chips shortage

When the (Micro) Chips Are Down, Being Overly Smart Doesn’t Help

When the Chips Are Down, Being Overly Smart Doesn’t Help

By Satyan Gupta, Director, Energy

If there were an award for strongest trending topics in 2021, semiconductors would be among the top contenders.

Rightly so, considering their use in so many applications, such as automobiles, wireless communications, personal computers, servers, and electromedical and various other digital technologies. As the “smartness” quotient in end-use applications continues to climb, chip demand similarly continues to experience robust growth. The COVID-19 pandemic served to further bolster this momentum, as remote operations of manufacturing and service sectors placed even greater demands on connectivity and digital hardware — to the point where manufacturers began stockpiling chips for the integrated circuits (ICs). In contrast, the just-in-time (JIT) modelled supply chains of the automotive sector froze the procurement of chips during the initial lockdown phases of the pandemic.

As the automotive sector began recovering in the second half of 2020, the industry was forced to compete with other growing end users of semi-conductors, the supplies of which were impacted due to the pandemic-fueled factory shutdowns in countries like Malaysia. Even after chip manufacturing operations resumed in Q4 2020, supplies failed to keep up with the burgeoning demand — despite the maximization of utilization rates of global manufacturing assets. Unfortunately, industry pundits do not expect the situation to be resolved anytime soon.

Automotive Electronification

Over the last two decades, original equipment manufacturers (OEMs) have been working relentlessly toward transforming their automobiles from primarily mechanical machines to electronic devices. Integration of electronics in the vehicle hardware, like the drivetrain, controllers, infotainment, ACES (autonomous, connected, electric, and shared) mobility, and safety systems — for expanding the vehicle functionality and optimizing performance and safety, while complying with emission norms — necessitated the increased use of semiconductor chips. This trend is apparent from the growing content of semiconductor chips in automotive electronics over the last five years.

HISTORICAL GROWTH OF SEMICONDUCTOR CONTENT PER VEHICLE

Total automotive semiconductor market

SOURCE: IC Insights
IC: integrated circuits; OSD: optical, sensors and discrete.

Further, growing penetration of battery electric vehicles (BEVs) and hybrids — which incorporate a greater number of integrated circuits and sensors and, consequently, higher semiconductor content — will further amplify the stress on the chip supply chains.

AVERAGE CAR SEMICONDUCTOR CONTENT BY POWERTRAIN ($)

 

semiconductor by powertrain

SOURCE: Infineon.
Other include semiconductor content in body, chassis, safety and infotainment, opto, small-signal discretes, and memory

Despite the strong recovery in demand, automotive production has been severely impacted by the unavailability of chips, with many global and regional OEMs — like Toyota, Honda, Ford, GM, Tata, and Nio — announcing production cuts or complete shutdowns of select assembly plants. LMC Automotive forecasts a decline of 8% in light vehicle sales in 2021. Further, due to the expected longer recovery path, light vehicle sales for 2022 and 2023 have also been revised downward, by 8% and 3%, respectively. These developments will have a profound impact on the entire automotive value chain. According to AlixPartners, a consulting firm, the semiconductor chip shortage will lead to a loss of USD 210 billion for the global automotive industry in 2021.

FORECAST FOR LIGHT VEHICLE SALES

FORECAST FOR LIGHT VEHICLE SALES

Impact on the Lubricant Industry

Looking forward, the lubricant industry will not be immune to changes in the automotive industry; both automotive and industrial lubricants will be adversely affected. This will have strong implications for the lubricant suppliers, against the backdrop of changes in customer ambitions, preferences, and buying considerations.

On the B2B front, the volumetric impact on factory fill volumes for engine oil, transmission fluids, grease, coolants, and other lubricants will be immediate and certain due to its direct correlation with automobile production. In addition, the demand for factory maintenance fluids and metalworking fluids (MWFs) in assembly plants and auto-component manufacturing facilities will be gradual and uneven — depending on the structure, operations and maintenance, and supply chains of OEMs and auto-component manufacturers.

Typically, the production line is comprised of a complex integration of many rotating pieces of equipment and machines, ranging from CNC machine tools to hydraulic and geared motor systems to compressors to robotics. Based on the operation, manufacturers use a combination of central lubrication reservoirs and isolated sumps for lubricating equipment. Low utilization or partial shutdown of the plant does not directly translate into a clear, measured decline in demand for factory maintenance fluids or MWFs. In the case of the latter, calculations for modelling the impact are more complex due to defined shelf life, which is governed by biological activity and individual company practices/processes for producing machined parts. Among MWFs, the impact on straight oils and premium water-miscible removal and forming fluids will be relatively easily to decipher due to higher application-specific end-use and independent reservoirs. The impact on conventional MWFs might vary depending on the auto-component supply chains and sourcing models of the OEMs. Preventive and treating fluids will be impacted to the extent of their exposure in the metal auto-components industry and mandates issued by automotive OEMs to the component suppliers for fluid use.

Trends in the automotive industry will have a cascading impact on the upstream raw material industries, like metals, rubber, and plastics, where the demand for general industrial oils and process oils will be affected. Further, the slowdown in the processing industries will have a direct impact on the extraction industries, like mining, refining, and petrochemicals, where the lower utilization rates will affect the consumption of the various lubricants used in both stationary and mobile rotating equipment.

On the B2C front, the implications will be broader. The longer wait times, along with rising input costs, including fuel, will have repercussions on the market for new automobiles and the aftermarkets. All these factors will play on the customer’s mind, resulting in contraction of the pool of new buyers, or buyers being forced to compromise on their original purchase aspirations, i.e., selecting either a pre-owned vehicle, or a low-tiered model of the OEM, or choosing a different OEM in the same vehicle category. These changes will all impact the demand for automotive lubricants — volumetrically and qualitatively. Sales of light-viscosity premium engine oils like 0Ws and 5Ws will be impacted as customers opt for heavier and economical grades of engine oils, while maximizing the life of their new vehicles or newly acquired used ones. Similarly, the use of premium greases utilized in fill-for-life components and in transmission fluids will be affected.

Channel volumetric flows will also not be immune to these changes. OEM dealerships will suffer losses in their service business or will experience a dispersion of the in-warranty vehicle footfalls as customers shift their OEM preferences for purchase of new vehicles, depending on the waiting period. The used-car market is also experiencing structural shifts in many regions, with the rapid expansion of the organized business, along with the ratio of new-vehicle sales versus preowned vehicles increasingly skewing toward the latter. The IWS channel will clearly benefit from the growth in average life of the vehicles due to this short-term trend. Further, as the business models of used-vehicle providers mature, they will expand their value-added services, including vehicle maintenance and services to customers, which will emerge as an important channel for lubricant sales.

The table that follows provides a simplified view of the impact the semiconductor shortage will have on lubricant consumption in various end-use sectors, along with the type of lubricants impacted. The scale and length of impact for lubricants will vary depending on the structure and profile of the customers that comprise the end-use sector, the operational and sourcing practices, and, ultimately, the business exposure to the automotive value chain.

RELATIVE IMPACT ON LUBRICANT CONSUMPTION

IMPACT ON LUBRICANT CONSUMPTION

Through ongoing research, Kline’s Energy team continues to expand its understanding of the interplay between various end-use sectors and applications of lubricants for simulating the real-time impact of these industry developments on the lubricants industry and adjacencies in the short, medium, and long terms. We are continuing to track various developments linked to the evolution of the ecosystems, specific customer needs, technology advancements, digitalization, and sustainability for defining the existing and new opportunities, in order to support the growth ambitions of our industry and clients.

About this article:

When the Chips are Down, Being Overly Smart Doesn’t Help features insights from Satyan Gupta, a director in Kline & Company’s Energy sector. Gupta, who is based in the firm’s Delhi office, has more than 13 years of management consulting experience in areas such as new market entry and feasibility, channel and customer acquisition strategy, market-opportunity mapping, and price and sustainability analysis. Prior to joining Kline, Gupta worked in the Natural Gas industry as a technical-commercial consultant.

Share this:

Professional Beauty: The Biggest Wins and Losses in the United States

Professional Beauty: The Biggest Wins and Losses in the United States

Challenged by the pandemic, the professional beauty market made some of the boldest moves toward digitalization. Consumers turned to social media for education on products and at-home beauty routines. Most of the conversations centered around wellness and self-care while bringing the professional beauty experience home. Professionals increased the practice of virtual consultations to continue interacting with clients and selling throughout the shutdown. Marketers moved toward e-commerce and increased their presence online to continue selling while retail outlets were closed. While the industry was severely impacted, brands such as Olaplex, ZO Skin Health, and Revision Skincare continued to enjoy healthy growth. In this report, we discuss some of the biggest wins and losses in the professional beauty industry so far. 

What’s inside the report? 

  • An overview of the industry’s performance with snapshots for salon hair care, professional skin care, and professional nail care 
  • Notable changes and key developments along with the fastest-growing brands  
  • Future view of the industry highlighting areas with a high impact

This highlights report contains select excerpts from the following in-depth study: 

The Consumer Self-Care Explosion

The Consumer Self-Care Explosion: Implications and Opportunities for Wellness and Treatment Products

Over the last six years, we have seen an evolution and broadening of actions that consumers have adopted, in varying degrees, to take better care of themselves. In particular, the 2020 pandemic intensified the resolve of most all consumers to do something to care for themselves. In fact, 93% of those surveyed by IRI and Kline’s most recent consumer survey in late 2020 view health and wellness as a priority to a degree. 

With more consumers across all demographic and psychographic characteristics engaging in a broad range of activities to take better care of themselves, what does this portend regarding future demand for consumer healthcare products in both wellness and treatment? This paper explores that very question.  

Download The Consumer Self-Care Explosion: Implications and Opportunities for Wellness and Treatment Products to learn about: 
  • Emerging self-care themes that are contributing to a groundswell of consumers taking ownership and control of their health 
  • Self-care behaviors across a continuum, with wellness and maintaining good health on one end of the spectrum and needing doctor and hospital care on the other 
  • Preventive and natural products that are being placed alongside treatment-focused products within the category assortment on shelf 
  • The various actions marketers could take to help consumers simplify and foster daily health regimens aimed at wellness 

 

Resiliency main image

Resiliency 101: How Kline & Company Faced Adversity Head-On – and Became a Force in the Industry

Resiliency 101: How Kline & Company Faced Adversity Head-On – and Became a Force in the Industry

By Lance Debler

“Battle hardened.”

That’s certainly one way to describe Kline & Company. Since its inception in 1959, the NJ-based firm has fought its way through many of the economic crises that muddled other enterprises, but it’s also squared off in a pair of bitter internal battles and faced a solid slice of adversity, all the while becoming a leader in market research and consulting. Now, looking back at their Kline careers, CEO Joe Tarantola and some of the most senior members of his staff are discussing the secrets of their resiliency, what challenged them the most, and how the company managed to attain the world’s latest technology – even back in the ’80s.

“When I got to Kline, there was a Wang computer – it was about six feet long, three feet wide, and three feet high, and it was sitting in the middle of one of the open spaces,” Tarantola says of the then-top-of-the-line machinery.  “It was used as a typewriter, basically, with a screen.”

He also mentions a Telex (just Google it) and recalls the day that he, a consultant at the time, was called into a conference room with a slew of senior executives, including the company’s founder, the late Charles H. Kline. There, the suits were making a “monumental decision” on whether or not to buy a new piece of equipment: a fax machine. It gets better – Tarantola also vividly remembers the day he “almost got fired”…for buying a pen plotter.

“It’s a device that would grab a piece of paper and then physically grab different colored pens to draw pie charts and bar charts,” he says. “I went out and got one, and by the time I got back to Kline, Charlie was absolutely livid. But those were the kinds of things that we were trying in the very early stages. We just kept pushing the envelope.”

Eventually, Tarantola’s efforts to modernize the company paid off, as he successfully convinced Mr. Kline to invest in an IT department.  His plans, however, were railroaded by unhappy circumstances, and the company soon faced its first major challenge.

“Charlie got sick and sold us to a venture capital firm, and that was a disaster,” Tarantola remembers. “That’s when I was just getting up in the ranks, and I kind of led the revolt to buy ourselves back and pay them off.”

But the internal clashes over ownership, direction, and “control” – a word Tarantola says he, in general, is loathe to use – weren’t over. As the mid-’90s approached, there was, as now-Senior Vice President Eric Vogelsberg puts it diplomatically, “senior leadership whose personal interests were ahead of what was best for the firm.”

Tarantola is more blunt, saying that Kline’s management committed a “high-power betrayal.”

THE SECOND ‘REVOLT’

“They decided that they wanted to sell us to whoever would give them the right amount of money,” Tarantola says, adding that he and three of his fellow board members – Vogelsberg, now-Senior Vice President Susan Babinsky, and former SVP Ian Butcher – “didn’t even know” of the plans. “What became apparent to us was, they couldn’t care less who they sold us to and what they left us with in terms of our jobs and our futures. They were just trying to cash out. And look, I get it – I really do. But I was looking to my left and my right down the hall, and these were all my friends. If they came to us and said, ‘Here’s what’s going to happen to you guys. You’re going to plug into this bigger thing – your jobs will be enriched; you’ll have more opportunities. Here’s the plan; here are the strategies...’ But no one came to us with that. It was a money play. And I don’t know where it came from, but I just said no. I led another revolt to say, ‘You can sell the company, but we’re not going with them.’”

His coworkers quickly galvanized around him – “more quietly than me, probably,” he says – with Vogelsberg, Babinsky, and Butcher agreeing that they would “take care of our people.” Eventually, the four – who, like Tarantola, had started as consultants – won their war and gained control of Kline. But there were battle scars.

“That took a lot out of our growth trajectory,” Tarantola admits. “When companies were expanding quickly in the ’90s, we were dealing with these internal battles. And for me, that was an opportunity lost during a great economic cycle – we lost what I think was a very important growth stage.”

Still, Tarantola says, the future seemed bright. “We finally got ourselves owned by our people and were going in a direction that was not about someone getting rich. We finished buying those guys out and gave them a party in July of 2001. Then two months later, I was looking out the window, and it was 9/11…”

‘THE WORLD JUST STOPPED’

Now, looking back 20 years after the terrorist attacks that nearly devastated America, Tarantola realizes that September 11, 2001, was, in fact, Kline’s first “real battle.”

“What happened to us as a company was insignificant compared to the tragedy as a whole, but that was really the first economic crisis we had to deal with,” he says. “Before that, our biggest struggles were internal ones. But after 9/11, we didn’t get a consulting project for six months. The world just stopped because nobody knew what the hell was going on. I’m not sure I was ready for that. I’m not sure anybody was ready for that.

“We just hunkered down. Yes, we had to make some cuts. But to me, one thing about this group is, we’re battle hardened. You learn certain things, and the biggest thing I think people need to recognize is that it’s all about cash flow – your money. We got through it, and we got through it as a team. We were all in this little rowboat together.”

Indeed, that rowboat continued to sail – and soon set its compass overseas as a new trend began sweeping the industry: globalization.

“Many companies were contemplating whether they should expand internationally,” recalls Li Wang, who now serves as Senior Vice President of Kline Asia. “The risks were obvious, but we had foresight and courage. We decided to, one by one, set up offices around the world; today, our geographical footprint is an invaluable asset.”

The global expansion began with China in 2004.

“I pounded at the senior team and said, ‘Let’s do this. I can promise you – we’ll break even the first year in China if you let me do it,’” Tarantola recalls. “They said, ‘Oh, okay – if we’re not going to lose money, then go ahead.’ But you have to understand, I didn’t know what the hell I was doing. We just got on a plane; we met little companies and government businesses and tried to figure out what we were going to do. And we made some right decisions, but honestly, we just got lucky.”

A key cog in the machine: Wang, who was willing to head up offices in China.

“Brother Li volunteered to go,” Tarantola says, before swiftly explaining of Wang, “I call him Brother Li, and he calls me Brother Joe. When he said he would go back to China and run the business group there, that was it. How could I have hired a stranger in China? But Brother Li said, ‘I’ll go and do this little adventure with you’ – I still remember the email he sent saying he would – and that was a big deal. Once we did that and were successful, it emboldened us to really expand.”

And expand they did: Kline then spread its reach to India when, along the lines of Wang, Ali Khan volunteered to head up offices in Delhi/Gurgaon in 2006; he now serves as Managing Director of Kline India.

“That territory is a big piece of the engine now,” says Tarantola, noting that a Hyderabad office opened in 2012. “Then we wheedled our way into Eastern Europe. That became Prague. We got into Oxford next and then moved into London, getting all these great people we have there. Strategically, the center of gravity for companies is moving East, and I think, pretty soon, you could argue that London is a very important place for us.”

THE GREAT RECESSION’S ‘SHARED PAIN’

There were more bumps along the way; one of the biggest was the Great Recession that began in 2007.

“We did pay cuts,” Tarantola says. “The highest cuts were among the most senior people, down to a pretty nominal number for admins. But it was shared pain instead of firing people.”

And throughout it all, team members were kept apprised of any – and all – happenings.

“One of the most important things to do in such situations is to communicate frequently and very transparently,” says Babinsky. “We made sure to foster esprit de corps and explain all that we were doing to keep Kline viable. That hadn’t been done in the past, and the rank and file were often left in the dark. When Joe took over, we agreed we would never be that way again.”

Indeed, Tarantola says, “We all talked a lot. I learned to be a better communicator during the recession, and it did make a difference. When people don’t hear anything, they assume the worst – that’s human nature.”

Other challenges tested the stability of Kline’s core. Among them: the departures of key staff members.

“We lost some critical leaders about 10 years ago,” Babinsky recalls. “It was not expected and was a setback.  It took a while for us to rebound and determine a path forward – it was challenging.”

Tarantola agrees.

“It left a massive hole that we had to backfill,” he says. “That one totally blindsided us. We moved some people around and, mostly, moved people up – maybe a little before they were ready. Because, for the most part, we don’t bring in senior people very often. We’ve always kind of developed them. It’s a homegrown mentality here. If we can push somebody into a job before they’re ready for it rather than hire somebody above them, I’m going to make that choice almost every time.”

And in 2020, along with the rest of the world, Kline began dealing with the COVID-19 pandemic. Once again, the company faced the crisis with as much aplomb as possible.

COVID-19 – AND HOW IT STRENGTHENED KLINE

“I think we have navigated the pandemic as successfully as we could have to this point, as earlier crises provided learning experiences,” says Vogelsberg. “We focused on maximizing employee retention and minimizing cash outlays by taking judicious management of expenses such as travel, entertainment, rent, and leases.  At the same time, we took advantage of any incentives offered by various governmental agencies.”

It helped that the nature of Kline’s business allowed its employees to work from home, which Vogelsberg believes only improved the company’s offerings.  “I would go so far as to say that the pandemic helped strengthen our relationships with colleagues and clients, as we’re able to often provide very personal insights and perspectives via technology like Microsoft Teams and Zoom video conferences,” he adds.

Speaking of technology, the Wang computer is long gone. Today, the list of Kline’s high-tech accomplishments is extensive. Perhaps the most impressive: All its servers and systems are Cloud-based, putting Kline in the first 5% of companies to be entirely on the Cloud – ever. And despite the pandemic still unfolding – plus a past that left more than a few war wounds – the team at Kline remains ready for whatever may come next, with little fear of failure.

“If you’re not failing, you’re not trying,” says Tarantola, who – this month – marked his 40th year at Kline. “I’ve made so many mistakes, but I have one rule: Never make the same mistake twice. Yes, we’ve tried things that were failures – but none of those mistakes was so big that it really set us back. And one of the things I’ve learned, to be quite honest, is that I don’t have any fear.”

That, surely, comes with the decades of ups and downs tucked under his belt – plus a crew that’s sailing in Kline’s now-bigger rowboat with a well-deserved sense of ease. After all, Tarantola says, “You just have to stay calm and stick to the mission.”

Share this:

The Impact of the COVID-19 Pandemic on the Global Lubricants Industry

The Impact of the COVID-19 Pandemic on the Global Lubricants Industry

The Impact of the COVID-19 Pandemic on the Global Lubricants Industry 

By Ian Moncrieff and Milind Phadke 

 

Key Takeaways 

  1. COVID-19 could last from six to 18 months worldwide
  2. Economic impacts are already severe, and evolving national policies will impact the shape and duration of economic recovery
  3. Oil markets are in free fall, with transportation fuels hit hardest
  4. Based on our analysis of the market situation at time of writing this article, 2020 lubricants consumption could drop by at least 15%, and perhaps even up to 30%, from 2019 levels with PCMO most impacted
  5. Adverse lubricants market signals could extend beyond 2020 if COVID-19 persists or social distancing becomes embedded in corporate behaviors

Impact of COVID-19 on Oil and Lubricants market

How Did We Get Here? 

The COVID-19 pandemic, which started in China in November 2019, now afflicts much of the world. What will be its immediate and lasting impacts on the global economy and, specifically, on the lubricants industry? In a series of articles over the next weeks, Kline will analyze the impacts of this pandemic on various dimensions of the global lubricants, base oils, and additives industries. 

The story of the spread of SARS-CoV-2, the virus that causes COVID-19, has been widely told and does not need repeating here. What is now clear is that the virus is highly transmissible and has a higher mortality rate than seasonal influenza. There are currently no medicines or vaccines to fight the disease. The only effective weapon at present is social distancing, imposed by various means, to slow transmission of the disease. 

At best, it would seem that radical measures adopted worldwide could contain the impact of COVID-19 to mid-year (a lifecycle of a little over six months). Just as likely, based on the history of previoupandemics such as the Spanish flu and Swine flu, its extent could persist for up to 18 months, lasting into 2021. 

The Economic Consequences 

COVID-19, and the restrictions put in place to inhibit its spread, will have massive and potentially long-lasting consequences. Governments are responding with measures to stimulate economies, assure liquidity, and soften impacts on the...

Share this:

synthetic and natural wax

Strengthening Sustainability Efforts Move the Goalposts in The Wax Industry

Strengthening Sustainability Efforts Move the Goalposts in the Wax Industry

By Pooja Sharma, Project Manager, September 2021

The economic and health crises of 2020 have caused energy market participants to refocus their attention on protecting the global ecosystem and regeneration — and now, the global wax industry is doing its part to move toward cleaner, sustainable, and circular products.  

As the volume of petroleum wax continues to diminish, crude oil-derived petroleum waxes and non-petroleum synthetic and natural waxes are stepping up to fill supply gaps in the wax industry. But how well will these waxes align with the drive toward global sustainability? Are there more sustainable substitutes? And are consumer preferences changing in favor of end-products with low carbon footprints and recyclable? 

Petroleum wax, which is the workhorse for the wax industry, is produced as a byproduct of Group I base oil production as well as via solvent dewaxing of heavy waxy crude. The supply of Group I base oil-derived wax, which is associated with Group I base oil production, is declining due to declining demand for Group I base oils. The demand for Group I base oils is declining as the automotive and industrial lubricant applications transition toward more efficient lubricants formulated from higher-quality base oils. It is estimated that in the next 10-year period, base oil supply by wax-producing Group I plants will reduce to half of its current volume and, in the long-term — by perhaps 2050 — the supply will further reduce to nearly one-third of the current volume. This will have drastic implications on the supply of petroleum waxes, leaving the world short of nearly 1.5-2.0 million tonnes of gross Group I base oil-associated slack wax production. 

Wax and Group I Base Oil Supply Trend

Crude oil-derived petroleum waxes, produced by massive petrochemical refineries in Northeast China, have historically helped in softening the blow of Group I base oil-derived petroleum waxes capacity closures. These refineries will continue to supply petroleum waxes in the mid- to long-term future to partially fill the gap created by the loss of base oil-derived waxes. 

But which waxes are most sustainable? According to Kline's research, those produced via synthetic and natural processes may have an edge in the long-term future. Synthetic waxes that are derived from natural gas, such as those produced via Fischer-Tropsch (FT) process and polymerization of ethylene, have relatively lower carbon footprints compared to crude oil or coal-derived waxes.  These waxes are also free from toxic impurities such as polycyclic aromatic hydrocarbons, sulfur, and heavy metals, which may be found in petroleum waxes.  

Polyethylene (PE) waxes currently upstage other synthetic waxes when it comes to offering innovative sustainable products. Byproduct PE waxes that are produced via thermal cracking of waste plastics replace the “end-of-life” concept with “regeneration” in the plastics industry — one of the most vexed industries for waste generation. Although thermal cracking of waste plastics into oils and waxes has existed for years, the technology is regaining focus as a viable solution for tackling global waste plastics issues. New players are entering this market, with GreenMantra and Clariter being the most recently established.  

waste plastics into oils and waxes

The wax market is also currently seeing the introduction of revolutionary bio-based PE waxes. This type of wax, produced from plant-sourced ethanol, a 100% renewable source, can assist end users in reduce their carbon footprints when used in applications such as adhesives, cosmetics, coatings, and PCV compounding. In June 2021, Braskem, a Brazilian petrochemical company, introduced a sugarcane ethanol-based bio-PE wax product to its I'm green™ branded product portfolio. Demand for such products in the future will be driven by PVC manufacturers who are introducing bio-based PVC products to their portfolios and are looking for bio-based solutions for PVC lubrication. Bio-based PVC technology has recently surfaced, with eminent PVC manufacturer INEOS’ INOVYN business at the forefront with its BIOVYN branded bio-PVC products. 

Natural waxes that are produced from renewable plant-based sources and carry a green label on them, such as palm and soy, are doing exceptionally well in candle applications. These waxes are also gaining steam in cosmetics, food-based packaging, and coatings applications, driven by their suitability for food contact. Natural waxes have historically advanced only in application areas that consume softer waxes due to their lower melting points. However, the growing desire of wax consumers to use sustainable ingredients in other applications that have been traditionally served by harder, high melt-point waxes will drive their demand in the long term. Clariant’s Licocare rice bran wax, which is targeted at high-melt applications such as engineering thermoplastics and masterbatches, is an example of this trend. 

How will the wax industry acclimate to the new sustainable and circular environment? What roadblocks could slow down the adoption of waxes with low-carbon footprints?

The wax market has historically exhibited versatility and adeptness in absorbing non-petroleum waxes in the absence of a sufficient supply of petroleum wax. In the future, it is estimated that wax customers in traditional candles or board sizing applications — who are sensitive to changes in supply or price of wax — will experience a more significant impact. These applications will find it tougher to transition toward more expensive alternatives to petroleum wax, such as FT waxes. These applications are driven by end-consumer preference, have low barriers to entry, and are vulnerable to substitution in the long run. In contrast, rheological and surface applications such as PVC, hot-melt adhesives, masterbatches, inks, paints, and coating are higher-value applications that offer higher barriers to entry. Rheological and surface applications also have the ability to pay higher prices for waxes. In the long run, these applications will exhibit higher flexibility to absorb cleaner or sustainable products, such as synthetic waxes or even chemically modified plant-sourced waxes, which are typically more expensive. 

Another foreseeable challenge in transitioning toward clean and sustainable waxes could arise due to the raw material limitations for these waxes. Both synthetic and plant-sourced natural waxes could see supply limitations in the long-term future for several reasons. For one, in FT waxes, nearly half of the global supply is met by Chinese coal-to-liquids (CTL) plants, which convert coal to syn gas for producing waxes and other products. These plants are not likely to see any capacity additions beyond 2030 as China tightens its carbon emission limits to meet its carbon neutrality targets by 2060. Other synthetic wax suppliers, such as thermal degradation PE producers, may see lower volumetric growth due to raw material issues. The raw materials (plastic waste) that these plants consume are non-uniform in nature, resulting in lower quality of finished products. While these waxes may be able to meet the circular economy objective, they may not achieve the required quality standards for several applications. 

Vegetable oil-derived waxes may seem to be checking all the boxes, as they are plant-sourced. However, they will also have their own limitations in the future. Growth in palm plantations, from which palm wax is derived, has been termed as “the other oil spill,” as it has resulted in large-scale deforestation of tropical forest land in Asia. Negative consumer sentiments associated with palm plantations are likely to hamper the growth in palm waxes in the future. Meanwhile, soy waxes —produced from soy oil — are seeing growing demand from other competing markets such as fuels and food, and this could restrict the availability of soy oil for producing wax. 

wax industry acclimate to the new sustainable and circular environment

Sustainability trends will provide a new spin to the wax market 

The ever-complex wax market will face new challenges as consumers increasingly demand materials produced from greener sources. As a result of such demand, suppliers will strive to exhibit their commitment to protecting the global ecosystem by including new, innovative products based on renewable and recycled sources. With a reinforced global wave toward sustainability and a circular economy in 2020 and 2021, the wax industry is at the cusp of a new — and sustainable — normal.  

Kline & Company, an industry leader in providing market research reports and expertise on the wax industry, will soon be publishing a detailed report titled, Global Wax Industry: Market Analysis and Opportunities. 

Share this:

RELATED STUDIES

Global White Oils: Market Analysis and Opportunities

The global demand for white oils has been increasing slowly over the past few years. Despite the slow growth, the market remains dynamic due to the increasing use of Group II baseoils, intensifying competition from small suppliers, substitution by other products, and increasing regulatory control.

Learn more >>

Global Lubricants: Market Analysis and Assessment

This continuous publication since 2003, provides a comprehensive, in-depth analysis of automotive and industrial finished lubricant products, end-use industries, trade classes, major suppliers, and market trends in leading country markets and regions.

The customized report covers your choice of 10 country market and/or supplier profiles and offers a comprehensive Year in Review summarizing the overall global lubricants industry.

Learn More >>

 

 

FOLLOW US

Road to Recovery: Zooming in on the U.S. Professional Hair Care Market

Road to Recovery: Zooming in on the U.S. Professional Hair Care Market

The COVID-19 pandemic has transformed the hair care industry, amplifying many trends that were already present in the market. Download this highlights report to uncover key trends in: 

Channels: E-commerce became the main shopping destination consumers turned to during the temporary shutdowns of brick-and-mortar retailers. In the professional hair care market, e-commerce was the only channel to record growth, accelerating manufacturers’ move toward digitalization. 

Services: Color and treatment and corrective color remained among the fastest-growing salon services in the first quarter of 2021; their average service price surged as well. Do-it-yourself color experienced major growth while salons were closed, and this is expected to impact coloring services in the future. 

Products: With more consumers at home, the “skinification” of hair reached new heights. Consumers started to treat their scalp like the face, and various scrubs, masks, oils, and serums were introduced that effectively treat scalp concerns

What Are the Latest Strategies to Mitigate Herbicide Weed Resistance?

What Are the Latest Strategies to Mitigate Herbicide Weed Resistance?

What Are the Latest Strategies to Mitigate Herbicide Weed Resistance?

By Vera Sandarova, Kline

 

weed resistance to herbicidesA trio of technologies has emerged to counteract the herbicide resistance that wreaked havoc among crops and forced many farmers into bankruptcy.  

Since first being discovered in 1968, herbicide-resistant weeds have been reported in nearly 500 unique cases. Monsanto came to the rescue in 1996 via its introduction of genetically engineered Roundup Ready® (RR) crops, which increased crop yields, but eventually, 22 weeds worldwide became resistant to the glyphosate used in RR. Growers soon began employing PPO-inhibitors, but by 2015, PPO-resistant Palmer amaranth caused countless farmers to experience yield loss and struggle to control resistant weeds. 

To counteract herbicide resistance, the industry has been developing three technologies:
 

Stacked herbicide tolerance (GMO)  

To battle glyphosate-resistant weeds, agrochemical companies have been cultivating new herbicides or, more commonly, using genetic engineering to create herbicide-resistant crop plants. However, the cost of developing new active ingredients and the time required to develop them, along with the limited potential for economic return, have made it difficult to bring new products to market quickly. To fill the gap, companies chose to introduce 2,4-D and dicamba resistance to crops.  

There are two of these stacked herbicides technologies currently on the market: Xtend technology (Monsanto/Bayer)​ and Enlist Technology ( Dow/Corteva)​. Both have advantages and disadvantages, which are analyzed in detail in Kline’s Strategies to Mitigate Weed Resistance to Herbicides: U.S. Market Analysis and Opportunities study. Both technologies are creating multiple resistance capabilities, for which unique formulations will be required.   

Stacked gene seeds currently cover 70%-80% of planted acres of soybean and cotton and will likely increase to about 90%; there is a split between Enlist and Xtend technologies.  

New herbicide modes of action 

While no new modes of herbicide action had been developed in the past 30 years, some finally began emerging in 2020. Companies such as BASF, Bayer, FMC, and Mitsui announced new herbicides that have some novel modes of action; still, none of the new herbicides appear to be game changers in the short term. 

Perhaps the most interesting novel herbicide, tetflupyrolimet from FMC Corporation, was granted a new mode of action classification in the spring of 2021. FMC plans to start the registration process and launch products containing tetflupyrolimet in the transplanted and direct-seeded rice markets in 2023. The use of tetflupyrolimet is being tested in other crops, including sugarcane, wheat, soybeans, and corn. 

Herbicide combination products 

Since combination herbicides exploded in the 2000s, market share has grown to 37% of U.S. herbicide sales. Combinations contain between two and four different actives; new actives are often introduced in combination herbicides.  

Today, more than 300 different brands are sold in the U.S. market by all the majors, post-patent suppliers, and distributors. Syngenta is the sales leader followed by Corteva (which has the most combination brands). Distributors such as Loveland, Tenkoz, and Helena all sell different combination herbicides under private-label brands; even off-patent suppliers like Nufarm and Albaugh offer combination herbicides. According to our projections, Kline expects combination herbicides to grow at a rate of 6%, resulting in U.S. sales of $3.5 billion in 2025.  

To take a deep dive into analysis of all three strategies, consider Kline’s Strategies to Mitigate Weed Resistance to Herbicides: U.S. Market Analysis and Opportunities. To learn more about the study, visit our website. 

Share this:

Beauty Nutrition: Market Trends, Growth, and Innovation

Beauty Nutrition: Market Trends, Growth, and Innovation

Due to the ongoing COVID-19 pandemic, consumers have shifted to a new area of beauty that is concentrated on health and wellness. “Beauty from Within” — or hair, skin, and nail supplements — is growing at a rapid, double-digit pace.  

Wellness supplements that offer wide-ranging benefits, including better sleep, enhanced mental wellness and beauty, and relief from stress and anxiety are popular among consumers. Products with sustainable, vegan, organic, clean, and eco-friendly claims remain top of mind, and this is expected to continue in the following years as marketers center innovation around natural ingredients. 

The beauty nutrition market is comprised of a wide range of competitors, from supplement manufacturers to food, beverage, and beauty players, mushrooming into all retail outlets. What started in specialty stores like Ulta and Sephora has been mainstreamed into food/grocery stores, drugstores, mass merchandisers, and department stores. The e-commerce channel registered unprecedented sales gains due to the rising popularity of personalized nutrition offerings, coupled with strong promotion on social media. 

What are consumers’ favorite product forms? What ingredients are in high demand? What are the latest launches from leading brands like Nature’s Bounty and Olly, as well as emerging ones like SugarBearHair? How do retailers like Walmart, Walgreens, CVS Health, Target, Whole Foods, and Kroger respond to this rapidly growing segment?  

Get the pulse of the beauty nutrition market from our highlights report focusing on: 

  • Growth drivers and key trends 
  • Leading brands and private-label activity 
  • Hot ingredients and popular product forms 
  • Retail breakdown and future view of the segment 

The insights and data in this highlights report represent select excerpts from our in-depth Beauty Nutrition: U.S. Market Brief study, revealing key areas of growth in the “Beauty from Within” realm along with potential acquisition targets. 

How Will the White Oils Market Evolve in the Post-COVID-19 World

How Will the White Oils Market Evolve in the Post-COVID-19 World

How Will the White Oils Market Evolve in the Post-COVID-19 World

By Kunal Mahajan, Project Manager, July 2021

Global white oils demand is expected to grow at a CAGR of 3.1% to reach almost 2.0 million tonnes by 2025, mainly due to the global economy recovering from the impact of COVID-19.

White oils ― comprised of highly refined paraffinic or naphthenic baseoils with extremely low aromatic content ― are colorless, tasteless, odorless, and hydrophobic and do not change color over time. They’re also known as light mineral oils, light liquid paraffin, and light paraffin oils in different parts of the world.

White oils are used in various industries and their functionality varies from one industry to another. Key white oil applications are described in the table below:

white oils market in different applications

The Changes in White Oils Grades Uses

White oils are produced in two quality grades: pharmaceutical and technical (or industrial) grade. Pharmaceutical grade is the most refined white oil, consisting of only branched alkanes and cycloalkanes and free from aromatic or unsaturated compounds. Quality standards for pharmaceutical-grade white oils in a country are usually set by the national pharmacopeia. However, standards set by the United States Pharmacopeia and the U.S. FDA for use in the food, pharmaceuticals, and personal care industries are followed globally. 

Pharmaceutical-grade white oils are mainly used in industries such as personal care, pharmaceuticals, and food, as the end products of these industries are either ingested or come in contact with human skin. Earlier, pharmaceutical-grade white oils were used in equipment, where incidental contact with food, medicines, or personal care products was possible. For all other equipment, technical-grade white oils were used. However, lately, for all equipment, only pharmaceutical-grade white oils is used irrespective of whether the lubricant can come in contact with end products or not. This approach is followed in most markets.  Pharmaceutical-grade white oils are also used in industrial applications such as adhesives and sealants, and plastics, as they are used in packaging food, medicines, and personal care products. 

Technical-grade white oils are mainly used in non-food-contact industrial applications such as textile, plastics, and adhesives and sealants, paper, and agriculture. However, technical-grade white oils can be used in food, pharmaceutical, and personal care industries, where white oils do not come in contact with end products in some markets, such as China. 

Why Pharmaceutical Grades Dominate

Pharmaceutical-grade white oils lead demand with more than 50% share due to a preference for pharmaceutical-grade white oils in the food, pharmaceuticals, and personal care industries. They also have significant usage in the plastics and adhesives and sealants industries used for food, medicine, and personal care products packaging, as previously noted.

However, there are regional variations. For example, in Europe and North America, pharmaceutical-grade white oil dominates the market, with more than three-fourths of market share. As a result, in these regions, end users in industrial applications such as adhesives and sealants or plastics (not meant for food packaging) also use pharmaceutical-grade white oils.  The end users were already using pharmaceutical-grade white oils and have shifted to only using pharmaceutical-grade white oils. It also helps end users project an image of being more health- and safety-conscious. And while pharmaceutical-grade white oils are more expensive than technical-grade of white oils, the price difference is within the 5% to 10% range, which is not cost-prohibitive.

Global White Oil Demand

Global white oil demand was estimated at 1.7 million tonnes in 2020. Asia leads consumption, as it is the leading producer of plastics, textiles, pharmaceuticals, and adhesives and sealants (the industries that are the largest consumers of white oils). Asia is also one of the biggest producers of personal care products globally. China and India are the two biggest markets for white oils in Asia. Asia is followed by North America and Europe, with plastics and personal care being two leading consumers of white oils in both regions. The United States is the largest market in North America, accounting for almost 95% of white oils demand in the region. In Europe, Germany is the leading consumer of white oils.

 GLOBAL DEMAND OF WHITE OILS BY REGION, 2020

white oils demand by region

Impact of COVID-19

The COVID-19 pandemic had an adverse impact on global white oils demand, causing an estimated 5% drop in 2020. The scale of decline varied from one country to another. The decreases, between 5% and 10%, were higher in developed markets such as Germany, the United States, France, and the United Kingdom because these countries were among the most impacted during the first wave of COVID-19, experiencing temporary closures or reduction in production activities in various factories.

China and India also witnessed lessened demand of around 3% in 2020. However, in other Asian countries, such as South Korea, Japan, and Indonesia, drops in demand were not significant for several reasons. For one, decreased demand in industries such as agriculture, textile, and personal care in South Korea and Japan in 2020 was offset by increased demand in the food, pharmaceuticals, and plastics industries. As a result, the decline in demand was less than 1% in both South Korea and Japan. Other countries, such as Brazil and South Africa, also witnessed minor decline in white oils demand in 2020.

The impact of COVID-19 on various industries differed. As consumers observed quarantine orders and purchased less makeup and clothes, demand for white oils decreased in the personal care and textile industries. Meanwhile, the closure of restaurants and bars led to a decline in white oils demand in the food industry, and the temporary closure of plastics and adhesives and sealants production facilities also led to declines. But the pharmaceuticals industry saw an increase in white oils demand. The reason: Pharmaceuticals production rose, with consumers purchasing more than their average number of medications during the pandemic.

Base Oils

White oils are among the purest lubricants. Group I base oils need to undergo an extensive purification process before they can be used to produce white oils. This increases the cost of producing white oils from Group I base oils. Further, the supply of Group II base oils has increased while the supply of Group I base oils has decreased. As a result, white oil suppliers prefer Group II base oils over Group I due to the higher processing cost associated with the latter. Group II base oils are also preferred over Group III base oils, as the latter are more expensive than the former.

The choice of base oils to produce white oils also depends upon the availability. For example, the United States is the biggest producer of naphthenic base oils. Therefore, the usage of naphthenic base oils to produce white oils is higher than Group I and III base oils in the country. The demand for white oils in Indonesia and South Africa is met through imports; the base oils used to produce them depend upon their availability in countries such as India and South Korea, from where white oils are imported.

White Oil Suppliers

China, the United States, and India, together, accounted for around two-thirds of global white oils demand in 2020. Consequently, the leading white oils suppliers in these countries also lead the global market. For example, Sinopec leads the market in China and is the leading supplier globally. Similarly, HollyFrontier and Calumet, together, account for 90% of sales in the United States. Savita Oil, Gandhar Oil, Raj Petro, and Apar are top leading suppliers on India’s white oils market.

Apart from Indian white oil suppliers, most other white oil suppliers are focusing on their domestic markets. For example, Sinopec is the biggest white oil supplier, but all its white oil sales are in China; Indian suppliers such as Gandhar Oil and Savita Oil, export white oils to such countries as Brazil, Indonesia, and South Africa. Panama Petrochem, an Indian supplier, is mainly focusing on the exports market for white oils.

Where Will White Oils Grow the Most?

Lithium-ion battery separators is expected to be the fastest-growing application for white oils from 2020 to 2025, driven by increased interest in electric vehicles. The pharmaceuticals industry is expected to be the second fastest-growing application for white oils, driven by an aging population in Europe and countries such as Japan, as well as increasing healthcare coverage in countries such as India and South Africa.

Africa and the Middle East, and Europe are expected to be the fastest-growing regions for white oils demand globally. Europe was the region most affected by COVID-19 and is thus expected to have faster growth rates as its economy recovers. Growth in Africa is expected to be faster due to income growth, leading to quicker growth in packaged food items and pharmaceuticals. This, in turn, will lead to higher growth in white oils demand. Asia will remain the biggest white oils-consuming region due to economic growth and the continued shift of the industrial production of plastics, paper, and more to Asia.

In terms of grades, demand for pharmaceutical-grade white oils is expected to grow faster than technical-grade white oils. This will occur as white oils demand in the pharmaceuticals, food, and personal care industries — which mainly use pharmaceutical-grade white oils — grows faster than white oils demand in industries such as adhesives and sealants, along with plastics, which uses technical-grade white oils in large quantities.

In terms of base oils, demand for Group III and II base oils for manufacturing white oils is expected to grow faster than demand for Group I and naphthenic base oils. This is mainly due to purity requirements and growth in the supply of Group II and III base oils.

About the study:

Global White Oils: Market Analysis and Opportunities assists white oil marketers in identifying opportunities within the global white oil industry. It also serves as an invaluable tool in the strategic planning process. To learn more about the study REQUEST more information.

 

Share this:

RELATED STUDIES

Global White Oils: Market Analysis and Opportunities

The global demand for white oils has been increasing slowly over the past few years. Despite the slow growth, the market remains dynamic due to the increasing use of Group II baseoils, intensifying competition from small suppliers, substitution by other products, and increasing regulatory control.

Learn more >>

Global Lubricants: Market Analysis and Assessment

This continuous publication since 2003, provides a comprehensive, in-depth analysis of automotive and industrial finished lubricant products, end-use industries, trade classes, major suppliers, and market trends in leading country markets and regions.

The customized report covers your choice of 10 country market and/or supplier profiles and offers a comprehensive Year in Review summarizing the overall global lubricants industry.

Learn More >>

 

 

FOLLOW US