Major wax end-users are capitalizing on the global shift to alternative waxes such as vegetable-based, animal-based and synthetic waxes as a marketing opportunity to sell their products, according to a study published by consulting and research firm Kline and Company. The transition comes as worldwide supplies of petroleum-based wax continue to decline.
According to the report, Global Opportunities and Threats in the Wax Business, 2006-2020, the candle industry, which accounts for nearly half of global wax demand, as well as the healthcare industry (including cosmetics, pharmaceutical and toiletries), which makes up a smaller segment, are taking advantage of the eco-friendly and biodegradable labels of alternative waxes as petroleum-based wax supplies are predicted to decline by approximately 1.5 percent per year from 2006 to 2020.
The study presents the complete picture of the global wax business, Geeta Agashe, director of Little Falls, N.J.-based Kline & Co.s petroleum and energy practice, told Lube Report. Its not dynamics in the wax businesses that are affecting the global wax supply but the shut downs of Group I base stock refineries and upgrades of some to Group II. Astute wax end-users have quickly managed to convert over to the alternative waxes and are getting mileage out of them.
Growing demand for higher performance API Group II, III, and gas-to-liquid lubes has sent the global supply of crude-based waxes into decline. Developments in refining technology are putting a squeeze on wax supplies, she said. The shortfall we predicted two years ago has actually given rise to new opportunities for alternative supplies.
Vegetable, animal and synthetic waxes are all set to expand at an average annual growth rate of more than 5 percent over the next 14 years as dwindling petroleum wax supplies and specialty applications make room for alternatives, the report says.
This shift is taking place even as the cost of some of these non-petroleum-based waxes is much higher than petroleum-based, said Agashe.
Mineral oil-based waxes, a byproduct of the Group I solvent extraction refining process, account for 87 percent of global wax demand, with synthetic waxes accounting for 10 percent, vegetable-based waxes for two percent and animal-based waxes for one percent.
Global demand for waxes reached an estimated 9,600 million pounds, valued at more than $2 billion in 2006. Other sectors of global wax demand include packaging, board sizing, rheology and surface applications including hot melts and fire logs.
There will always be a need for petroleum-based waxes, but significant growth in the market over the next 10 to 15 years will come from non-petroleum waxes, which we expect will grow to nearly one-fourth of the total supply by 2020, Agashe said.