November 2023 Sees Tall Oil Prices Surge Amid Positive Consumer Sentiments

Tall Oil prices are anticipated to increase globally in November, continuing the trend from the previous month. This rise is linked to a surge in demand from end-user industries, driven by increased consumer spending and heightened consumption. Tall Oil derivatives, employed as emollients and moisturizing agents in cosmetics and personal care items like lotions, creams, and soaps, are the driving force behind this trend. The onset of the winter season has further amplified the demand for personal care products, potentially contributing to the upswing in Tall Oil prices.

In the United States, there was a marginal expansion in business activity in November, consistent with the rate observed in the preceding month, accompanied by an improvement in demand and signs of inflation slowing down. While both manufacturers and service providers reported another monthly uptick in activity, the overall pace of expansion remained modest. There was a slight increase in total new orders, propelled by the first expansion in new business within the service sector in four months. Concurrently, total new export orders have risen for the first time since July, attributed to manufacturers observing an upswing in new sales from overseas customers. There was a minimal rise in input costs, primarily due to decreased energy and raw material expenses. On the other hand, selling prices increased at a faster rate, further supporting the expected price surge for Tall Oil.

Europe is a significant producer of Tall Oil, with the majority of its production centered in Finland. Recent data indicates that the decline in the manufacturing and services sectors across the eurozone eased more than anticipated in November. However, the economy is still poised to enter a technical recession. This is attributed to an uptick in inquiries for new orders compared to the previous month, potentially influencing the upward trajectory of Tall Oil prices. Tall Oil, a byproduct of the kraft pulping process in the paper and pulp industry, is derived from extracting wood fibers from pine trees for papermaking. During winter, certain European regions like Finland may encounter challenges related to weather conditions, including cold temperatures and snow, impacting forestry and harvesting operations. This, in turn, could result in limited Tall Oil availability, potentially contributing to a further price increase.

A comparable trend is anticipated for Tall Oil in China, where the country predominantly imports Tall Oil from the USA. Recent data indicates a strengthening of the Chinese yuan against the US dollar, resulting in more affordable imports, potentially driving up domestic market demand and increasing Tall Oil prices. Furthermore, a recent upswing in domestic consumption, supported by lower interest rates and a reduction in inflationary pressures, has further stimulated overall demand in the Chinese market, providing an additional boost to the upward trajectory of Tall Oil prices.

Based on ChemAnalyst's assessment, Tall Oil prices are expected to decrease by the year's end, which is attributed to a reduction in demand from end-user sectors like the paper and pulp industry and an abundant supply in the market. Nevertheless, prices can rebound at the commencement of the new fiscal year, driven by an upswing in consumer spending, maintaining an optimistic market sentiment overall.