China future provider of wax to US

Sep 25, 1998 02:00 AM

China is taking centre stage as a source of wax to close the growing supply-demand gap in the US.
"While the market for wax in the US reached close to $ 0.5 bn in 1998, the production of wax is expected to decline within 5 years," according to a marketing manager. According to him, "China has an abundant supply of waxy crudes."
It is estimated that its fields in Daqing, Karamay, and Nanyang, together with other locations, give China the capacity to produce close to 2 bn pound of wax a year. "Of that capacity," Glenn notes, "less than half of the wax produced is captured by domestic demand. As a result, China has a significant surplus of wax and tends to be a very aggressive supplier enjoying a substantial export business."
"In contrast, by the year 2000, 2 to 3 lube basestock plants in the US are forecast to shut down and these closings will likely take wax with them. The forecast closings, together with such second-generation dewaxing technology as Chevron's ISODEWAXING process, are projected to drastically reduce domestic production of petroleum wax," he said.
Today, consumers are increasingly receptive to purchasing wax from China. "In addition to the tight domestic supply, the change in attitude is being driven by efforts on the part of China and US importers to resolve the concerns about quality, consistency, shipping costs, sales representation, and others." Such issues inhibited China from making significant inroads into the US market.

The ability of China to penetrate US and other global wax markets will largely be determined by its success with the current reorganisation of its petrochemical industry. According to Glenn, "There are still questions as to how the reorganisation will impact the overall direction of China's wax business." he noted, "Although there are questions about China's ability to construct a successful business plan to exploit opportunities in the US wax market, there is little doubt that significant business opportunities are developing."

Source: not available
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