US paraffin wax market not reacting to base oil price drop

23 January 2014 19:56 Source:ICIS News

HOUSTON (ICIS)--US paraffin wax prices are not reacting to January price reductions in the upstream Group I base oil market, sources confirmed this week.

“We have not heard about any wax price announcements,” one supplier said.

Paraffin waxes are produced from residues created in the Group I base oil solvent processing, making the waxes a potential co-product of the base oil production.

Group I base oil posted prices dropped this week as industry sources verified that ExxonMobil reduced its light grade base stocks by 14 cents/gal effective 21 January, with mid-grades reduced by 10 cents/gal on the same date.

ExxonMobil is the largest US paraffin wax producer.

Other Group I base oil producers also announced price reductions, but none of the price changes were applied to brightstock.

Brightstock is the heaviest grade of base oil produced and can be a precursor to waxes.

Base oil price decreases were driven by seasonally slow Q4 demand from the key lubricants sector that pushed base oil producers to offer heavy discounts between November and January.

However, the downward pressure on the base oils did not translate to the paraffin wax market, as end-use sectors for the waxes are different.

Candle manufacturing is a key end-use for the waxes, with certain spring holiday requirements in the US and Latin America currently boosting that wax demand sector.

Slackwax prices were most recently assessed by ICIS at 58-63 cents/lb FOB (free on board USG (US Gulf).

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By Judith Taylor