MUMBAI, India – Global petroleum wax supply will continue to drift lower on shrinking sources of API Group I base stocks, paving the way for alternative waxes, but that wont be sufficient to meet the worldwide demand, so the overall wax market deficit will cross 600 million pounds by 2021, an industry consultant said at an event here in July.
The global wax market – which consists of petroleum, synthetic, vegetable and animal waxes – was estimated at 10.5 billion pounds in 2016, according to United States-based consultancy Kline & Co. Petroleum waxes accounted for around 70 percent of the global wax market, followed by other waxes.
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The worldwide availability of petroleum waxes, however, is declining as the API Group I base stock supply shrank over the past decade, said Pooja Sharma, a project manager in Klines energy practice. The changes in lubricant-refining technology have led to the erosion of petroleum wax supplies, Sharma told Lube Report. Global supply of petroleum waxes is declining each year at 1 percent to 2 percent, primarily due to Group I base oil plant rationalizations.
In the last five to six years, the global supply of petroleum waxes trickled down from accounting for more than 80 percent of the global wax market to less than 70 percent in 2016, she noted. Due to quality improvements, Group I base stocks are becoming technically unviable for use in automotive applications and are being replaced with higher-quality base stocks. This has resulted in the closure of Group I plants that also supply petroleum waxes, Sharma told the Asia, Middle East and Africa Base Oil, Lubricant and Wax Conference here in July.
The declining supply of petroleum waxes, however, has created opportunities for alternative wax types, she pointed out. Synthetic waxes such as Fischer-Tropsch and polyethylene wax as well as vegetable waxes like hydrogenated soy and palm, along with natural palm waxes, are the fastest-growing products in the current market environment, Sharma said. The Fischer-Tropsch process is a collection of chemical reactions that converts natural gas into liquid hydrocarbons.
Sharma said synthetic waxes are growing at a strong pace of 3 percent to 4 percent to embrace the market space vacated by petroleum waxes and as a result, their share of the global market has increased from 11 percent in 2010 to 15 percent in 2016. Synthetic waxes, particularly Fischer-Tropsch waxes, have experienced a strong growth as well as a good acceptance in many applications, such as [hot melt adhesives], PVC and plastics, masterbatches, inks, paints, and coatings. These applications are also amongst the fast-growing applications for waxes, she added.
The share of Fischer-Tropsch waxes in the global synthetic waxes market increased from 34 percent to 39 percent between 2010 and 2016, according to Kline. The reason for such a strong growth is that the physical properties of Fischer-Tropsch waxes are similar to the physical properties of paraffin waxes, which make it easier for end users to absorb these waxes in to their process and formation, Sharma pointed out. The quickly growing share of rheology and surface applications is also driving demand for Fischer-Tropsch waxes and polyethylene/polypropylene waxes, she said.
Another reason is the higher availability of Fischer-Tropsch waxes in recent years due to capacity additions in Malaysia, South Africa and China, Sharma said. She projected these waxes to see strong growth in the next five years, driven by further capacity additions in South Africa and North America by 2020.
Sharma said vegetable waxes continue to expand in the market for applications demanding softer waxes such as slack waxes, which are in shortage. Palm waxes account for about 50 percent of the total supply of vegetable waxes, and these waxes continue to see robust growth in the candles market, she noted.
Approximately 95 percent of all vegetable waxes produced are being targeted to manufactures of candles, which accounts for nearly half of the total global wax demand, but demand for conventional, mainstream wax applications such as candles has slowed down, Sharma said. Currently, the market focus has turned from candles to rheology and surface based applications, which are growing at a very fast pace in applications such as plastics, rubber and tire manufacturing and paint and coatings, she continued.
The share of rheology and surface based applications in global wax demand increased from 14 percent to 19 percent between 2010 and 2016, according to Kline. Sharma said these waxes are growing fast in the regions, which are witnessing strong and faster infrastructure development. Asia, Africa and the Middle East are the key suppliers of petroleum and synthetic waxes, while Europe and North America are major importers.
Sharma projected global wax supply to increase at a compound annual rate of 0.4 percent between 2016 and 2021, under-performing the likely demand growth of 1.5 percent during the period. With demand growing thrice as fast as supply, the overall wax market deficit will be more than 600 million pounds by 2021, she concluded.