Pine Chemicals Market Update

North America

Kraton Corporation announced on 17 February a general price increase of 10% across its entire pine chemicals and alpha methyl styrene (AMS) resins effective immediately. In January 2021, the company also raised its tall oil fatty acid (TOFA) price by up to 10%. The price increase is reportedly because of competitive factors within the pine chemicals space as well as based on price-setting mechanisms cause by inflationary pressures seen in the vegetable oil-based fatty acids market where TOFA competes in.

According to the company’s Q1 2021 and full year 2020 earnings results, lower revenue for its chemical segment in 2020 was driven by lower pricing in the crude sulfate turpentine (CST) chain and lower average selling prices for rosin esters related to the oversupply of low-cost hydrocarbon tackifiers in Asia. Sales for TOFA and TOFA derivatives were also down in 2020 due to lower demand driven mostly by the COVID-19 pandemic especially during Q2 2020. For 2021, Kraton noted that it is seeing favourable trends in TOFA, tall oil rosin (TOR) and CST chain as demand in the industrial sector is now coming back.

Kraton is also looking for opportunities to be more active in the renewable diesel market as the company is said to be well-positioned with two crude tall oil (CTO) refineries in the USA and two refineries in Europe as well as strong and diverse CTO supply position. While remaining committed to its existing customers pulpin the pine chemicals market, Kraton said it has the ability to ship excess CTO and CTO derivatives as well as pitch from the US into the European market.

Ingevity, another major pine chemicals producer based in the USA, also implemented on 1 January 2021 a general price increase for its TOFA and TOR grades sold to the merchant markets ranging from 10-15%. The increase does not include products for the pavement technologies, oilfield technologies and other derivatised product families. A price increase in the range of 10-15% for all merchant and derivatised TOR and TOFA products associated with its industrial specialties and oilfield technologies portfolios will be implemented as of 1 April 2021 (or as contracts allow) due to strengthening market demand and increasing raw material costs. The TOFA price increase is reportedly getting traction as pricing for competing vegetable oil-based fatty acids also went up significantly, and consumers are reportedly taking advantage of using TOFA as a substitute especially in the overseas coatings sector where they have the ability to change between different types of fatty acids.

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