Thanks to changing lubricant standards, two new studies say, the wax industry is expected to continue losing traditional sources of supply, even as demand for wax products grows at a healthy clip.
Fortunately for manufacturers of wax products, the void is being filled by wax from China, with gas-to-liquids technology expected to provide reinforcement in the future.
The studies were released this month by Kline and Co., of Little Falls, N.J., and Freedonia Group Inc., of Cleveland. The Kline report, GTL Specialties: High-value Threat or Opportunity? Volume II: Waxes, assesses global wax supply. Freedonias Waxes projects U.S. demand for wax products.
As both studies note, the wax industry has already lost traditional supply sources due to closures of Group I base oil plants, whichextract wax as part of the refining process. Kline predicted the trend will continue as standards for finished lubricants continue to rise, increasing demand for premium Group II and Group III base stocks. Plants that produce these base stocks do not produce wax.
Much of the lost supply has been replaced by China, which still uses mostly Group I base oils. The twin national oil giants – Sinopec and PetroChina – use crude oil with high wax content and, according to Kline, have made China the biggest exporter of petroleum wax to all of the worlds major wax markets.
Wax supply will receive a further boost, the Kline study says, with the opening of large gas-to-liquids plants, scheduled for later this decade. With the declining supply of petroleum wax, GTL waxy raffinate could provide feedstock for deoilers like Sasol Schumann, IGI and Honeywell, the company said in a Dec. 5 announcement. And GTL could offer lubricant base stock manufacturers like ExxonMobil, Petrobras and Petro-Canada a way to remain in the wax manufacturing business despite changes in base stock processing.
By 2015, Kline predicts, China will supply 40 percent of the worlds annual wax demand of 10.1 million pounds. GTL plants, the firm said, will provide 25 percent.
According to Freedonia, more wax is going to be needed, at least in the United States. The firms study projects that the value of U.S. demand for waxes will grow 4.9 percent annually to $1.7 billion in 2007. Demand is expected to rise in the consumer, industrial and commercial segments, with some of the fastest growth coming from new applications, such as crop protection.
While forecasting an increase in demand for petroleum wax, Freedonia predicted that demand for synthetic and vegetable-based waxes will rise even faster – at least 6 percent per year. The firm attributed this projection to superior performance by synthetics and the marketing appeal of naturals.