Are Pulp And Paper Companies Overlooking Lucrative Opportunities In Crude Tall Oil?

This content is being republished with the consent of Fisher International and ResourceWise. Read more about Crude Tall Oil at ResourceWise. June 8’23

Ah, crude tall oil (CTO), the underdog of the pulp and paper industry. It’s been quietly lurking in the shadows, but guess what? It’s time for CTO to shine! This by-product, with its magical concoction of fatty acids, rosins, and other delightful elements, is causing quite a stir. Prices are skyrocketing, thanks to supply disruptions and a hungry market eager to get its hands on this liquid gold.

CTO and Its Various Forms

It is refined into different fractions like tall oil fatty acid (TOFA), tall oil rosin (TOR), distilled tall oil (DTO), and even pitch. These fractions find applications in a wide range of industries such as adhesives, inks, detergents, and emulsifiers. Talk about versatility! The recovery of CTO from resinous tree species like southern pines can amount to 30-50 kg per ton of pulp, representing approximately 30-70% recovery.

But what’s driving this sudden frenzy over CTO, you ask?

Well, regulators have bestowed upon it the prestigious title of “advanced feedstock for biofuel production.” It’s like the crown jewel of eco-friendly fuels, from hydrotreated vegetable oil (HVO)/renewable diesel to Sustainable Aviation Fuels (SAF). With net-zero goals and ESG commitments on everyone’s minds, there’s a mad dash to blend and produce SAF using qualified feedstocks. And wouldn’t you know it, CTO fits the bill like a perfect puzzle piece!

But wait, there’s more! CTO is mingling with the cool kids in the sustainable aviation fuel scene. It’s a VIP guest on the list, recognized under the Annex IX A of the European RED II mandate and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The aviation industry and other sectors are clamoring for low-carbon fuels, and waste-based feedstocks like tall oil are the talk of the town. It’s like CTO stepped into the spotlight, ready to rock the stage and rake in those sweet profits!

CTO’s Relevance in the Pulp and Paper Industry

Now, let’s turn our attention to the pulp and paper industry. It seems like many companies haven’t fully grasped the dazzling potential of CTO. They’re missing out on a treasure trove of benefits! With prices skyrocketing and demand reaching new heights, it’s high time for kraft pulp mills to jump on the CTO bandwagon.

You see, CTO is like that hidden gem waiting to be discovered. Sure, not every pulp and paper company has fully embraced the CTO craze just yet. But with the buzz around CTO for biofuel production, the tall oil market is heating up faster than a forest fire. It’s time to let CTO shine like a true superstar!

Here’s the catch: CTO supply is currently limited, making it a precious commodity that commands a premium price. And to add a little spice to the mix, geopolitical tensions have caused supply chain disruptions in Europe, making CTO even harder to come by for traditional pine chemical applications. It’s a classic tale of supply and demand, and the stakes are higher than ever.

Now, you might be wondering why CTO is such a game-changer for the industry. Well, there are currently 187 mills that extract tall oil. While historically lower prices and variations in yield and quality based on wood species have limited the production of crude tall oil, the rising interest in CTO for biofuel production has ignited the tall oil market. Adhesives, inks, detergents, and emulsifiers are just the beginning. The potential applications are vast, and the profits waiting to be made are simply tantalizing.

Since there is a finite number of pulp mills operating, the supply of CTO is currently constrained, making it largely price inelastic. The geopolitical tensions resulting from the Russia-Ukraine war have also caused supply chain disruptions in Europe, further straining the availability of CTO for traditional pine chemical applications.

But let’s not forget the driving force behind this CTO frenzy – the regulators and their sustainability goals. Biofuels are the future, and CTO is at the forefront of this revolution. It’s the perfect raw material for producing low-carbon biofuels like HVO/renewable diesel and SAF. With stringent regulations and corporate commitments towards net-zero emissions, the demand for sustainable aviation fuel is soaring. And guess what? CTO fits the bill perfectly, making it a highly sought-after feedstock.

So, dear pulp and paper companies, it’s time to seize the day and embrace the CTO revolution. Don’t let this lucrative opportunity slip through your fingers. Let’s unlock the full potential of CTO together and embark on a journey towards sustainable profitability.

Remember, the future belongs to those who dare to innovate. And when it comes to CTO, Coniferous is here to equip you with a comprehensive analysis of the CTO landscape, offering valuable market intelligence and opportunity assessments. Get ready to make a splash in the market and secure your place at the forefront of the pulp and paper industry’s transformation. Let’s sail toward success with CTO as our guiding star!