PARSIPPANY, NJ, February 15, 2011 – Changes in lubricant refining technology have led to a decline in the supply for petroleum wax, which has traditionally dominated the global wax industry. As petroleum waxes fall behind, new formulations have emerged to compete for the vacated market space. Global wax supply in 2010 is estimated at 9.6 billion lb according to the latest report Global Wax Industry 2010: Market Analysis and Opportunities from worldwide consulting and research firm Kline & Company.
The fate of petroleum wax supplies is largely outside the control of the wax industry. Wax supplies are tied to regional basestock quality requirements, and this is independent of wax supply and demand. Today, petroleum waxes represent 85% of global wax supply, dropping below 90% for the first time in decades.
A combination of tight wax supplies and rising crude oil costs has caused a steady rise in wax prices during the last five years. This has created market openings for higher cost synthetic, animal, and natural vegetable waxes, and provided a platform for the research, development, and marketing of hydrogenated vegetable waxes.
Fighting to take the place of petroleum waxes are synthetic and vegetable waxes. Synthetics, mainly represented by Fischer-Tropsch and polyethylene waxes, have the advantage of closely resembling the physical properties of petroleum waxes and currently represent 11% of global wax supply. On the other hand, vegetable waxes can fulfill the need for softer waxes, which are in deficit due to the reduction in slack wax-supplies. Their use has already begun in applications including board sizing, candles, and fire logs. Vegetable and animal waxes account for 4% of global wax supply.
Wax supply has eroded significantly in North America and Western Europe due to a rapid Group I supply rationalization. In the past, the decline in supplies from North America and Western Europe were compensated by growth in supplies from China. However, this is no longer the case, as the Chinese lubricant industry starts demanding more Group II and III basestocks, leading to a flat or declining Group I supply.
Waxes are used in thousands of applications around the world, with candles being the predominant application on a global basis. Candles make up about 43% of the global wax demand. Board sizing now accounts for 15% and is the second largest application segment. Rheology/surface applications and health industries account for 14% and 3% of the global demand respectively and are among the fastest growing segments of the industry.
Wax consumption is expected to grow at an average annual growth rate of more than 2% from 2010 to 2020. Different regions and different product applications will enjoy different growth rates. Ultimately, insufficient supply growth or even a supply decline will constrain demand growth.
Global Wax Industry 2010: Market Analysis and Opportunities provides a comprehensive analysis of the global supply and demand of waxes including animal based, vegetable based, mineral, and synthetic waxes like Fischer-Tropsch, alpha-olefin, and polyethylene waxes.
Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit www.KlineGroup.com.