Waxing Paraffin: Prices on the Rise

Spend Matters welcomes a guest post from Robert Miles, at Mintec Ltd.

As the nights draw in and we approach Halloween and the festive season, purchases of candles are likely to rise and so is the price to consumers.

In 2012 the global paraffin wax market is expected to reach around USD 9bn, but the price of paraffin wax from China has so far been decreasing in 2012 thanks to lower feedstock prices and a lack of demand in key exporting regions of Europe and the US. All that may be set to change as crude oil strengthen in price.

Paraffin wax is mainly obtained as a by-product of oil refining. It is used in a wide variety of products (e.g. in the manufacture of candles, waxed paper/cups/plates, the wax coating on cheese, chemicals, car components, as an electrical insulator, as well as in the rubber, packaging, and adhesive industries).

China usually has the most competitively priced ex-works paraffin wax and is one of the largest sources of global supply. Over the last few years, the global supply of paraffin wax has become increasingly reliant on the old style Group I refineries primarily in China as the rest of the world has steadily moved to higher quality, more competitive Group II and III refineries where no wax is produced. China operates several of the old style (Group I) base oil refineries where slack wax (the raw material required for the manufacture of paraffin waxes) is obtained as a co-product in the manufacture of base oils from crude oil. Base oils are the base for motor oils and are made from the heavier fractions of crude oil.

Competitor products for the manufacture of candles such as tallow, beeswax and soya wax are all expected to (or are already tending to) show price rises too, on a lack of their own supply. This is for various reasons, such as a fall in the US beef herd, colony collapse disorder for bees and the US drought affecting US soya supply.

If this all seems to be occurring at a particularly unfortunate time, let's support a Halloween tradition and light some candles to help ward off bad news!

- Robert Miles, Mintec Ltd.

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