Bearish Sentiment in the North American Tall Oil Rosin Market: Challenges Ahead

Texas, (US): In the first half of September, the Tall Oil Rosin market experienced noticeably weak buying interest across the North- American market. Most buyers have only procured their minimal needs and subsequently stepped back from making further purchases. The primary reason for this diminished demand, compared to last month, was a lack of active downstream orders. Furthermore, the availability of Tall Oil Rosin has been abundant to meet the existing downstream demand which further eased the prices of Tall Oil Rosin in the regional market. Furthermore, freight rates have also stabilized during the same time frame, keeping the Tall Oil Rosin prices downward. Looking forward, many market players are expressing doubts about the demand outlook for the upcoming months. Consequently, there is a prevailing sentiment that Tall Oil Rosin prices are likely to remain subdued, reflecting a cautious approach toward market conditions. Overall, the combination of weak demand, sufficient supply, and steady shipping costs points to a challenging environment for Tall Oil Rosin pricing in the near future.

A bearish wind has continued to blow across the US Tall Oil Rosin market, with prices tracked a downward trend since August, mainly due to tepid demand fundamentals coupled with eased freight rates. The domestic demand for Tall Oil Rosin from the downstream paints and coating, paper, and pulp industry has continued to remain lukewarm as consumption from the building and construction and other end-user sector was slower than- expectations which weighed down the prices of Tall Oil Rosin. According to the National Association of Realtors, US existing home sales dropped more than expected in August as house prices remain elevated despite a continued improvement in supply. Home sales declined 2.5% last month to a seasonally adjusted annual rate of 38.6 million units, consequently dampened the demand for Tall Oil Rosin in the domestic market. In the meantime, inquiries from the rubber industry have been moderate due to steady consumption from the end-user automotive and tire sectors.

In addition, the supply of Tall Oil Rosin was observed on the higher end in the US domestic market amid steady imports from Asia and Brazil. On the flip side, freight rates, which experienced a peak in mid-July after a significant surge that began in early May, have been on a downward trajectory since then. This decline is largely attributed to a slump in shipping routes originating from China. Market analysts are forecasting that this downward trend will likely continue; however, they caution that freight rates may not decrease as quickly as they increased over the past few months given the persistent port congestion in Asia and various logistical challenges worldwide, which are expected to create ongoing disruptions in the supply chain. According to Freightos Baltic Index, Asia to US West Coast prices dropped 10% to $ 6,891/FEU while Asia to US East Coast prices declined 2% to $ 9,661/FEU during mid-August. Thus, prices of Tall Oil Rosin were settled at USD 894/MT CFR Texas with a month-on-month decrement of USD 25/MT during August.

ChemAnalyst anticipate prices of Tall Oil Rosin are expected to decline across the US market in the forthcoming month. In the short term, demand for Tall Oil Rosin is not likely to improve despite the lower mortgage rates. Furthermore, the supply of Tall Oil Rosin might remain sufficient in the regional market amidst a decline in new orders which further weigh on the prices.