2018 PCA international Conference

September 16-18 Lisbon/Portugal

CST and CTO : Global OverviewMichel Baumassy , Forchem Oy

Portuguese Rosin History

• Y1475 : Earl of Vila Real was granted a license to operate the Leiria pine tree forest

and collect the rosin extracts mainly for Naval Store.

• Y1790: At the demand of Marquis of Pombal the first ovens ( Ragusa/Sicily type)

were installed to produce Pine Resin.

(Replaced in Y1822 by cylindrical metal ovens)

• Second half of 19th century: Tree tapping techniques imported from the South of

France.

• Sebastiao Bethamio de Almeida (1817-1864) ( Chemistry Teacher) and Bernardino

José Gomes (1817-1890) (Forest Authority of Marinha Grande) at the origin of the

Rosin industry in Portugal.

• Y1861/1862: Building of the first ‘modern’ plant in Marinha Grande (Leiria) to produce

Rosin and Turpentine .

1st Portuguese Rosin factory

(1861-1914) Marinha Grande

1st Portuguese Rosin factory

(1861-1914) Marinha Grande

Gum Rosin and Turpentine

Production in Portugal

0

20000

40000

60000

80000

100000

120000

Rosin Turpentine

1935

1975

2018

Metric Tons

Y2018 Gum Turpentine Production:

145 000T

China 55%

Brazil 24%

Indonesia 7%

ROW 14%

Y2018 CST Production: 205 000 T*3-5 Kg / T Softwood Kraft Pulp

North America, 59%

Europe/Russia , 33%

ROW, 8%

*Including 20 000 T ? CST from CTO

Y2018 World CST fractionation capacity

245 000 T

(Capacity in use: 205 000T)

USA 140 000 T

(4 plants)

France 50 000 T

(1 plant)

ROW 25 000 T

3 plants , CHL,NZL,RUS)

India 30 000 T

(1 plant)

Y2018 Turpentine Demand

(Total Turpentine Production 350 000 T)

USA 120 000 T

France 40 000 T

India 60 000 T

China 90 000 T

ROW 40 000 T

Turpentine Main Components

Average Composition (%)Alpha Pinene Beta Pinene Delta 3 Carene

China / P.Massoniana 80 7

China / P.Elliottii 52 36

China / P.Yunanensis 60 25

Brazil/P.Elliottii 40 45

Brazil /P.Tropical 80 5

Indonesia /P.Merkusii 80 2 12

Portugal 75 17

India 25 3 60

USA (South East) 62 25

USA (NW)/Canada 30 10 20

Finland/Sweden/Russia 55 4 25

Austria 60 13 15

CST: Sulfur compounds 1 – 5 %

Y2018 CTO Production : 2 Million T40-60 Kg / T Softwood Kraft Pulp

North America, 49%

Europe/Russia , 42%

ROW, 9%

Y2018 CTO Demand / Market Segment

Fractionation, 79%

Biofuels, 12%

Other uses, 9%

Y2018 World CTO fractionation capacity

1.8 Million T

(Capacity in use: 1.5 Million T)

USA 0.7 MT

5 Plants

Europe 0.8 MT

6 Plants

Russia 0.16 MT

4 (5) Plants

CHN/JPN/NZL/ZAF

0.14 MT

1 MT = 1 Million Metric T

South Africa

1 Plant

Japan

1 PlantChina

2 (3) Plants

New Zealand

1 Plant

CTO Exports from USA

Y2017:110 Million USD / 250 000 T

(Y2016:100 Million USD / 205 000 T)

Japan 27 M USD

(30 M USD)

China 8 M USD

(4 M USD)

France 11 M USD

(7 M USD)

Sweden 32 M USD

(25 M USD) Finland 26 M USD

(30 M USD)

Source: Customs statistics

USA

South Africa 5 M USD

(3.6 M USD)

Million USD : M USD

Y2017 (Y2016) CTO Other Main Exports

Source: Customs statistics

RussiaFinland 11 M USD (5.5 M USD)

GermanyAustria 8 M USD (7 M USD)

Sweden Finland 18 M USD (11 M USD)

Finland Sweden 4 M USD (7 M USD)

Million USD : M USD

Canada

USA 3 M USD(5 M USD)FRA/SWE/FIN 5 M USD (5 M USD)

PolandAUT/FIN 3 M USD (3 M USD)

Spain France 2 M USD (2 M USD)

Pulp And CTO Developments

. 2015/2020 : 4 Billions USD invested in pulpmills in Finland and Sweden resulting in

additional 150 000 T CTO

• New pulp mills projects in Brazil , USA and Russia

• Hengan International , Chinese tissue giant acquires stake in Finnpulp/Finland

• Y2021 : CTO demand for biofuels will increase

• SCA/St1 partnership to build a new facility to produce biofuels using 100 000 T CTO

(planned to be operational in 2021)

• SunPine planning a 50% capacity increase (operational in 2020)

Y2018 Global TOFA Production:

460 000 T

USA, 38%

Finland, 24%

Russia, 9%

Sweden, 14%

France, 4%

Japan, 4%

Austria, 2%

China, 2% Others, 3%

Y2018 Global Rosin Production:

1 240 000T

Gum Rosin production increasing

GumRosin,63%

TallOilRosin,36%

WoodRosin,1%

Y2018 Global Tall Oil Rosin (TOR) Production:

450 000 T

Y2020 : Min +15 000T

USA,47%

Finland,16%

Russia,6%

Sweden,16%

France,5%

Japan,4%Austria,2%

China,2% Others,2%

Y2018 Global Resin Production :

2 610 000 T

Hydrocarbon resins becoming commodities

Terpene resins facing high feed costs

Rosin, 47%

Hydrocarbon Resins , 50%

Terpene Resins, 3%

From Dieselgate to Dieselcrash

100% Electrical

(Batteries)

Plug-in Hybrids

Hybrids

Gasoline

Diesel

Forecasts

Europe

Millions of vehicles

(Cars/LUV)

Source: AlixPartners

European Diesel Market Share (Cars/LUV)

Forecast 2030

2015:Volswagen Dieselgate

France

Italy

United Kingdom

Germany

Crude Talloil

A Scarce and Renewable Product• CTO industry : More than 100 years old

• Sustainable , non-subsidized bio-based industry

• Bio-diesel production out of CTO : Destroying a precious resource

• Dieselgate : Diesel technology questioned in many countries

Possible ban of diesel cars in European cities ( Paris 2020 ?)

• Diesel for Trucks : Possible breakthrough of other technologies ?

• Fractionating CTO and upgrading the obtained products following the principle of

cascading is the most efficient and intelligent way of using CTO.

Outlook for the Pine Chemical market

• High demand for CST and Gum Turpentine from the flavor/fragrance ,solvent and

resin industries … but cost considerations might force users to switch to alternative

products.

(D Limonene production from Citrus industry affected by climatic conditions

and diseases in Brazil and Florida)

• Hydrocarbon resins becoming commodities and affecting rosin demand

• Tofa demand remaining high . Production only 0.5 MT compared to other vegetable

oils ( Palm oil 70 MT , SBO 55 MT…)

• Pine Chemical market growing at a higher rate than average GDP growth and

demand driven by Asia.

• Growing environmental concerns will favour Pine Chemicals.