Well, for one thing, its common knowledge that if too much untreated residual wax is left in base oils, it can create a lot of headaches. However, less well known is the relationship between wax and base oil at the refinery level, and the resulting effect on each in terms of availability and economics. Because wax has value in a couple of ways as one of the outputs of base oil production, it can directly impact lube base oil plant economics.

Once largely considered a waste by-product, paraffin wax is a significant specialty business today, and like other aspects of the petroleum business, wax has seen many changes over the years in terms of applications, supply, demand and competition from other materials.

Extracting Value

Due to its undesirable effect on lubricating oil low-temperature properties, wax must be either removed or converted in some way during base oil production. A common method of removing wax involves introducing solvents such as methyl ethyl ketone and toluene, chilling the mixture at a controlled rate, and then filtering out the solidified wax. The solvent dilution factor and chilling rate are carefully controlled so that the optimum size wax crystals form, for ease of filtering and to minimize the oil trapped in filters. The solvents also reduce the viscosity of the oil/wax mixture, allowing for easier separation. Chillers are usually double-pipe heat exchangers with internal scrapers – similar in principle to an old-fashioned ice cream mixer, but longer, thinner and working continuously.

What leaves the chillers is a cold slurry of oil, solvent and wax crystals, which is then filtered under a vacuum to separate the wax from the oil and solvents. Any residual solvent is then flashed out of the wax, leaving the wax as a semi-refined product for market or for further processing to a finished wax.

The term slack wax refers to this semi-refined wax, derived from solvent neutral production. Outside of feed for refining into finished waxes, one of the largest uses for slack wax is in the production of oriented strand board (OSB) for the housing construction industry. As a component of the board sizing, it provides water resistance. Also historically consuming large quantities is the fire-log market. Other applications include candles, concrete curing compounds, some coatings and several smaller uses.

Converting slack waxes into higher-value refined or finished waxes typically involves additional de-oiling and hydro-treating. More severe hydrotreating produces waxes meeting U.S. Food & Drug Administration and U.S. Pharmacopeia (USP) requirements, allowing their use in food and health products. Common applications for refined waxes include candles, coatings, foods, cosmetics, pharmaceuticals, specialty chemicals and emulsions, polishes and waxes, plastics and rubber production, and others.

For purposes of this article, petroleum waxes are neatly divided into these two principal groups, semi-refined and fully refined, although microcrystalline wax from bright stock production also has some unique applications. (So-called scale wax, a low oil content semi-refined wax, is also grouped with slack wax.)

Figure 1 shows a breakdown of current volume demand by application in various regions of the world.

Output Slackens

Two major trends in the wax business over the past 20 years are the loss of API Group I base oil production facilities, and the tides of Chinese wax production. Other factors making themselves felt are recycling of wax-containing materials, conversion to the use of green or plant-based materials, and overall refinery production and market issues.

Loss of Group I base oil refining capacity in the United States is well known. Since wax comes primarily from Group I plants, as these plants shut down there was a commensurate reduction in wax capacity. According to data from the National Petrochemical & Refiners Association, the United States and Canada had 18 companies operating 25 wax-producing facilities in 1993, versus just 10 companies with 12 facilities in 2007 (Figure 2).

The trend really started in the mid-1980s, when Chevron introduced hydroprocessing technology which isomerized the wax in base oil, changing its molecular structure so that it remained a liquid at very low temperatures. It allowed the wax, being naturally highly saturated, to remain a high-quality component of the base oil and improve both the oils oxidation stability and low-temperature properties, instead of needing to be extracted as a nuisance.

Amy Claxton of MyEnergy, a consultancy in Hummelstown, Pa., points out that, Because of the higher quality requirements in the U.S., hydroprocessing became the quality du jour for base oils, resulting in the rise of Group II stocks and the loss of many Group I plants.

Although the isomerization technology came along in the 1980s, Claxton went on, the other shoe started to fall in the mid 90s, when Excel Paralubes became the second mega-plant to make Group II. Shortly it was followed by capacity conversions and additions by ExxonMobil and Motiva. While ExxonMobils technology preserved its wax production, the overall effect from all of the Group II production was that you didnt need as much Group I in the market, said Claxton. It just created a spate of closures, and wax production suffered as a result (Figure 3, page 24). As another source, who asked to remain anonymous, put it, The base oil business is what screwed up the wax business!

By comparison, the splash blending of small amounts of polyalphaolefins (PAO) into Group I stocks to improve quality in Europe helped the Group I plants there remain relatively viable – as did their wax production, said Claxton.

Claxton recently cooperated with Little Falls, N.J.-based Kline & Co. on a study of the worlds wax markets, to be the subject of a presentation at this months NPRA Lubricants & Waxes Meeting, Global Opportunities and Threats in the Wax Business, 2006- 2020.

Changing Tides

As wax production was waning in North America, a different trend was occurring on the other side of the world. China was continuing to modernize, which meant increased demand for fuels.

The impact was soon felt in wax, according to Carl Verbanic, the Homer, N.Y.-based editor of Wax Data. He pointed out that Chinese crude oil is very waxy, containing approximately 28 percent to 40 percent wax. Most of this wax had been consumed domestically with candles accounting for 50 percent to 55 percent of Chinese consumption as recently as 10 years ago.

However, as its appetite for fuels continued to grow, Chinas domestic wax demand eventually leveled and even somewhat declined as the country moved toward greater electricity production. Combined with favorable trade tariffs, the Chinese increasingly began to fill the void in North America. By that point, the North American refining industry could not support wax demand by itself, recollected Barry Rathkopf, president of wax seller Nova Petroleum Specialties, and the tide of Chinese imports was a most welcome entrant to the market.

Even so, the forecasts of increasingly large Chinese export volumes created considerable concern in North Americas producers, the Tarrytown, N.Y.-based Rathkopf observed. In the early to mid 90s, when Chinese wax production really started to rev up, some U.S. refiners feared they would be drowned in wax, he said. Soon though, China began to see the development of a much larger domestic consumer market, resulting in internal consumption buffering those early estimates.

More recently Chinese demand for fuels has outstripped its domestic crude production capabilities. According to Claxton, China now is importing crudes that contain less wax, and has altered refinery operating conditions accordingly. The result from those changes and some upsets has been significantly less production of quality waxes.

What may next come to bear in China are fuels hydrocrackers, which will likely consume wax and further dent supply. Still, as Verbanic pointed out, Chinese imports today represents well in excess of 40 percent of North American wax consumption, based on U.S. Census data.

Candle with Care

Recent developments in North America include a push on two environmental issues, one being soot from candles, the other a recycling challenge. Ross Reucassel, president of The International Group Inc. in Wayne, Pa., pointed out, The sooting issue came from these people who were saying that discoloration of curtains and ceilings was from all this soot coming from the wax that you really couldnt see in the environment, and that it is a by-product of petroleum which has harmful chemicals in it, and so on. It has primarily come from individuals or small associations who have not gone very far in their research.

In response, the National Candle Association led an effort, joined by NPRA and several other associations around the world, and sponsored an independent study of the issue, which was just recently completed. Quality wax and properly burning a candle appear to be the key factors, said Reucassel, who also chairs the NPRA Wax Subcommittee. He added that all indicators point toward a properly burned candle emitting negligible hydrocarbons into the atmosphere. Along similar lines, studies in Europe regarding use of petroleum wax in other applications have essentially deemed them to be clean for their intended uses.

Another challenge is that wax renders a corrugated carton non-recyclable, which has resulted in a thrust to remove wax from all cartons. This push is coming largely from the grocery industry and is focused primarily on cartons used for meat and produce, even though these represent only a small fraction of the total corrugated produced, according to Reucassel.

An attempt has been made to replace petroleum wax for corrugated with vegetable or synthetic waxes. However, Reucassel feels, such alternatives are such a very small percentage of taking any of the wax market whatsoever, because they can only meet very minor demanding requirements. A big line is struck through wax – get rid of wax – but yet it is the only product that still performs. I mean, theres nothing else close to it. If wax is replaced, its years down the road.

Nevertheless, vegetable waxes such as soy wax have gained entry in some areas, according to Nova Petroleum Specialties Vice President John Gallo, who noted, There is some movement away from lower oil content waxes in candles toward blends of veggie wax and fully refined wax.

In addition, a major change has occurred in the fire-log industry, as Duraflame, the largest producer of fire-logs in the United States, recently opted to replace slack wax with soy wax in its branded product. Gallo said there also has been some attempt to use vegetable waxes in the board-sizing market, but with no real success.

Is the Cup Half Full?

Although alternative coatings have made few inroads thus far into applications traditionally supplied by wax, one notable exception is in the paper cup industry, which had consumed very large quantities of wax to coat cold-drink cups. Today that volume has been almost entirely replaced by synthetic coatings. In spite of that loss, Reucassel and others agree that another change of similar scale is not likely for quite some time, so long as wax remains a competitive product that performs well versus the alternatives.

The other wild card is Fischer-Tropsch waxes from gas-to-liquids plants. These have already been in use in certain applications for many years. Although their future impact is difficult to predict, in view of recent cancellations and delays for several world-scale GTL projects, it is generally agreed that they will be a significant factor.

In terms of the future, most agree that the wax business is healthy and viable. Challenges such as the severe shortage following the hurricanes of 2005 demonstrated the delicate worldwide balance in wax supply and demand. However, barring such short-term issues, the future appears good for the business, sources said. Most cautioned as well that crude oil costs and fuel prices can impact wax competitiveness in the marketplace.

Alternative values for fuels can certainly affect wax prices, and we have seen that happen, said Gallo. Yet while prices may be affected, availability has rarely been impacted, according to Reucassel. The wax business today is still a good business, he said, and there are some refiners that look at it that way, as they are putting money into it and staying in it.