Supply and Demand in the Wax Industry – Some Thoughts
Synthetic and natural waxes have seen strong growth recently, but it seems unlikely to meet the increase in demand. Both Europe and the US have seen an erosion of their supply due to market-driven lower operating rates following the financial recession, as well as the closure of some Group I wax-producing plants. And the strengthening of the European and North American economies after the recession has helped drive a growth in demand, along with increased consumption from the evolving manufacturing sectors in Asia, Africa and the Middle East.
According to Kline’s Pooja Sharma, both buyers and sellers of wax need to prepare themselves for a continued and gradual shift away from petroleum waxes by incorporating more synthetic, hydrogenated and natural vegetable waxes into the overall wax supply. Future growth opportunities will be defined by current wax blenders and de-oilers’ ability to adapt their production facilities to new materials and source different types of wax.
So the challenges facing the industry in terms of supply, while a serious source of concern, are far from insurmountable. But it remains to be seen how well the industry can adapt in the face of this shortage.