Chemical Conversations: Pine Chemicals and Hydrocarbon Resins

Author Argus

Listen as Leonardo Siqueira, Editor, Pine Chemicals, talks to Steve Williams, VP, C5 and Hydrocarbon Resins about:

  • The demand outlook for hydrocarbon tackifiers in Europe and elsewhere, including key factors driving supply, demand and feedstock availability
  • Issues surrounding Crude Tall Oil (CTO) in the US and Europe 
  • Changes in tackifier production capacity and whether it could offset any potential loss of CTO derivative production 
  • CTO pricing and availability impact on tackifier consumers trying to meet their sustainability goals 
  • The impact of US imposed tariffs to several Chinese goods on the longer-term imports of both pine-based and hydrocarbon-based tackifiers to the US 


This podcast is delivered by Argus’s pine chemical and hydrocarbon resin experts using data and insight from Argus Pine Chemicals and Argus C5 and Hydrocarbon Resins. Click on the links to request a free trial or more information. 



Leo: Hello, and welcome to this "Pine chemicals and HCR conversations" podcast brought to you by Argus Media. I'm Leonardo Siqueira, one of the editors of pine chemicals here at Argus and I'm joined by Steve Williams, vice-president of C5 and Hydrocarbon Resins at Argus.

Demand for South American gum rosin has been weak in recent months along with lower prices because of higher buyer inventories in Europe and not much trading activity. How is the demand outlook for hydrocarbon based tackifiers and adhesives in Europe and elsewhere?

Steve: First, greetings to our listeners for this first podcast in the series. And with respect to demand for hydrocarbon tackifiers in Europe (and the rest of the globe) we definitely saw weaker demand during the fourth quarter of 2022 carrying into the first quarter of 2023. Some of this had been destocking for the end of 2022, but weaker structural demand is also evident in early 2023. We had seen tackifier prices move lower during Q4 in the western hemisphere, inventories moving higher in China, and better availability for most types of tackifiers within both Europe and the US.

Leo: What should be some of the key factors driving supply and demand for hydrocarbon tackifiers progressing into 2023?

Steve: In Europe, tackifier production has been weaker with a number of plants shutdown or reduced due to poor production economics, labour strikes in France, and the most recent round of European sanctions on exported Russian oil products. We expect European tackifier production to remain on the weaker side for the balance of Q1 and into Q2. China production has been weaker due to very weak domestic and export demand, but there is plenty of feedstock and production capacity and China continues to be very aggressive on tackifier export pricing to the Americas and especially Europe, which is the bigger export opportunity. Production in the US will be slightly lower to meet a little weaker demand and with what is slightly lower availability of domestic feedstock with reduced ethylene cracker rates.

On the demand side, all eyes are initially on China for the re-emergence of demand after the lunar new year holiday and with Covid-19 cases on the decline after the huge peak in cases after the elimination of the zero-tolerance policy. For both China and the balance of the globe, we have improving expectations for the 2H of 2023 in terms of economic growth, which will obviously help drive improved demand for tackifiers which are used predominantly in the hot melt adhesives markets. Globally, there is more than enough production capacity to meet increased demand, and increased exports from China to the west are likely to be the result of improving demand as we progress through the year.

Steve: Feedstock availability for hydrocarbon tackifier production is generally not a concern in China unlike the US or Europe. But it also appears one of the key feedstocks for rosin and especially rosin ester derivatives production in North America and Europe, CTO, is getting a lot of attention. Can you comment on the issues surrounding CTO in the US?

Leo: The supply of crude tall oil (CTO), a by-product of the softwood kraft pulping process, is expected to remain tight in the first of quarter of this year. With CTO supply scarce in the US and Europe, the world’s two largest CTO markets, there is room for sustained price volatility looking into 2023. In the US, about 70pc of CTO supply is currently under long-term contract agreements, and the scarce CTO available in the spot market is heard offered at higher prices. Market participants anticipate we will continue to see tight supply and there is discussion there could be demand destruction because of higher pricing. Buyers discuss moving away certain formulations from fractions like tall oil fatty acids, also known as TOFA. Newer supply agreements for CTO are heard being negotiated at shorter-term periods. There is also discussion higher feedstock prices can hurt the CTO fractionation business, and fractionators are heard operating at reduced rates.

Steve: How do you see the CTO situation in Europe?

Leo: In Europe, supply disruptions and rising energy prices for pulp and paper mills have accelerated the use of swaps of CTO for tall oil pitch, known as TOP or tall oil pitch. Pitch is the bottom fraction obtained by distilling CTO. Fractionators need CTO as a feedstock, while pulp mills are looking at pitch as a cheaper fuel alternative in the face of high energy prices and reduced natural gas supplies. Terms of the swap deals are often discussed on a case-by-case basis and depend on the existing relationship between seller and buyer. They also depend on the distance between the pulp mill and the fractionator, and on the quality of CTO. Sources said the swap deals should continue into the first quarter of 2023, but it is unclear if this will be constrained in the long-term by limited pitch supplies because fractionators often get about 30pc of pitch from CTO. Turning to the rosin part of the business, the supply of tall oil rosin, also known as TOR, is considered sufficient, but demand is heard weaker because of high rosin inventories in Europe. There is also discussion rosin buyers in Europe could be destocking by the end of the first quarter. Rosin destocking, including the destocking of gum rosin in Europe, could lead to increased demand for Brazilian gum rosin. Demand for the South American product has been weak in recent months because of high buyer inventories in Europe and weak trading activity. Prices for Brazilian gum rosin have been down in recent months. But we now hear Chinese buyers are quoting the Brazilian product and a few deals have been reported below the low end of our price assessment range. Increased demand from China, which has not been in the market for the South American product for years, could provide support for higher Brazilian gum rosin prices. In some other instances, we have seen hydrocarbon based tackifiers taking market share from rosin derivatives. Leo: Steve, do you see any changes in tackifier production capacity, which could possibly offset any potential loss of CTO derivative production?

Steve: Globally, the surplus production capacity for hydrocarbon tackifiers generally means that new capacity in the west where there is a lack of resin feedstocks is unlikely to occur. This is generally the case in Japan and probably in South Korea as well for hydrogenated water white grades. But new tackifier capacity continues to be built in China, where most of the excess capacity already resides. We expect to see new C5 tackifier capacity in late first half or early second half of 2023 from Luhua at Gulei, and when market conditions dictate, there is a second C5 tackifier line at Derong in east China which is also available for start-up. Derong also has a water white tackifier line at Zhoushan Island which should start-up in the 2H of 2023, consuming dicyclopentadiene (DCPD) feed produced at the site. We also expect the start-up of a new DCPD based water white tackifier unit at Tianli in NW China during 4Q of 2023. And Luhua at Gulei will also have a new water white unit based on DCPD feed which may start-up during the 2H of 2023. So as usual, there is no lack of new capacity on the books within China to help fill any void in production. But these are hydrocarbon based tackifiers, and many larger consumers of tackifiers are looking to have at least some portion of more sustainable (and likely pine based) tackifier supply in the portfolio.

Steve: Leo, how do you see CTO pricing and availability playing out moving forward in time and what impact do you think it might have on the aspirations of some of the tackifier consumers including adhesive makers to meet their sustainability goals?

Leo: In the US, CTO has seen upward price pressure because of a lack of the product in the spot market. Market participants indicate prices may have reached a plateau, and buyers discuss moving to alternative stream products due to the higher cost of the feedstock material. There should be sustained price volatility this year, and no CTO expansions are anticipated in the US. The start-up of a new pulp mill in Finland in the third quarter of this year may provide some additional volume in Europe, but CTO supply should remain tight. Pricing in Europe may also increase, and pulp mills are expected to continue requiring pitch from fractionators as part of their supply agreements. With CTO supply short and customers of fractions like TOFA looking elsewhere for alternative products, it seems that specialty chemicals and companies willing to use adhesive makers to meet their sustainability goals could be paying a premium for the pine-based raw material. We have seen a few company announcements for the use of CTO-based feedstocks, which likely include other CTO streams, for the production of products such as styrene and amorphous polymers.

Leo: Can you provide us an update on the tariffs the US imposed to a number of Chinese goods, including tackifiers of all varieties? What kind of impact can these tariffs have on the longer term imports of both pine-based and hydrocarbon-based tackifiers to the US?

Steve: The tariffs implemented in 2018 on many of the Chinese goods exported to the US (more commonly known as the section 301 tariffs) saw their initial four year implementation period expire in later 2022. Feedback from market participants to the US trade representative during the subsequent two months after the initial tariff period saw a number of participants advocating for continuation of the tariffs due to what they viewed as the potential damage caused if the tariffs were to be removed. As part of the trade representative’s process, this initiated a further investigation by the US trade representative with the tariffs continuing to remain in place. The US trade representative initiated a two month comment period through mid-January of 2023 whereby affected or interested parties could comment on the necessity and desirability of extending the tariffs relating to specifically impacted HTS codes. The US trade representative received almost 1,500 submissions during the comment period and will now need to review those comments before proposing further actions. In the meantime, the tariffs remain in place and this is likely to be the case for some period of time. I suspect that we may come out of the review process with an updated and improved methodology for requesting and approving exceptions to the tariffs but this remains somewhat speculative at this point.

Leo: There is no doubt that many industry participants will be watching the outcome of the US trade representative’s review of the tariffs. Thanks for listening to this podcast. In the next episode, we will discuss trade flows for the pine oleoresin and gum rosin markets in Brazil and China, the two biggest markets for these products. If you would like a discussion about the pine chemicals and hydrocarbon resin markets and how we assess prices and market trends at Argus, please email us at or

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