US p-wax prices soar on crude oil surge

29 May 2008 17:10  [Source: ICIS news]

HOUSTON (ICIS news)--Record feedstock costs and tight supply have propelled US paraffin wax (p-wax) spot prices to new highs, with parcels selling at about 50% more than transactions at this time last year, a trader said on Thursday.

Spot prices for fully refined liquid p-wax with melt point of 125-140° F (52-60 °C) degrees were assessed at $1,440-$1,520/tonne (65.32-68.95 cents/lb) free on board (FOB) US Gulf, according to global chemical market intelligence service ICIS pricing.

Truck loads were selling for under $1,000/tonne (€640/tonne) in the US last year, the trader said.

North American producers of fully refined p-wax, ExxonMobil, Citgo and IGI, have issued 3-5 hikes from 1 January to 31 May, depending on seller. The sum of the initiatives totals 12-18 cents through 31 May. In the same time last year, no hikes were issued, the buyer added.

Buyers and sellers said more hikes were already in the pipeline for June business. Citgo announced plus 7 cents/lb effective 2 June. ExxonMobil announced plus 4 cents/lb effective on 5 June. IGI announced plus 7.5 cents/lb effective on 9 June and another 6-10 cents/lb effective on 23 June.

Also, distributor Mastertank issued a hike of 7 cents/lb effective on 23 June, and Shell Canada was out with hikes of 4 cents/lb effective on 16 June, a buyer said.

Buyers said the number of increases issued this year was unprecedented. The difficulty is not just in keeping up with the announcements, but capturing the replacement cost in the final product, a buyer said.

Suppliers said that most integrated refiners continue to favour transportation fuels, such as diesel, jet and gasoline, over base oils/waxes due to better return on the dollar. As a result, there is growing pressure to divert light grades of base oils into fuels. Therefore, wax and base oil sellers said it is imperative to keep pushing for steeper prices.

North America is a net importer of Chinese wax, but prices have soared in Asia as well.

Chinese 58/60° C bulk liquid wax prices jumped an average of $100-140/tonne to $1,350-$1,420/tonne FOB China Main Port (CMP) this week.

Refinery shutdowns in China have tightened supply in the second quarter, a source said. One trader speculated that the closures in China were intentional, as producers tried to minimise losses from refining crude oil and reselling the product at huge losses due to government-controlled prices.

($1 = €0.64)

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By: Heather McGuire Doyle
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