Price drops break three-month US p-wax lull

21 November 2008 17:06  [Source: ICIS news]

HOUSTON (ICIS news)--US paraffin wax (p-wax) suppliers have but fully-refined wax contract prices, ending a three-month streak of steady prices, sources said on Friday.

Falling base oil values and ample inventory arriving from Asia ports helped exert downward pressure on US contract prices, a trader said.

Prices for fully-refined p-wax were lowered by 8 cents/lb ($176/tonne, €141/tonne) by the two major suppliers, buyers said. Prices had been holding since September after several months of steady hikes.

Fully-refined p-wax with melt point 125-140° F (52-60° C) was assessed at 78-83 cents/lb FOB (free on board) US Gulf, according to global chemical market intelligence service ICIS pricing.

Suppliers also lowered heavy grades of fully refined p-wax by 3 cents/lb, buyers said.

US p-wax suppliers had maintained steady prices for several weeks despite recent declines in other regions.

International wax players who gathered at the National Petrochemical & Refiners Association’s (NPRA) annual Lubricants and Waxes meeting last week said it had been a shocking year for all.

Among their concerns were the lack of supply caused by two domestic producers exiting the business in 2008, additional worries of reduced Group I base oil production in 2009 and record high operating costs.

Although crude prices began to plummet in September, US p-wax prices held firm.

“In fuels refining, many (products) can turn on a dime as crude goes up and down,” analyst Jamie Brunk said in a speech at the annual meeting. “But historically, wax price changes take considerable more time.”

A buyer said another decease was likely before year end, since p-wax prices would be slow to catch up to the crude fall. Also, Asia generally sets the price and that market has been dropping for several weeks, the buyer said.

The buyer added that the US would not likely see the same fire-sale prices Asia was experiencing, but prices would likely fall more than once before the year ends.

A trader warned, however, that even a dramatic drop in p-wax prices may be short-lived as the industry has not seen the full impact of recently reduced supply.

Wax players have been concerned since suppliers Citgo and Marathon announced they would exit the business, taking 20% of wax supply out of the US market.

ExxonMobil and IGI are the major fully-refined p-wax suppliers in North America.

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($1 = €0.80)

 

 

By: Heather McGuire Doyle
+1 713 525 2653

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