June 2023 from the preliminary estimate of 43.6, indicating the sharpest deterioration in the sector's health since May 2020. The factory activity slowed down, leading to fewer inventories among suppliers and traders, which pushed the prices upward. Inflation in Finland settled at 6.3 percent in June, according to preliminary data published by Statistics Finland. The change in the inflation rate resulted in a moderate rise in electricity prices. This subsequently led to increased production costs, supporting the upward trend of tall oil prices.
For the Quarter Ending March 2023
The first quarter of 2023 saw a rise in Tall Oil prices in North America due to a global supply interruption. Due to high inflation and growing commodity costs, prices continued to rise throughout the first month of the quarter. The product's price increased as a result of low stocks on the global market for the United States in the second month of the quarter and downstream sectors' inclined demand. The main reasons for the price increase were low inventories present in domestic US markets and a broken supply chain. Towards the end of Q1 2023, the price of Tall Oil was recorded to be USD 1865/MT for FOB Houston USA in March 2023.
In the Asia Pacific region, the cost of Tall Oil rose throughout the first quarter of 2023. The demand for completed value-added commodities in the downstream industries has resulted in an increase in demand for Tall Oil. Companies are also focusing on Tall Crude Oil, which has applications in oils, resins, and other industries, in addition to being an environmentally beneficial and more expensive by-product produced in the paper and pulp business during the pulping process. There were a lot of needs in the domestic market because the majority of Kraft pulping factories sell their waste streams to chemical companies, who then turn the waste into value-added products. Towards the end of Q1 2023, the price of Tall Oil was recorded to be USD 2700/MT for CFR Shanghai in China in March 2023.
The first quarter of 2023 saw price increases for Tall Oil across the board, with Europe accounting for a substantial part of global prices. Rising US prices and high US pricing both contributed to the high price of oil in Europe. Due to the conflict between Russia and Ukraine, both the price of crude oil and the demand for biofuels worldwide increased. Due to a lack of premium raw materials, the downstream industry was unable to manufacture the proper grade of tall oil, which resulted in a shortage and an increase in price. Towards the end of Q1 2023, the price of Tall Oil was recorded to be USD 2670/MT for the FOB Port of Helsinki, Finland, in March 2023.
For the Quarter Ending December 2022
Due to the worldwide supply disruption in the fourth quarter, Tall Oil prices increased in North America throughout the Q4 of 2022. During the first month of the quarter, prices were consistently increasing due to high inflation with the rising price of commodities. Low stockpiles on the international market for the United States during the second month of the quarter and downstream sectors' demand inclined led to an increase in the price of the product. In the last month of the quarter, the increase in the price of the region was due to a bomb cyclone which led to low temperature and cold wave blizzards destroying the yield. Low inventories existent in the USA's domestic marketplaces and disrupted supply chain were the main causes of the price increment. Towards the end of Q4 2022, the price of Tall Oil was recorded to be USD 1650/MT for FOB Houston USA in December 2022.
In the Asia Pacific region, the cost of Tall Oil rose throughout the fourth quarter of 2022. There has been an increase in demand for Tall Oil as a result of the downstream sectors' increased need for finished, value-added commodities. Businesses are concentrating on Tall Crude Oil as well, which has uses in oils, resins, and other industries, in addition to being an eco-friendly and more expensive by-product created in the paper and pulp industry during the pulping process. Due to the fact that most Kraft pulping plants sell their waste streams to chemical firms, who then transform the waste into value-added products, there were many demands on the domestic market. Towards the end of Q4 2022, the price of Tall Oil was recorded to be USD 2050/MT for Ex Kandla India in December 2022.
Europe makes up a sizable portion of Tall Oil prices in the fourth quarter of 2022, showing substantial volatility due to Europe's significant importation of tall oil from North American nations. The high price of oil in Europe was a result of both rising US prices and high US pricing. As a result of the crisis in Russia and Ukraine, crude oil prices rose, and so did the demand for biofuels on a global scale. The downstream industry was unable to produce the right grade of tall oil because it lacked premium raw materials, which led to a shortage and a rise in price.
Due to the worldwide supply disruption in the third quarter, Tall Oil prices varied in North America. Due to significant stockpiles in the international market for the United States during the first quarter, downstream sectors' demand declined. USA Tall oil comes from pine and other conifer trees. It is important for the creation of many commercial substances, including alkyd resins, fatty acid esters, and dimer acids. These compounds are used by many industries, including those that manufacture plastics, soaps, detergents, lubricants, paints, and coatings. High inventories existent in the USA's domestic marketplaces and a stable supply chain were the main causes of the market dynamics' fluctuations. Towards the end of Q3 2022, the price of Tall Oil was recorded to be USD 1310/MT for FOB Houston USA in September 2022.
Due to the erratic market dynamics, the price of Tall Oil varied throughout the third quarter of 2022 in the Asia Pacific. Because there is less need from downstream industries for finishing Tall Oil in value-added goods, there is a decline in demand for it. In addition, businesses are focusing on Tall crude Oil, an eco-friendly and less expensive by-product produced in the paper and pulp industry during the pulping process sectors, in addition to its uses in oils, resins, and other industries. There is limited demand in the domestic market because most Kraft pulping factories sell their waste streams to chemical companies, which turn the waste into value-added products. Towards the end of Q3 2022, the price of Tall Oil was recorded to be USD 1729/MT for Ex Kandla India in September 2022.
Europe is a significant importer of tall oil from countries in North America, and the price of tall oil in the third quarter of 2022 experienced significant fluctuations. Rising US prices had a similar effect on high oil prices in European countries as they did in the US. Crude oil prices increased along with the demand for biofuels globally as a result of the conflict in Russia and Ukraine. Due to a lack of high-quality raw materials, the downstream industry was unable to manufacture the proper grade of tall oil, which resulted in a shortage and an increase in price. During the second half of Q3, prices decreased because of reduced inflationary pressure from the worldwide market and steady demand from end-use sectors, such as the paper and pulp industry. Towards the end of Q3 2022, the price of Tall Oil was recorded to be USD 1140/MT for FOB in Germany in September 2022.