The shift from conventional petroleum wax-based products to synthetic and vegetable waxes is becoming intense. Non-conventional waxes, particularly Fischer-Tropsch’s and hydrogenated vegetable, are increasingly becoming the focus for growth in the wax business. Interestingly, the wax landscape is also changing on the end-use side.
Demand for conventional mainstream wax applications, such as candles, has slowed down. Relatively newer rheology and surface applications are the fastest-growing applications. The ability of new and growing applications to adapt to non-petroleum wax types will now set the stage for future wax supply and demand balance.
Global demand for waxes is growing at 1.3% annually. Amidst this growth, wax demand is experiencing a clear drift toward non-commoditized applications such as rheological, surface, healthcare, cosmetics, and personal care products. Conventional and more commoditized wax applications, such as candles, board sizing, and packaging, have slowed down with changing consumer tastes, socioeconomic development, and innovation. Non-commoditized, more specialized applications, which require superior-quality finished wax products, have been providing grounds to alternative wax suppliers to proliferate. Currently, synthetic waxes account for more than two-thirds of wax demand in rheological and surface applications. In healthcare, cosmetics, and personal care industries superior quality petroleum waxes account for more than two-third of wax demand.
The upturn in demand for highly refined finished wax products is particularly creating growth opportunities for suppliers of synthetic waxes, such as FT, PE, and AO. These waxes are carving out spaces for themselves in applications where highly refined petroleum waxes have been used in the past. This competitive overlap between synthetic and petroleum waxes is also keeping the prices of petroleum waxes in check, despite a continuous decline in their supply. Most synthetic wax supplier position their waxes at prices closer to those of petroleum waxes for target end-consumers to gain market shares. In fact, growing supplies of FT and AO waxes is likely to shift the wax demand balance further towards synthetic waxes in future, as end-customers who look to secure long-term supply contracts may perceive synthetic waxes as more stable options. However, at present, the supplies of synthetic waxes stand in excess to their demand in wax applications, with the balance being directed towards other non-wax applications.
The growth story for vegetable or plant-derived waxes is driven by the business forces that are more sociocultural in nature. The demand for these waxes is seeing substantial growth in applications that are under greater influence of societal norms, culture, beliefs, and lifestyles. These waxes are making relatively steadier strides into the market space for low-melt, soft waxes with the advantageous ‘green-label’ attached to them. On one hand, these waxes have made high volume advances into the more commodity-like application such as candles; on the other hand, vegetable wax jellies are replacing specialty petroleum jellies in cosmetics applications. In both applications, the vegetable or plant-derived characteristic of this wax plays an important role for consumers. Vegetable wax suppliers currently find themselves in a fortuitous spot, as soft vegetable waxes are very difficult to substitute in these applications by other aggressively growing high-melt and harder synthetic waxes. Encouraged by such applications, the supplies of vegetable waxes are forecast to experience annual growth of 2.0% to 2.5% in the next five years.
Forces from both sides of the value chain have placed the wax businesses at a juncture where both suppliers and end consumers must revaluate their business. The supply of alternative wax types is growing, and the landscape on the demand side is changing. Growing supplies of synthetic and vegetable waxes seem to be abating the deficit of petroleum waxes in the market for now; however, will the incremental supply of alternative waxes be able to meet the deficit in the future? Could changing wax availability in the future stir changes in wax formulations and drive price-sensitive end consumers toward substitutes for waxes? It has become crucial for wax value chain participants, such as base oil refiners, wax de-oilers, blenders, distributors, and end-consumers, to access these questions in light of the latest developments in the wax industry. Kline’s latest edition of the study titled, Global Wax Industry: Market Analysis and Opportunities is targeted towards assisting such wax market participants. This study will help them understand the forces in the wax business as well as the recent developments that are driving the global wax market.