Optimistic Outlook for The North American Petroleum Wax Business

METUCHEN, NJ  February 11, 2003 – According to preliminary finding from Petroleum Trends International’s multiclient report, Business Opportunities in the North American Petroleum Wax Market, 2002 to 2007, although demand for wax in North America has been softened by the recession, the future looks bright for suppliers that stay in the game.  

Petroleum Trends International’s research identifies two primary reasons for this optimistic outlook. The first is, “a step change in the manufacturing process employed to produce lubricant base stocks,” notes Thomas F. Glenn, President of Petroleum Trends International. This change directly impacts wax supply since wax is a byproduct of base stock manufacturing and the new technology does not produce wax. In addition to declines in wax supply as a result of new technology, supply in North America has also been eroded by a number of base stock manufacturing plant closures.  According to Glenn, “The combined impact of these closures, along with the shift in manufacturing technology, reduced the number of primary wax producers in the U.S. to only 7 in 2002, down from 16 in 1995.  This reflects a drop in refinery wax capacity from 29.2 thousand barrels a day (TBD) in 1995 to only 10 TBD in 2002.”

The second reason for Petroleum Trends’ optimistic outlook is growth in demand. While wax supply in the US is on decline, domestic demand continues to build, notes Glenn. As an example, Petroleum Trends’ research shows that demand for wax by the candle industry reached an estimated 725 million pounds in 2001, up from 445 million pounds in 1995. This represents an average annual increase of 8.5% and particularly remarkable growth considering the significant increase in finished candle imports during this period. Demand for wax in board sizing, hot-melt adhesives, and other end-use applications has also posted growth over the last five years. 

Although these and other wax markets have been hurt somewhat by the recession, an economic recovery, along with a continuing shift in base stock manufacturing technology will certainly favor domestic wax suppliers who stay in the game. In addition, the supply-demand imbalance draws the attention of foreign suppliers to the US market. “Over the past 5 years, for example, imports of Chinese wax to the U.S. market has grown from 15% to 47%,” notes Glenn. 

For more information on the report, or to subscribe to Business Opportunities in the North American Petroleum Wax Market, 2002 to 2007, please visit www.petrotrends.com or contact Petroleum Trends International at 732-494-0405. 

Petroleum Trends International, Inc. is a strategic planning and market research consulting firm based in Metuchen, New Jersey. The firm specializes in market research and consulting in lubricants, base stocks, waxes, additives, and fuels and other petroleum products.   

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