U.S. demand for waxes is forecast to grow by 1.8% yearly
U.S. demand for waxes is forecast to grow 1.8% yearly through 2019 to USD 3.2 billion, according to a new study by the Freedonia Group Inc., a Cleveland, Ohio-based industry market research firm in the United States.
Increases in volume terms will be supported by continued growth in manufacturing and residential construction activity. However, advances will be limited by a challenging environment for waxes in the packaging industry, as well as weak growth in most consumer and commercial applications.
The supply and market share of different wax types will remain dynamic as changes in the global petroleum refining industry impact the supply and pricing of petroleum-derived waxes, as crude oil and natural gas prices impact investment in new capacity for synthetic waxes, and as agricultural commodity prices impact production of natural waxes.
Developments in the global refining industry will have a significant impact on the composition of the wax market.
“We expect supply issues for petroleum waxes as major refiners shift away from producing the lower quality base oils from which petroleum waxes are derived,” said Joey Lovins, a Freedonia analyst.
Additionally, refiners are increasingly turning to catalytic dewaxing technologies, which do not produce wax as a by-product. Limited supplies will continue to support above average growth in petroleum wax prices, and thereby increase the competitiveness of synthetic and natural wax alternatives.
The use of synthetic waxes as additives to create high-performance, low-cost wax blends is expected to be a major area of focus for future product development. While synthetic waxes will generally benefit from the shift toward higher quality base oils by refiners, synthetic Fisher-Tropsch waxes will face their own supply shortages due to the delay or cancellation of new gas-to-liquids (GTL) projects in the U.S. following the collapse of crude oil prices in late 2014.
Natural waxes will remain the smallest segment of the market, with growth expected for some consumer applications, such as candles and firelogs. Consumer preference for environmentally friendly products or formulations and the expanding use of cheaper natural wax types, especially hydrogenated palm oil, the least costly natural wax, will support this growth. Volatility in the supply and cost of natural waxes will remain the most significant factor limiting more widespread adoption of these products.