US p-wax down on weaker raw material costs

25 January 2007 21:57  [Source: ICIS news]

HOUSTON (ICIS news)--US paraffin wax (p-wax) spot values shed 2-5 cents/lb this week on weaker upstream costs as well as competitive activity, market sources said on Thursday.

Slack wax, a key feedstock for producing fully refined wax, fell by 4-5 cents/lb to 29-32 cents/lb ($660-700/tonne) FOB (free-on-board) following competitive activity that had been building for several weeks. Also contributing to lower numbers was weaker market sentiment, fresh offers and completed business.

Traders said that discounted prices were now fairly regular, but not all suppliers would agree. A few US slack wax producers refused to participate in lower-priced activity. Much of the cheaper slack was imported material, traders said.

Prices for fully refined p-wax with melt points of 125-140°Fahrenheit dropped by 2-4 cents/lb to $1,000-1,050/tonne FOB, according to global chemical market intelligence service ICIS pricing. Lower prices were the result of weaker upstream costs - mainly softer base oils prices - as well as competitive activity, market sources said.

Participants on both sides of the market agreed that prices had slid as a result of attempts by suppliers to reduce inventories amid questionable p-wax demand the past couple of months.

The slowdown in the housing sector during the third and fourth quarters of last year was partially responsible for the slowed p-wax demand, sources said. Also, many p-wax consumption segments had satisfied their requirements in advance of the year-end holidays.

However, suppliers said that orders were ramping up with the approach of February.

The high-end microcrystalline sector remained stable with steady demand alongside balanced-to-tight supply. Associated prices continued to hold a premium of about 5-10 cents/lb to mid-melt point fully refined numbers.

Wax producers include ExxonMobil, Sunoco, CITGO, Marathon, Calumet, IG and Shell Canada.

By: Carolyn Green
+1 713 525 2653

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