US p-wax prices skyrocket on tight supply

19 June 2008 18:06  [Source: ICIS news]

HOUSTON (ICIS news)--Spot prices for fully refined paraffin wax soared by 7 cents/lb ($154/tonne) on Thursday likely due to market tightness following news of the CITGO plant closure, traders and buyers said.

Fully refined liquid paraffin wax with melt point 52-60°C was assessed higher by $154/tonne at $1,685-$1,735/tonne (76.4-78.70 cents/lb) free on board (FOB) US Gulf, according to data from global chemical market intelligence service ICIS pricing.

Railcars of fully refined p-wax with melt point 60-62°C were sold at prices north of 80 cents/lb, and offers for July were in the mid 80s cents/lb, buyers and traders said.

“Some contract customers are paying in the low 70s cents/lb range,” one seller said, adding, however, that there was no spot activity taking place at that level.

US base oils and wax producer CITGO confirmed on Monday it would cease production at its Lake Charles lube and wax plant in Louisiana prior to year-end.

CITGO’s news this week had a number of buyers scrambling to secure supply, especially for microcrystalline wax.

Meanwhile, contract p-wax buyers appeared resigned to the continued stream of price increases, mostly driven by strengthening feedstock vacuum gas oil (VGO) values and tight supply.

Calumet has announced a 4 cent/lb hike across the board to take effect on 20 June. IGI was out with a hike for 11 July of 2-7 cents/lb, buyers said. Sunoco announced a 7 cents/lb slackwax hike.

US producers have announced on average one to two hikes each month, depending on supplier and type of wax, since February, a buyer said.

In 2007, wax prices only changed three times for the most part, a buyer said.

“But for 2008 we’ve already seen seven changes and its just June,” the buyer said.

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By: Heather McGuire Doyle
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