U.S. Wax Demand to Top $3 Billion in 2019

Share

U.S. demand for waxes will grow 1.8 percent per year by value, to $3.2 billion in 2019, supported by continued growth in manufacturing and residential construction activity, Freedonia Group forecasted.

The industry market research firm said the supply and market share of different wax types will remain dynamic as changes in the global petroleum refining industry impact the supply and pricing of petroleum derived waxes, as crude oil and natural gas prices impact investment in new capacity for synthetic waxes, and as agricultural commodity prices impact production of natural waxes.

Get alerts when new Sustainability Blog articles are available.

Loading

We expect supply issues for petroleum waxes as major refiners shift away from producing the lower quality base oils from which petroleum waxes are derived, analyst Joey Lovins said in a news release. Refiners are also increasingly turning to catalytic dewaxing technologies, which do not produce wax as a byproduct. Limited supplies will continue to support above average growth in petroleum wax prices, the research firm noted and thereby increase the competitiveness of synthetic and natural wax alternatives. The use of synthetic waxes as additives to create high-performance, low-cost wax blends is expected to be a major area of focus for product development.

Exports are significant for the United States wax industry, particularly synthetic waxes, Ned Zimmerman, Freedonias Chemicals Group leader, told Lube Report.

Zimmerman said that pricing is a little more nuanced with waxes. There are varying grades of waxes, and U.S. wax exports tend to be of a higher quality, and are produced to meet specific performance requirements, he said. These waxes will carry a price premium relative to lower quality slack waxes that may be exported by other countries, but the two types of wax are not directly competing. Additionally, synthetic waxes produced in the U.S. are generally derived from natural gas, which helps keep them cost competitive on a global basis due to the relatively low natural gas prices in the U.S. compared to the rest of the world.

While synthetic waxes will generally benefit from the shift toward higher quality base oils by refiners, the research firm said synthetic Fischer-Tropsch waxes will face their own supply shortages due to the delay or cancellation of new gas-to-liquids projects in the U.S. following the collapse of crude oil prices in 2014.

He said the challenging environment for waxes in the packaging industry is due primarily to trends toward more eco-friendly packaging and use of different kinds of packaging coatings not based on wax. The biggest use of wax in packaging is wax-coated corrugated boxes where it acts as a moisture barrier, Zimmerman noted. However, these boxes are not recyclable, and because the wax is petroleum based, it is not viewed as favorably from a sustainability perspective. Wax-coated boxes are also heavy, which means additional energy use during shipping. The packaging industry has responded with alternative coatings that may also act as a moisture barrier, but that are lighter, more recyclable, or derived from more sustainable materials.

Among U.S. agricultural commodity prices impacting production of natural waxes, soybean prices is the big one, Zimmerman pointed out. A sharp jump in soybean prices will drive up the cost of soybean oil and soy wax, he said. This can make soy wax uncompetitive relative to petroleum-based waxes and lead to a drop in soy wax demand in applications such as candles or personal care products where the soy wax is often used as a blend, and the exact amount of soy wax incorporation may not be specified explicitly. Production will fall off correspondingly.

U.S. Wax Demand

(million dollars)

% Annual Growth

Year

Years Range

Wax Type

2009

2014

2019

2009-2014

2014-2019

Total Wax Demand

1,760

2,415

3,150

6.5

5.5

Petroleum & Mineral

1,049

1,386

1,743

5.7

4.7

Synthetic

559

810

1,130

7.7

6.9

Natural

152

219

277

7.6

4.8

Source: The Freedonia Group Inc.

The 265-page study, Waxes, costs $5,200 from Cleveland-based Freedonia Group. For more information, visit www.freedoniagroup.com.

Related Topics

Base Stocks    Business    Other    Waxes