Weaker softwood pulp markets have reduced European crude tall oil (CTO) supply, but soft rosin markets remain a limiting factor for tall oil fractionators in 2026, sources told Argus.
With tighter CTO availability in Europe, refiners have turned to US imports to meet rising demand for tall-oil-based fatty acids used in biofuels.
Swedish and Finnish refiners imported 318,485t of US CTO in 2025 — the highest since 2010 — up from 218,160t in 2024 and 174,568t in 2023, Global Trade Tracker (GTT) data show.
Imports surged because of reduced Nordic tall oil supply, greater interest in higher-rosin fatty acid fractions such as crude fatty acids (CFA) for biofuels, and increased run rates at several fractionators.
While European CTO imports from the US have risen, fractionation rates vary among companies depending on their rosin exposure, sourcing strategies and product mix, participants told Argus during meetings and site visits in Finland.
"Rosin remains the limiting factor," CTO refiners said.
Rosin is one of the main fractions produced during tall oil distillation. It is used in paper sizing, printing inks and as a feedstock for rosin derivatives.
Rosin and derivative markets have faced declining demand in recent years because of falling paper and printing-ink use, and competition from cheaper and oversupplied hydrocarbon resins (HCR) in adhesive and road-marking applications.
As a result, C5 HCR from China continues to land in Europe at discounts of several hundred euros on a delivered basis compared with pine-derived rosin derivatives, suppliers and adhesive formulators said.
Some CTO refiners are running at higher rates because of firm biofuels demand and a product mix less dependent on rosin. Others have reduced fractionation because of changes in strategy or sourcing.
Selling more fatty acids into biofuels generates more rosin as a co-product, adding to stock pressure in an already soft rosin markets.
CTO refiners have explored reducing their reliance on rosin markets by using higher rosin levels in CFA.
End-users can tolerate 8–20pc rosin in tall-oil-derived fractions such as CFA, which could ease some of the stock pressure, participants said. But higher rosin content makes it harder to produce 100pc HVO compared with other feedstock options, one participant noted.
Lower run rates at some facilities, combined with higher CTO costs, resulted in firmer first-quarter tall oil fatty acid (TOFA) contract prices of €1,525–1,675/t delivered — a 5.8pc midpoint rise from €1,450–1,575/t in the fourth quarter of 2025.
Lower-rosin European TOFA can also be used in biofuels, but its higher price relative to the higher-rosin CFA alternative limits sales into that sector.
Even so, stronger demand for advanced feedstocks such as CTO and its derivatives under the EU's Renewable Energy Directive (RED III) could support some TOFA use despite its structural premium over CFA.
