Market evolution: Tall oil (CN 3803) — 2015–2025

Introduction

Tall oil is a co-product of the kraft pulping process, derived from wood (predominantly softwood). It is used in a wide range of industrial applications, including adhesives, coatings, inks, soaps, and increasingly as a bio-based feedstock. This report examines the evolution of EU external trade in tall oil (CN 3803) between 2015 and 2025, drawing on trade data from the Trade Dashboard. Over this period, the EU's trade profile for this product has undergone a striking transformation: imports surged while exports remained largely stagnant, the United States consolidated its position as the dominant supplier, and the EU's net import reliance more than tripled. These shifts reflect broader dynamics in global bio-based supply chains and the EU's growing appetite for tall oil as a renewable feedstock.

1. A Widening Structural Deficit

The EU trade deficit in tall oil expanded almost fourfold

The most striking feature of the 2015–2025 period is the dramatic widening of the EU's trade deficit. In 2015, the EU's trade balance stood at -€40.2 million; by 2025, it had deteriorated to -€149.2 million — a decline of 271% (trade overview).

This reflects a fundamental asymmetry: imports grew far more rapidly than exports.

Import volumes grew at nearly seven times the rate of export volumes

While EU imports of tall oil more than doubled in quantity terms (from 106,202 to 253,027 tonnes), exports edged up only modestly (from 7,631 to 9,174 tonnes). The EU effectively transitioned from a modest importer to a major one over a single decade.

Rising unit prices amplified the value gap

Import prices rose from €511/t to €654/t (+28%), while export prices climbed from €1,393/t to €1,774/t (+27.3%). The persistent premium on EU exports — roughly 2.7× the import price in 2025 — suggests that the EU exports higher-value refined tall oil while importing cheaper crude or semi-processed grades. Price increases on both sides amplified the total value swing, particularly on the import side where volumes were much larger.

Net import reliance more than tripled

The net import reliance indicator confirms the structural shift. In 2015, the EU relied on external suppliers for just 4.1% of apparent consumption; by 2025, this figure had risen to 14.6% — a 252% increase. The peak reached 29.8% at one point during the period, underscoring the vulnerability of the EU's bio-based supply chains.

2. The American Consolidation and the Reconfiguration of Supply Sources

The United States became overwhelmingly the EU's primary tall oil supplier

The most dramatic shift in the EU's import geography was the rise of the United States. US tall oil exports to the EU surged from €46.9 million in 2015 to €157.0 million in 2025, an increase of 234.5% (top partners). By 2025, the US accounted for approximately 95% of all EU tall oil imports by value — an extraordinary level of concentration.

Traditional European and Latin American suppliers lost ground

Several formerly significant suppliers saw steep declines. Imports from Russia fell by 49% (from €5.8M to €2.9M), likely reflecting the impact of EU sanctions following the 2022 invasion of Ukraine. Imports from Brazil collapsed by 87.8% (from €3.6M to €444K), and those from the United Kingdom nearly vanished (−98.6%), the latter plausibly a consequence of Brexit-driven trade restructuring.

Belarus emerged as a notable, if volatile, supplier

Belarus grew from a negligible €360K in 2015 to nearly €4.0 million in 2025 (+1,001%), though with high year-to-year volatility (coefficient of variation of 0.74). This growth is noteworthy given the tightening of EU sanctions on Belarus over the same period, suggesting either residual pre-sanction shipments or indirect trade flows.

Import concentration increased materially

The Herfindahl-Hirschman Index (HHI) for imports by value rose from 7,607 in 2015 to 9,012 in 2025 (+18.5%). While the 2015 level already indicated moderate concentration, the 2025 level is approaching a high-concentration threshold, driven almost entirely by US dominance. This concentration risk makes the EU import market sensitive to any disruption in US supply.

Finnish imports surged, while Swedish imports collapsed

Among EU Member States, the shift was equally dramatic (top reporters):

Finland — itself a major producer of tall oil from its pulp industry — became by far the EU's largest importer, absorbing €146.5 million in 2025. This may reflect Finnish mills importing crude tall oil for refining and re-export, or the integration of Nordic supply chains. Conversely, Sweden went from €12.6 million to essentially zero, and Austria and the Netherlands also saw large declines, suggesting a consolidation of import flows through fewer entry points.

3. Export Destinations, Production Dynamics, and Growing Vulnerability

EU export destinations shifted markedly, with large swings in direction

EU exports of tall oil remained modest in absolute terms but underwent significant geographic reorientation (top partners for exports):

Norway became the top export destination, likely reflecting the integration of Nordic forestry industries. Türkiye also grew strongly. Meanwhile, the UK — which absorbed €2 million in 2015 — collapsed to €537K, mirroring the import-side Brexit effect. The UAE saw a sharp decline of 91.9%.

Export prices exhibited notable shocks in certain markets

The volatility analysis detected significant price shocks in EU exports:

• Türkiye (2019): a price abnormality score of 92.7, with a 144.2% upward shift, accounting for 13.9% of export value.
• United Arab Emirates (2023): abnormality of 68.5, with a 189.3% price shift (5.7% of export value).
• South Korea (2022): abnormality of 7.4, with a 78.9% shift (6.6% of export value).

These shocks suggest either one-off high-value shipments, supply disruptions in destination markets, or the EU's ability to command premium prices in less competitive markets.

EU production volumes declined while values surged

The production data reveals a striking divergence. Physical production fell from 432,199 tonnes to 400,000 tonnes (−7.5%), yet production value soared from €92.6 million to €800 million (+763.5%). This suggests massive price inflation in tall oil — consistent with surging global demand for bio-based feedstocks — even as output stagnated or slightly contracted.

EU export propensity collapsed, raising strategic questions

The export propensity — the share of domestic production exported — plummeted from 14.0% in 2015 to just 2.3% in 2025 (−83.9%). This is the most dramatic vulnerability indicator in the dataset. It implies that the EU is increasingly retaining or consuming its tall oil output domestically rather than exporting it, even as imports surge to fill demand. Combined with the rising trade intensity (down from 27.4% to 18.1%), this suggests the EU's tall oil market is becoming more insular and simultaneously more import-dependent — a potentially uncomfortable combination.

Finland and Sweden dominate EU production and specialization

The specialisation data confirms the Nordic dominance of EU tall oil production:

Finland alone accounts for over half of EU tall oil production and has an extraordinary revealed comparative advantage (RCA of 55), reflecting its vast softwood forests and kraft pulping capacity. Sweden contributes a further 14%. Together, these two countries dominate both production and export flows.

Conclusion

The EU tall oil market between 2015 and 2025 was characterised by a structural transformation driven by three converging forces: surging import demand (particularly from bio-based industries), growing dependence on US supply, and a contraction in export orientation.

The most consequential development is the tripling of net import reliance to 14.6%, combined with extreme concentration of imports on the United States (95% of import value by 2025). While the EU remains a significant producer — with Finland and Sweden at its core — domestic production has stagnated in volume terms even as demand has grown. The collapse of export propensity from 14% to 2.3% suggests that domestically produced tall oil is being absorbed by EU industries rather than traded internationally, reinforcing the need for imports.

From a strategic standpoint, this evolution presents both opportunities and risks. The EU's position as a major processor and consumer of tall oil reflects the strength of its bio-based economy, but the heavy reliance on a single external supplier creates a concentration vulnerability. The decline of traditional suppliers (Russia, Brazil, the UK) and the emergence of new ones (Belarus, Argentina) have not been sufficient to diversify supply. Future policy attention may need to focus on expanding domestic refining capacity, diversifying import sources, and monitoring the geopolitical implications of an increasingly US-dependent supply chain for this strategically relevant bio-based feedstock.