Unseasonably weak demand keeps paraffin wax prices subdued

25 September 2013 17:37  [Source: ICIS news]

LONDON (ICIS)--Demand for fully-refined paraffin wax remained lower than expected given the time of year, sources said on Wednesday, with plenty of product available.

Sources were again surprised at the downward pressure on the fully-refined market. Consumer demand for candles remains subdued as a result of economic weakness across Europe.

“My opinion is that after holiday season we were expecting [that the] market would be much stronger that it is today. I was expecting a little bit more demand for paraffin in general,” said a western European distributor.

“This is probably the reason why some paraffin wax suppliers are reducing prices. We see it is happening [the market improving] but not as much as expected,” he added.

The ongoing fall in the low-sulphur vacuum gasoil FOB (free on board) Rotterdam price, from a peak of $814/tonne (€602/tonne) on 27 August to $751/tonne on 24 September, gave slack wax producers more room to adjust their prices while maintaining margins. Nonetheless, the ex-tank Rotterdam price remained stable at €825-850/tonne on strong demand and ongoing and upcoming turnarounds, including Shell's Permis refinery and Kuwait Petroleum's Rotterdam refinery, limiting supply.

The distributor added, “Slack wax market [is] a little tight still, with Kuwait Pet and Shell refineries undergoing schedule maintenance. This is creating a shortage of slack wax towards October/November, but on the other side raw material prices went down.”

At the Poland-Belarus border, far more product was available, and slack wax traded at €800/tonne. One trader said there are 2,000-3,000 tonnes of product available beyond what would be expected on the market at this time of year. They added that a 2,000 tonne vessel had brought more slack wax into Poland in the past fortnight.

Sources said Chinese origin waxes were bring traded only in small quantities because a lack of available transport vessels was pushing up freight costs. Quality and price continues to vary enormously, with very low grade wax available for as little as $1300/tonne CIF NWE and higher quality at over $1500/tonne CIF NWE. Waxes in the 52-54 degree melt point range traded in the range $1,400-$1,460/tonne CIF NWE. Liquid wax demand continued to outstrip slab wax.

Semi-refined wax was seen trading at €790-850/tonne CPT (carriage paid to) on the Poland-Belarus border. A trader said the price was lower than expected, held down by candle makers prepared to increase the amount of slack wax in their manufacturing process.

A Polish trader said, “Due to the current market, semi-refined is a bit cheaper than it should be. It means that producers are not about to increase prices for semi-refined because candle makers choose slack wax instead of paraffin. Too much semi-refined and slack on the market.

 ($1 = €0.74)


By: Richard Welbirg
+44 208 652 3214



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