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March 31, 2015

Volume 7 Issue 8

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Micro Wax, Petrolatum Set for Growth

Asia-Pacific’s microcrystalline wax demand is expected to show strong growth to 2019, while its petrolatum demand is projected to grow more slowly over that time, consultancy Kline & Co. projected.

Meanwhile, at the global level, microcrystalline wax and petrolatum demand are both expected to outstrip supply through 2019, creating a shortage in each case, according to Kline.

“In the face of a shrinking supply of microcrystalline waxes and petrolatum, and on other hand, growing demand and penetration of alternative materials, it will suddenly be very interesting to know how this industry shapes up in the near future,” Pooja Sharma, a project lead in Kline’s energy practice, concluded during an online webinar March 11.

Global microcrystalline wax supply, estimated at between 200 million and 300 million pounds in 2014, is expected to grow 2.9 percent per year to 2019, while the supply is expected to decline by 1.7 percent per year over that period, consultancy Kline & Co. projected.

“This will result in creating a deficit of about 25 percent of the current supply,” said Sharma, who noted the microcrystalline wax supply decline will be a result of the shutdown of API Group I base stock refineries along with the declining operational efficiency of existing refineries.

The Asia-Pacific region is projected to exhibit strong growth in microcrystalline wax demand to 2019, with industrial, food processing and pharmaceuticals being key application areas. In terms of the overall demand, Asia-Pacific is the region with the highest demand because of the amount of industry there.

“The European region accounts for the largest volume of close to 40 percent of the global supply, closely followed by the Americas, and the balance of close to 20 percent is supplied by Asia-Pacific,” Sharma said.

Kline concluded that microcrystalline waxes produced in Asia-Pacific are almost entirely technical grade.

Kline found about 17 refineries and de-oilers produced microcrystalline waxes through dewaxing of base oils and/or through de-oiling of petrolatum. “Basically, the supply dynamics are such that the top five suppliers account for more than half of the global microcrystalline wax supply,” she said. IGI was the leading supplier, followed by H&R Group, HollyFrontier, Shell, Nippon Seiro, Petrobras, Sinopec Jingmen Petrochemical, Sinopec Nanyang Petrochemical, Total, Mol Group, Calumet Specialty Products Partners, Cepsa, Repsol, Dong Nam Petrochemical MFG Co. Ltd., YPF, Galp and TonenGeneral.

She pointed out that in addition to refiners and de-oilers, hydrofinished microcrystalline waxes are also supplied by some blenders, who buy unfinished waxes from refineries and then perform hydrofinishing at their own end. “However, these blenders are not reflected in [Kline’s calculations] so as to avoid any double counting of wax supply,” she added.

Crude petrolatum produced by refineries is sold to de-oilers, blenders, and specialty wax manufacturers for further refinement. Blenders and processors add value to product by modifying its characteristics according to requirements of end users.

Kline estimated global production for petrolatum at between 500 million and 600 million pounds in 2014. As with microcrystalline waxes, demand is expected to outpace supply to 2019.

The top 10 global petrolatum suppliers for 2014 were Sonneborn, Sasol, Aiglon, H&R, IGI, Penreco, Lukoil, Hebei Feitian Petrochemical Group, Raj Petro Specialties and Guangdong Maoming Petroleum Group. Together they accounted for more than half of the global petrolatum supply in 2014.

“The global market is characterized by prominent regional suppliers in each of the regions,” Sharma said. “Geographically, it is highly consolidated in the Americas, while in Europe and Asia-Pacific, the market is more fragmented. The top three suppliers in the Americas account for more than 80 percent of supply in the region, while in Europe and Asia-Pacific, shares of the top three suppliers are much lower than this.”

Global demand for petrolatum is forecasted to grow at a 2.3 percent compounded annual rate over the next 5 years, while supply will grow at a slower 1.4 percent, Kline said. Petrolatum supply from Europe, Asia-Pacific and the rest of world’s countries will grow slowly. “This will result in a supply demand imbalance of about 5 percent of current market size over the next five years,” she noted.

In Asia-Pacific, supply is almost equally split between food and pharmaceutical grade, and technical grade. In the rest of the world’s countries, the supply is limited to technical grade.

Europe is the leading petrolatum producing region, accounting for nearly half of global supply, followed by Asia-Pacific and the Americas.

Europe is also the overall leading petrolatum consumer globally, accounting for nearly a third of global demand, followed by Asia-Pacific and then the Americas.

Pharmaceuticals, cosmetics and personal care applications will be key growth areas¸ with moderate to strong growth expected in all regions. She noted the emergence of counterfeit products could present a challenge in the face of declining petrolatum supplies. “We’re more likely to see this trend in Asia-Pacific countries than anywhere else,” she added.

The title of the study is “Microcrystalline Wax and Petrolatum: Global Market Analysis and Opportunities.”