While North America’s petroleum wax supply has declined due to rationalization of API Group I base oil plants, the region accounts for more than 80 percent of alpha olefin wax, with polyvinyl chloride as a key end-use application, an industry insider said.
Global petroleum wax supply has declined over the past few years, according to Pooja Sharma, a project manager at Kline & Co.’s energy practice, who pegged the number between 7 billion and 8 billion pounds during a an April 16 webinar. Such waxes are extracted as a byproduct in the production of Group I base oils.
The petroleum variety still accounted for 66 percent of all wax supply in 2019, while by synthetic accounted for 16 percent, vegetable waxes for 13 percent, and animal and other waxes 5 percent.
From 2010 to 2019, North America posted a 0.8 percent compound annual growth rate in synthetic wax supply and an 8.3 percent CAGR in vegetable wax supply. Meanwhile, Kline found petroleum wax supply in North America declined at a 6 percent CAGR from 2010 to 2019, declining from around 1.5 billion pounds to less than 900 million pounds in 2019.
Between 2010 and 2019, a series of rationalizations of wax-producing Group I base oil plants occurred at refineries in North America, Sharma said, including Shell’s Montreal plant in 2010 and Imperial Oil’s Sarnia plant in 2011. She also cited more recent Group I rationalizations of ExxonMobil’s plant in Beaumont, Texas, and Imperial Oil’s Strathcona plant in Canada.
“The past decade has seen a global trend toward declining Group I base stock demand due to the reduced demand for lubricants formulated using Group I base stocks,” Sharma said. “In particular, the automotive lubricant market globally is moving away from using Group I base oil for finished lubricants. These markets are increasingly moving towards higher or better quality base oils such as Group II/II+, and Group III/III+.” As a result, Group I plants have either shutdown or have upgraded to higher API grades.
North America dominates in the smaller alpha olefin wax category, being home to two leading suppliers. These heavier alpha olefins are produced in linear alpha olefin plants via the process of controlled polymerization of ethylene, she explained.
Chevron Phillips Chemical was the top supplier with close to 60 million pounds in 2019. Shell Chemical was second in North America with close to 30 million pounds.
“Until 2016 CP Chem was the single largest producer of alpha olefin waxes in North America, producing these at its Cedar Bayou plant located in Texas,” she noted. “In 2017 Shell added capacity of linear alpha olefin production in Louisiana, which also added supply of heavier alpha olefins, or AO waxes, from that plant.”
Since most alpha olefin wax is produced in North America, she said, most is also consumed in the same region. “North America accounts for nearly 70 percent of the demand of alpha olefin waxes,” she said.
Kline estimated global alpha olefin wax demand at around 100 million pounds in 2019. PVC processing is the leading end use application, benefitting from the polarity and higher melting point of alpha olefin wax, she explained. “In fact, alpha olefin waxes have started making inroads in some other applications like personal care products, candles, printing inks, toners, coatings and color concentrates.”
Kline ranked several companies from the Americas region among the top 10 petroleum wax producers. ExxonMobil ranked second, Brazil’s Petrobras was in fifth, HollyFrontier sixth and Canada’s The International Group Inc. seventh.
The study’s list of 13 top non-petroleum wax suppliers list included Shell in second, Honeywell in fifth, Cargill in ninth, Westlake 10th and Chevron Phillips Chemical in 11th.
The study has been recently published and is titled, “Global Wax Industry: Market Analysis and Opportunities.”
Close-up of a high-pressure, braided polyvinyl chloride hose. PVC is the leading end use application for alpha olefin wax, a small wax market that is dominated by suppliers in North America.