April 01, 2008

Recent Price Trends

Recent Price Trends

Many larger magazines, newsletters and online publications plan their topics months in advance. This will help the writers and editors prepare material well in advance, but in many instances will make it difficult to always offer the most timely articles. One of the advantages of having a smaller publication is that the topics can be prepared a week or days in advance, so topics can be very timely.

There probably is not more of a timely issue right now than the current continued increase in soy wax prices, coupled with the continuing trend of paraffin wax increases. Unfortunately, the trend for paraffin wax has been ongoing on close to three (3) years and for the recent soy market about four to six months. In this issue we will focus on some of the reasons these price increases are occurring and why it may be necessary to follow some of the larger economic issues.

It is amazing how often you can read USA Today and one of the feature stories will indirectly have an impact on the candle business. Several weeks ago their front page article featured how prices of wheat, soy and other crops have skyrocketed and how much this has impacted food prices and essential household items. In some instances, there have been some extreme measures taken. According to USA Today, Pakistan is stockpiling wheat and using its military to guard flour mills. In other places the result has been continued price increases on food prices to the extent that riots have occurred.

The reality of it is that the candle industry is also getting hit very hard, because of these increases. While candles are not as critical as food, for many companies and individuals it is their sole income. The timing could not have been worse in that a growing trend had some companies switching from paraffin based products to soy and other natural based products to take advantage of the favorable pricing soy once offered. However, in recent months, soy has soared to where in some instances they are 25 to 30% higher than paraffin based products. Some might point out that the continued increase in popularity of soy contributed to this, but reality of it is that soy candles have had very little, if any impact on this upward movement of soy prices. Right now, depending on the source, it has been identified that only 2 to 6% of the soy processed goes into the candle market, the far greater usage is in foods.

The current increase in price is more of economics 101; the demand for the product is not nearly keeping pace with the availability. The price of soy is always determined based on the market commodity pricing. During the first quarter of 2008, by many accounts, the demand for soy would increase dramatically in 2008 and the availability would be down thus the tremendous shift up in pricing. The forecasted demand came as a result of the continuing trend to alternative fuels and now the anticipated rapidly need of soy and other products grown in China. The good news if any has been the last couple of weeks the “futures” on soy have been declining slightly. We do use the term slightly very cautiously in that it may only be a temporary situation if the demand suddenly increases, or the ability to grow the forecasted crop decreases it could go up very rapidly again.

It is very difficult to determine how to proceed in a market like this. The general suggestion is that when a price seems to be where you need it to be, purchase more than you may need to avoid future increases. Follow the market and always try to take advantage of soy pricing when possible.

The other development in the candle industry regarding paraffin waxes has actually been going on for a number of years and continues to evolve and change almost annually. For many years wax was treated at refineries as a by-product of the refining process and was priced accordingly. In most instances the operators of refineries focused on revenues from fuels and higher end products in the process and were satisfied, in most instances, with just minimal cost on selling the waxes. As technology was developed to convert more of the crude to fuel and other products, less wax was produced.

Many refineries that did not employ this type of technology started to treat wax as a raw material and not a by-product. In addition the refineries making wax also continued to decline. According to the National Petrochemical & Refineries Association, the number of refineries operating wax facilities declined from 25 in 1993 vs. now in the range of 10. Among those 10 many don’t even focus on the candle industry. This has greatly contributed to the current availability of waxes in the US. The final contributing factor, without doubt, is the cost of the crude oil. This impacts prices in several ways including, but not limited to, the transportation cost of getting the crude oil to the refineries, operating the refineries and then the distribution of the finished product.

While all of these factors may seem overwhelming, the key is continuing to keep your eye on all costs and be sure to determine this when pricing out your candles. Naturally, the biggest impact is going to be in larger candles, the votives and smaller price increases, while not always pleasant, do not impact the cost as much as other potential raw materials.

The candle market is always going to be a strong one due to its continued popularity and efforts of candle makers, producers and suppliers to continue to develop new and interesting products to ensure that growth and popularity continues.

 

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CHANDLER'S CORNER

With current increase in the mainstream materials it is imperative to look at everything you do. There are many techniques for increasing profit margin on your candles, but none are as inexpensive as the three Rs- reduce, recycle and reuse. These simple actions cost the candle maker nothing and actually help the environment at the same time. 

Reduce – In order to save money on many different levels, reduce the amount of trash you accumulate by looking at your orders over the year and trying to buy larger sizes of commonly used items. For instance, why pay the higher price for a yearly usage of eight, 4oz bottles of scent/color when you could save money and produce less waste by purchasing two, 16oz bottles. The benefits also include less ordering cost, more efficient shipping charges, lower price per unit and guarantee you have the materials on hand when needed.

Recycle – To protect your supplies during shipping, we must use packing materials to be sure your products arrive to you in perfect condition. Candlewic’s air pillows used in packing, as well as plastic scent bottles, are suitable for most recycle programs that accept plastic. Since reusing is also recycling, we highly encourage the candle maker to reuse the packing materials and boxes to reship finished goods, or even cut the cartons apart to use on the floor to absorb spilled wax.

Reuse – Once again, reusing an item is recycling, so please reuse any packing material you can. The boxes and packing materials are sturdy enough to get repeated uses, which reduce the cost of shipping your final product. Most candle makers will reship finished jar candles in the original cartons the jars were received in.

Other Frequently Asked Questions

Q: What does the scent load refer to?
A: This is the amount of fragrance that is placed into the candle maker’s formulation in relation to the entire batch size. In most instances this will range from 3% up to 8%, with the average being about 5%. In measuring this, a 5% scent load equals about 1 ounce of fragrance for each 1 pound of wax used (additives and everything included).

Q: How do I get rid of air bubbles in the gel?
A: When using the Penreco gel there is no way to totally eliminate the air bubbles, but to reduce them you can initiate some of the following steps: 1.) Raise the pouring temperature of the gel. 2.) Allow the gel to remain at the higher temperature for a little longer to allow the air bubbles to gravitate out of the candle. 3.) Slowly warm the candle after it has set up.



April 2008

Aluminum Molds
To Each
Their Own


Aluminum molds for making freestanding candles are a great investment as an inexpensive way to extend your line of candles. Jars have become so popular in recent years, that many candle makers have forgotten that pillar candles add a real touch of beauty to any home’s décor. Pillar candles offer extremely vibrant colors due to the fact there is no glass blocking the true color of the candle as seen with the naked eye. The profit margin on pillar candles may be higher, because the price of the glass is removed from the cost of raw materials. Aluminum does not rust, so you can enjoy your molds for many years.

Selecting your mold can be fun. Candlewic offers many shapes and sizes depending on the pillar that would best complement your existing line of candles. There are round molds, octagon molds, square molds, oval molds, plus many other unique shapes in our designer series of polycarbonate molds.

There are two wicking techniques that are most commonly employed when using aluminum molds. You can use the traditional method or the pillar pin method. Both techniques work well depending on the volume of candles produced or the amount of labor available.

The traditional method involves the mold, raw wicking on a spool, a wick bar and a rubber plug. This method is best for lower volume production or in the instance when you want to leave a little length of wick on the candle to attach a bead or a tag. You simply thread the wick through the mold and place a rubber plug into the small hole to hold the wick in place. Place a wick bar across the large opening of the mold and wrap the wick around the bar and pour the wax. After the wax has cooled, the finished product will have the wick nicely centered down the middle of the candle.

The pillar pin method involves a round mold, a pillar pin and a pre-wick assembly. This method is better suited for the small to large production run. Basically, you are making a candle with no wick and inserting a wick after it cools. There are two ways to use the pin. You can either stick the disc part of the pin down into the mold or stick the pin up through the mold from the outside bottom. Pour the wax and let cool. When you are done, you will have a candle with a hole through the center core and no wick. Take a wick assembly and insert up through the hole and you are done. The wick will be perfectly centered. The pillar pins are only suited for the round aluminum molds.

When using aluminum molds, there are a few tips and techniques that will help you regardless of the method you use.

1. Take good care of your molds. Do not use them for any other use such as a penholder or thermometer holder because you may scratch the inside, which will be apparent on the finished candle.

2. By heating or cooling the mold you can achieve different aesthetic qualities to the finished mold. Cold molds give a primitive appearance, while warm molds may give a good gloss.

3. Keep molds level unless a desired layered appearance is trying to be obtained. By resting the mold on various angles, some neat stripes can be achieved.

4. Take careful note on the pour temperatures. By adjusting the temperature you can control the shrinkage. Pouring too hot produces more shrinkage and may involve more topping off, while pouring too cool may not give you enough shrinkage therefore making it difficult to remove the mold.

5. For making perfect bottoms on your pillars, Candlewic highly recommends using a heated base leveler and angle plate for perfectly level pillars every time.

 


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