Industrial Wax Market

Increasing global packaging demand has had a large impact on the consumption of industrial waxes, primarily in areas where protection, longevity, and aesthetics are important. Industrial waxes are widely used in corrugated packaging, coated paper, and other food-grade containers, largely due to their ability to resist moisture, seal products, and enhance surfaces. Unparalleled levels of online shopping have led to insurmountable shipping volumes, requiring stronger packaging materials, whether for protection or aesthetics. Also, the e-commerce industry has increased its dependence upon more sustainable packaging options, providing wax complexes with the opportunity to improve wax formulations that align with both biodegradable and recycling options and meet both process and environmental requirements. As growth continues in industries the use of wax-treated packaging options will continue to grow.

Many industrial waxes, especially from petroleum feedstock are under scrutiny as non-bio-degradable products and for their environmental impact during production and after-use disposal process. Governing bodies across the European Union, North America, and parts of Asia are also beginning to impose rules aiming for compliance for VOC emissions and hazardous waste disposal and carbon footprint of wax manufacturers as well end users. The demand for sustainable alternatives is forcing many industries transition from traditional paraffin waxes to more bio-based or synthetic products, but this transition is often limited by higher capital costs, lack of scalability, and varied performance properties of eco-conscious waxes. Furthermore, many industries, including packaging (primary or secondary) and cosmetics, are further restricted in their use of industrial waxes for food safety and environmental labeling requirements that restrict the use of products that are either not at REACH or FDA or similar global thresholds.

Sustainable and bio-based wax innovation is being highlighted as a significant growth opportunity in the industrial wax category, as consumers become more environmentally savvy, regulators follow through with mandated changes, and consumers drive demand for eco-friendly products. Many traditional petroleum-based waxes are being substituted or replaced with nature-derived waxes from sources, such as soy, palm, beeswax, and sugarcane. Bio-based waxes provide equivalent performance benefits like, but not exclusively: water resistance, gloss enhancement, and barrier protection while complying with environmental and safety requirements. In packaging, such as food-grade, food, or e-commerce applications, bio-based waxes are starting to establish themselves as sustainable coatings that promote circular economy purposes. Additionally, improvements in formulation capabilities are supporting production effectiveness and consistency with bio-waxes consistent across multiple streams of the supply chain in personal care, food processing, adhesives, as they increase capacity and consistency of the respective performances of the bio-waxes involved.

The price volatility of raw materials is a major challenge for industrial wax players and end buyers. Industrial waxes are made from primarily petroleum-based feedstocks: paraffin, microcrystalline wax and synthetic hydrocarbons. Waxes are reliant on crude oil for pricing and production, which can swing wildly based on forces, such as geopolitical conflict, supply chain disruptions related to the pandemic, and purposeful changes from energy policy, expected and unexpected. The cost of wax production spiked and soared as the price of crude oil surged; more uncertainty continues to cause cost variations of many raw wax feedstocks, particularly since many of the competitors have either limited processing capacity or none. This price volatility makes it extremely difficult for manufacturers to arrange long-term contracts (fixed pricing) for wax production or maintain pricing for months in the market. Increasingly, categorical cost variance and margin pressures are related to the acknowledged changing wax price volatility. Price volatility leads to the manufacture of even small-scale scale not able to competently plan for wax acquisitions or be inefficient in business.