PARSIPPANY, N.J., Jan. 28, 2016 /PRNewswire/ -- While global wax demand is projected to grow at a compound annual growth rate (CAGR) of 1.5% until 2019, wax supply growth will be much slower at a CAGR of 0.4% during the forecast period. Despite strong growth in the supply of synthetic and natural waxes, growth in overall supply will not suffice to meet the increase in demand, finds the recently published Global Wax Industry: Market Analysis and Opportunities report by global market research and management consulting firm Kline.
The wax industry faces a future of changing wax supplies. Due to the closure of some Group I plants producing wax, as well as lower operating rates in the face of reduced demand due to the economic recession, both Europe and North America have experienced supply erosion. As the global petroleum wax supplies currently representing 70% of global supply continue to decline, demand growth has opened market space for synthetic and vegetable waxes, which represent the fastest-growing products in the current market environment.
The emerging wax supply will be driven by three variables: Group I plant rationalizations, growth in the supply of hydrogenated vegetable wax, and growth in Fischer-Tropsch (F-T) and F-T wax capacity. In addition to the growing supplies of established polyethylene and F-T waxes, hydrogenated vegetable waxes, a relative newcomer, improved with the fast developing technology to provide more stable vegetable waxes, with higher melting points now offering immense growth potential.
Ksenia Efimova, Analyst in Kline's Chemicals Practice, comments, "The overall trend of increasing eco-awareness leads to the rise in consumption of bio-materials, such as waxes from natural oils. However, the trend is not evenly split throughout the world. In the United States, the major consumer of waxes—the candle industry—has up to 50% of soy wax in the candle formulation. In some cases, candles might be fully done from this material and will be considered as 100% nature friendly."
Global demand growth through 2019 will occur at a slightly higher pace in comparison to demand growth in the previous five years, for several reasons. First, demand growth will occur as a result of the post-recession strengthening of the North American and European economies. Second, consumption in the evolving manufacturing sector of Asia, Africa, and the Middle East will also contribute to this demand increase. Even with the proliferation of electricity throughout the world, candles still represent 46% global wax consumption, and about 80% of the candles used today are for decorative or religious purposes, rather than illumination.
According to Pooja Sharma, Project Lead in Kline's Energy Practice, "Increased consumer spending will accelerate the demand for wax used in rheology and surface applications, packaging and non-packaging applications, and application in the health industry. In contrast, the demand for candles in the growth economies may be lower as increased electrification will reduce the demand for illumination. However, candle demand for home decor, aromatherapy, and the like will increase, as disposable incomes increase." Sharma adds, "To keep the global wax industry moving forward, wax buyers and sellers need to prepare for the continued, gradual shift away from petroleum waxes and incorporate more synthetic, hydrogenated vegetable, and natural vegetable waxes into the overall wax supply."
These findings and other key insights are available in the recently published Global Wax Industry: Market Analysis and Opportunities report.
Pooja Sharma will be presenting a webinar regarding the aforementioned report on Wednesday February 24, 2016, at 9:00 AM EST; if you are interested in joining the session, please click here to register.
About Kline
Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the agrochemicals, chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit www.KlineGroup.com.
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SOURCE Kline
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