Makers of candles and corrugated containers will see some of their U.S. wax sources melt away over the next five years -- but China stands ready to fill the supply gap. Wax has long been a petroleum byproduct. But new refining techniques -- along with forecasted closings of about one-fifth of lube basestock plants by 2000 -- will cut deeply into U.S. wax production, says Thomas Glenn, marketing manager at Fairfield, N.J.-based specialty-chemicals/materials consulting firm Kline & Co. Inc. The part of "black bubbling crude" made into engine oil contains paraffin, Glenn says. The paraffin must be removed, or the lubricant will go solid when cold. Traditionally, this was done by mixing the lubricant with a solvent, chilling it, and then physically removing the wax crystals. New U.S. technology doesn't pull out the wax. It just changes configurations of wax molecules "so it won't act like wax when it gets cold," says Glenn. But China, with abundant fields of waxy crudes and traditional refining methods, could produce an estimated 2 billion pounds of wax each year. Of that capacity, less than half is captured by domestic demand. China has a significant surplus of wax and tends to be an aggressive supplier. Major U.S. wax markets include manufacturers of corrugated containers, candles, sized board products such as particleboard, cups and containers, and fire logs. In 1998 the U.S. market for wax reached close to half a billion dollars. "Fully refined, wax costs 30 cents a pound," says Glenn. "That's a pretty cheap raw material, so they want to continue to use it." In the past, China had trouble making inroads into the U.S. wax market due to concerns about quality, consistency, shipping costs, and sales representation. China and U.S. importers now are resolving these issues, says Glenn. Kline & Co.'s most recent report on wax, Global Opportunities and Threats in the Petroleum Wax Business, 1997 to 2002, is scheduled for publication in November. For information on subscribing, contact Glenn at 973-808-3410. The address is Kline & Co. Inc., 165 Passaic Ave., Fairfield N.J. 07004.