Base Stocks

Are Europes Waxes Up to Snuff?


Availability of waxes in Europe overall appears balanced, but paraffin and microcrystalline wax supplies are short, and have to be substituted increasingly with imports from Asia, an industry insider says.

Asia now has to be regarded as the worlds leading wax supplier, especially as European API Group I base oil plants face potential closures, according to Kerax, the largest blender of waxes in the United Kingdom and Ireland.

Made from the dewaxing step that creates Group I base oils, petroleum waxes are one of the most important products for the lubricants industry. Examples of these petroleum-derived hydrocarbons include slack waxes, paraffin, microcrystalline and petrolatum. Slack waxes are increasingly becoming important because of tight supply of higher paraffins or de-oiled slack waxes, observed Ian Appleton, Keraxs owner and managing director. Some manufacturers use slack waxes as an additive that would lock the free oil. They can be used effectively as a hard wax substitute in certain applications.

In a presentation to the ACI Base Oils Summit in Budapest, Hungary, Appleton estimated that total wax production in Europe in 2012 amounted to 1.3 million tons. Petroleum waxes were by far the largest share at more than 900,000 tons; a bit more than half of this was paraffin waxes, and the rest was soft paraffin waxes. Animal derived waxes amounted to slightly more than 100,000 tons of the 2012 total, vegetable waxes and synthetic waxes each contributed a little less than 100,000 tons, and other types made up the remainder.

With a lubricants industry background that included roles with Mobil, BP and Castrol, Appleton first became involved in the wax industry in 2002 when he joined BPs Special Products Division. He continued with the business after its 2004 sale to the German refiner H&R Wasag, and two years later acquired its Chorley, U.K., wax blending plant himself. One of his first steps as owner was to restore the operation to its original name, Kerax.

Appleton said he expects petroleum waxes will continue to dominate the market in the future, citing data from a Kline & Co. study. European production of waxes will stay flat at 1.3 million t/y in the next few years with petroleum waxes to account for around 85 percent of the total demand, or 930,000 t/y.

The domination of petroleum waxes fits into the Group I base oil plants closure conversation. As a threat, this could lead to a massive impact on the future strategies and planning of the companies that produce waxes, Appleton remarked in his late- September presentation. Kerax, which has been in business since 1962, would not be exempt from the changes. It processes, blends and packages waxes, and also makes petroleum jellies for pharmaceutical, cosmetic, industrial and commercial uses.

Wax, he explained, is a multipurpose material that stays plastic or malleable at near-ambient temperatures. Characteristically, waxes melt at above 113 degrees F. (45 C) to yield a low-viscosity liquid. All waxes are organic compounds, whether synthetic or naturally occurring, Appleton emphasized, and are insoluble in water but soluble in organic, nonpolar solvents.

There are four key types of petroleum waxes:

Slack wax, an unextracted wax created by dewaxing lube base oil.

Paraffin. De-oiled slack wax, this consists largely of straight-chain alkanes.

Microcrystalline. These branched and cyclic alkanes are made by de-oiling the bright stock residual lube oil stream.

Petrolatum. This can be de-oiled bright stock residual lube oil, or blends of oils and waxes. (Its also known as petroleum jelly, such as the trademarked Vaseline.)

There are also natural or non-fossil waxes, which are made from palm, rape and soy seed, waxes made of castor oil, beeswax, carnauba or tallow. Finally, synthetic types include polyethylene wax and wax made via the Fischer-Tropsch gas-to-liquid process.

Our estimate is that synthetic and vegetable derived waxes will become increasingly important. If a producer wants to add value to a product, this is where they should look. With potential reduction in petroleum-derived wax supply, it will become important to satisfy the needs of the customers by making modifications and hybrids of these products, Appleton said.

Typical applications of waxes are in the paper and packaging industry, in pharmacy and personal care. Clothing, paper packaging and food industry are major clients. Vaseline is widely used in applications in pharma and personal care, Appleton said. Other versions go to surface coatings, particle board, as viscosity modifiers in hot-melt adhesives, synthetic rubber compounding, printing inks and candles.

Kerax has found this last use to be a growing sector in Europe, for religious ceremonies and especially in the restaurant business, where candles are popular for room lighting. European demand for candles is 600,000 to 700,000 tons. This is a huge number and takes a massive part of the business, Appleton stressed.

Waxes also lend functionality to many other industrial and construction areas. It is used to flatten paint systems, in mold-release, or as lubrication in plastic processing. Wax is also used in emulsions, for ultra-violet protection in rubber, to coat and laminate flexible packaging, as moisture proofing in fiber and chipboard, as pigment carrier for colors and dispersions, as well as to impart gloss and protection in polishes.

A not-so-usual application of paraffin wax is cleaning the dirt off bird seed with powder waxes, one of the many other aspects of life where wax is used, Appleton noted.

Turning to future needs, he said Kerax estimates that European demand for waxes could reach 1.5 million t/y in the next few years. By application type, candles would dominate the market at more than 700,000 tons, followed by applications in rheology/surface treatments (220,000 t/y) and particle board manufacturing (220,000 t/y). Flex and rigid packaging are completely overshadowed and their supply volumes would be very low, he forecasted, and around 160,000 t/y will go to miscellaneous uses. Miscellaneous could be everything, Appleton said, such as Keraxs specialized equestrian surface wax that is sprayed onto racetrack surfaces for cold-weather horse racing.

The outlook, he added, includes both threats and opportunities for wax marketers. Innovation will separate successful companies from those who fail to invest in technology and R&D. We have tried extensively at substituting wax-related products with those that are nonpetroleum- wax derived. It is done by going into the field, looking at a particular application and developing a product that meets the customers requirements.

Big or small, global or regional, all wax producers could be impacted by the reduction of Group I base oil refining capacity. This could prompt a movement to renewable and alternative waxes, Appleton said. We have a portfolio of waxes that is entirely or partly derived from natural sources. Our customers come and we work with them to develop products that fit their needs.

Marketers also should expect to see alternative technologies proffered as replacements for waxes. This happened in the packaging industry too early, and we saw how some projects failed where waxes were substituted with other materials. Kerax expects high wax prices to stay, however, so customers may switch to alternative products when the price for refined wax is too high for them.

Opportunities for wax marketers lie in increased production of GTL waxes, development of high-performance and synthetic waxes, and development of hybrid performance waxes, and even development of no-wax products. We are investing time and efforts in modified and hybrid products that are technically and functionally different than the petroleum slack waxes. These are no-wax derived products made of process oils which could be heavily modified with additives. On the other hand, it is almost impossible to get a natural or synthetic wax and replace it with paraffin, Appleton emphasized.

As the production of petroleum waxes is set to fall and there is a promising outlook for wax consumption in Europe, he said Kerax believes that suppliers who are quick, nimble in their offerings, and can differentiate themselves from the rest, can expect a bright future. Supply-side tightening of availability is a real issue. At the moment, the supply-side deficit is taken care of with imports from Asia, and we ourselves are importing paraffin from Asia when price availability dictates that, Appleton revealed.

Having just one source or one supply chain for wax is going to be very risky, he cautioned, and wax marketers should diversify their supply base to have multiple safety nets in case of a problem.

Related Topics

Base Stocks    Europe    Other    Region    Waxes