While registering modest growth through 2012, the
global wax market continues to be transformed, according to a new report
titled, 'Global Wax Industry: Market Analysis and Opportunities' by
consulting and research firm Kline and Company.
Synthetic waxes are growing rapidly, supplanting petroleum waxes, which enjoy a dominant, but declining market share. Hydrogenated and natural vegetable waxes are also making inroads.
The global wax supply is growing at a compound annual growth rate (CAGR) of 0.7 per cent. Petroleum waxes represent 73 per cent of the global supply, having dropped below 90 per cent for the first time in decades.
By contrast, synthetic waxes have increased their global market share to 13 per cent, riding on eroding petroleum wax supplies and growing Fischer-Tropsch and polyethylene wax capacities.
On the demand side, candles still represent 46 per cent of the global wax consumption. The growth in electricity grid and use of solar lamps has led to a decline in candle demand for illumination purposes in developing economies. An estimated 80 per cent of candles used today are for decorative or religious purposes rather than for illumination.
Overall demand growth, although modest, is driven by the creation of new end-uses in rheology, surface and health industry applications, and by economic growth in developing nations.
Reduced petroleum wax supplies have created a greater demand for synthetic and vegetable waxes, making them the fastest-growing segments within the waxes market.
The variety of products and applications in the wax market has resulted in a complex pricing mechanism for the wax market.
The period between 2008 and 2012 was characterised by increased price volatility. Crude oil price gyrations during this period coupled with supply and demand mismatch due to recession-linked demand contraction and continuing reductions in petroleum wax production have contributed to this volatility.
As the global supply of petroleum wax shrinks and the supply of other waxes, including vegetable and synthetic waxes increases, the relative prices of these substitute waxes continue to reflect the relative performance benefits or cost-of-usage of these waxes in comparison to petroleum wax.
The regional supplies of waxes do not conform to regional demands, leading to significant movement of wax across the world.
A net wax surplus of more than 1,500 million lb from Asia, Africa, and the Middle-East corresponds with an equivalent deficit in the Americas and Europe, leading to a massive global wax trade.
Despite its decreasing market share, petroleum wax still accounts for approximately 97 per cent of both imports and exports.
Pooja Sharma, senior consultant within Kline’s energy practice, said, “The new dynamic in the wax industry will be the one of change, where the emerging wax supply will be driven by three variables: reducing petroleum wax supply due to Group I plant rationalisations, growth in supply of hydrogenated vegetable wax, and growth in Fischer-Tropsch and polyethylene wax capacity.”
“The overall global wax demand is projected to grow at a CAGR of 1.5 per cent due to an accelerated consumption in the growing economies of Asia, Africa, and the Middle-East; and recovery in wax demand from the matured economies of North America and Europe,” she added.
With anticipated strong demand growth and relatively weak supply growth, the global wax market is expected to experience an increasing shortage. The global wax deficit is projected to grow to almost 850 million lb by 2022.
Synthetic waxes are growing rapidly, supplanting petroleum waxes, which enjoy a dominant, but declining market share. Hydrogenated and natural vegetable waxes are also making inroads.
The global wax supply is growing at a compound annual growth rate (CAGR) of 0.7 per cent. Petroleum waxes represent 73 per cent of the global supply, having dropped below 90 per cent for the first time in decades.
By contrast, synthetic waxes have increased their global market share to 13 per cent, riding on eroding petroleum wax supplies and growing Fischer-Tropsch and polyethylene wax capacities.
On the demand side, candles still represent 46 per cent of the global wax consumption. The growth in electricity grid and use of solar lamps has led to a decline in candle demand for illumination purposes in developing economies. An estimated 80 per cent of candles used today are for decorative or religious purposes rather than for illumination.
Overall demand growth, although modest, is driven by the creation of new end-uses in rheology, surface and health industry applications, and by economic growth in developing nations.
Reduced petroleum wax supplies have created a greater demand for synthetic and vegetable waxes, making them the fastest-growing segments within the waxes market.
The variety of products and applications in the wax market has resulted in a complex pricing mechanism for the wax market.
The period between 2008 and 2012 was characterised by increased price volatility. Crude oil price gyrations during this period coupled with supply and demand mismatch due to recession-linked demand contraction and continuing reductions in petroleum wax production have contributed to this volatility.
As the global supply of petroleum wax shrinks and the supply of other waxes, including vegetable and synthetic waxes increases, the relative prices of these substitute waxes continue to reflect the relative performance benefits or cost-of-usage of these waxes in comparison to petroleum wax.
The regional supplies of waxes do not conform to regional demands, leading to significant movement of wax across the world.
A net wax surplus of more than 1,500 million lb from Asia, Africa, and the Middle-East corresponds with an equivalent deficit in the Americas and Europe, leading to a massive global wax trade.
Despite its decreasing market share, petroleum wax still accounts for approximately 97 per cent of both imports and exports.
Pooja Sharma, senior consultant within Kline’s energy practice, said, “The new dynamic in the wax industry will be the one of change, where the emerging wax supply will be driven by three variables: reducing petroleum wax supply due to Group I plant rationalisations, growth in supply of hydrogenated vegetable wax, and growth in Fischer-Tropsch and polyethylene wax capacity.”
“The overall global wax demand is projected to grow at a CAGR of 1.5 per cent due to an accelerated consumption in the growing economies of Asia, Africa, and the Middle-East; and recovery in wax demand from the matured economies of North America and Europe,” she added.
With anticipated strong demand growth and relatively weak supply growth, the global wax market is expected to experience an increasing shortage. The global wax deficit is projected to grow to almost 850 million lb by 2022.
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