Price and market trends: US oleic and tall oil fatty acids vie to meet rising C18 demand

29 November 2012 18:47  [Source: ICB]

Applications in oilfield services boost demand for C18 acids, but supply issues could constrain tall oil fatty acids

US oleic and tall oil fatty acids (TOFAs) are vying with one another to meet growing demand for C18s in the industrial end-use sector, said buyers and sellers.

Increased US oilfield activity is pushing up demand for C18 acids

Copyright: RexFeatures 

A combination of ramped-up industrial requirements in the domestic oilfield and nascent emerging end-use applications are driving the demand increase that is draining ready supply of both acids.

Both C18 acid sources are cramped on the production side, adding to the supply squeeze and keeping prices under upward pressure.

Tallow-based acids are a US product with most production operations located in the country's vast agricultural midwestern section. Tallow oleic acid feedstock is tallow fat, typically bleachable fancy tallow (BFT), produced by animal fat rendering.

There Chicago's feedlots and rendering facilities command production of the tallow feedstock used to make these fatty acids through the lipid - also called fat - splitting technology of the oleochemical industry.

TOFA LIMITATIONS
The TOFAs are another story on the production side. These are not considered to be necessarily limited by production capacity, but rather by feedstock issues and lack of demand for the co-product rosins that come along in the process.

TOFA feedstock is crude tall oil (CTO), produced by processes used in wood pulping, typically softwoods, and associated mainly with the paper milling business.

But both oleic and TOFA fatty acids provide an 18-carbon, or C18, chain length source and are liquids at room temperature.

These characteristics, chemically and physically, are what are attractive in the oilfield applications where increased drilling and down-hole activity is being prompted by the US shale gas phenomenon. There is a preference in these applications for liquid-at-room temperature acids. The C18 length provides this physical property along with the required chemical properties.

These same physical and chemical properties grant the C18s attractive potential for an array of derivatives, forming the basis for emerging offtake outlets as developments continue.

However, the supply factors for oleic acids and TOFAs appear to be going in different directions.

In October 2012, US-based Vantage Specialty Chemicals announced plans to expand its oleochemical production capacity at its plant in Chicago, Illinois, stating that this work will also include expansion in oleic fatty acid production.

"The oleic acid is needed to support rapidly expanding growth in new markets," said Guillermo Schnitzler, product manager for fatty acids.

The oleic fatty acid expansion will add 30m lb/year of additional fatty acid production capacity to the plant, with full output streams available by year-end 2013 and product shipments outgoing by late 2013 and early 2014.

"This increased capacity will help to alleviate the tightness in oleic supply and offer improved flow to meet expected demand increases," Schnitzler added.

On the other hand, increasing supply prospects for TOFAs are less likely to develop.

The tall oil feedstock is a viscous liquid obtained as a by-product of the Kraft process of wood pulping, with the name originating from the Swedish "tallolja", meaning "pine oil".

Through fractional distillation processes, tall oil rosins are obtained and further reduction processes yield the tall oil fatty acids, TOFAs.

Although co-products of the manufacturing processes, rosins and TOFAs mainly go into different end-use markets with varying demand requirements.

Rosin end-uses in adhesives, inks and coatings, and rubber are less robust than in oilfield services, according to sources.

One consequence of this is that fractionators are less interested in making the rosin because inventories of this product are stacking up.

SOFTWOOD IMPORTS FALL
However, the significant factor in TOFA supply is wood. Softwood imports from China are said to be dwindling because the Chinese want to retain those woods and retrieve the turpentine pine oil products from them.

Adding to this situation is mundane demand in the paper markets, leading to less wood pulping and therefore less CTO production - consequently, less rosin and TOFA production.

Tallow-based oleic acid, referred to often as C18:1 because of the different units of unsaturation (denoted by the colon) in the several cuts of C18 that come from oleochemical production, had bulk delivered monthly contracts assessed at 80-83 cents/lb.

November TOFAs, on the same contract basis, were assessed at parity - a situation that has increasingly prevailed in 2012.


By: Judith Taylor
+1 713 525 2653



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