SINGAPORE (ICIS)--A steady uptrend in domestic prices of Chinese paraffin wax has thrown the export market into confusion, with some buyers foreseeing unworkable hikes in offers in the next two months.
Upcoming turnarounds of major wax refineries have already led to increases in the list prices from domestic producers, which in turn are exerting upward pressure on export offers.
“Chinese wax prices have gone wild, out of control,” a Hong Kong based trader said.
Fully refined solid wax prices were last assessed at $1,200-1,270/tonne FOB (free on board) China, up by $20/tonne week on week, according to ICIS data on 22 March.
“Domestic prices are up every week and export offers are messed up now. People are calling out prices at higher levels but there is little acceptance,” a Chinese trader said.
Prices have been trending higher after the Lunar New Year, following hikes in domestic list prices on the back of short material availability.
“Offers have gone up crazily and they’re not very workable with customers. We are not sure when this will stop, maybe in June when turnarounds come to an end,” he added.
Major wax refineries like Dalian and Fushun will be undergoing turnarounds in late March and early June respectively, according to market sources.
“It’s a confusing market now. Even those who are not trading waxes are also putting their foot into the market, they see that supply will tighten further due to maintenances and want to profit during then,” another Chinese wax distributor said.
“But this has a very huge impact on us who have always been in the business. There are not enough cargoes already.”
In key import market southeast Asia, which typically imports wax from China, buyers are affected by limited cargoes.
“We are getting good enquiries. The problem is that customers want to buy, but cannot accept the crazy prices from China,” a Thailand based distributor said.
“The buy-sell gap is at around $50-100/tonne now. It’s just not workable,” the distributor added.
Acceptable selling levels for fully refined wax were understood to be at around $1,270/tonne and above this week, up by $20 week on week.
Market participants said the outlook will depend on acceptance within the domestic market itself, along with the duration needed for the short supply to ease.
Paraffin wax is commonly used in candles, coatings and laminates for food packaging.
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Focus article by Jeslyn Lerh