Tall Oil Prices Show Bullish Trend in US Market Amidst Ample Inventories

Tall Oil prices increased in the United States due to insufficient inventory levels among market manufacturers and traders. Additionally, the growing demand for Tall Oil from paper, pulp, and mining industries has contributed to the high price of Tall Oil. Furthermore, market participants have been concentrating on replenishing their inventories with new stock, which also supported the upward trajectory of Tall Oil prices.

As of August 2023, the manufacturing industry in the U.S. has seen a decline for the tenth month in a row. However, the decline rate slowed, indicating that the sector may be settling down at a lower level. The number of inquiries for new orders improved in August compared to the preceding month, supporting the uptrend of the Tall Oil prices. The decrease in production activity led to an overhang of Tall Oil's inventory in the U.S. market. Stocks at factories and their customers remained very low in August.

According to the most recent Logistics Manager's Index (LMI) data, growth is accelerating in the United States in terms of inventory costs, warehousing utilization, and warehousing prices. The US LMI stood at 51.2 in August of this year, which was a notable improvement considering the overall index had previously experienced three straight months of contraction and five consecutive months of new record lows. In contrast, this expansion has occurred at its swiftest pace since February. Aggregate logistics expenses increased 18.6 points to a reading of 175.3 in August, a significant shift from the patterns seen over the previous 18 months. Inventory costs were the main driver of cost growth in August. This increase is attributed to large enterprises' scarcity of storage space and inventory restocking. The restocking of inventory contributed to the slowing rate of contraction in inventory levels. All of these elements played a role in driving up business expenses and Tall Oil prices.

The latest Federal Reserve report indicates that economic growth in the United States was moderate in July and August amid a tightening labor market and a decrease in inflationary pressure, reinforcing expectations that the Federal Reserve has either completed or is close to completing its policy of interest rate hikes. This has contributed to an increase in consumer confidence in August, increasing Tall Oil prices.

According to ChemAnalyst's projection, the price of Tall Oil will rise at a modest rate in the USA market, reflecting the end sector's persistently positive demand outlook and the market's tight supply. The key interest rate increases by central banks are expected to be put on hold in the upcoming months, which might enhance consumer confidence and help maintain the favorable market dynamics for Tall Oil.