H1, 2019 China Paraffin Wax Export Volume Surged by 24%

SCI99

2019-08-08

H1, 2019 China Paraffin Wax Export Volume Surged by 24%

In the first half of 2019, China’s prices of paraffin wax reached the lowest level in the last three years. Up to June 30, the average price of semi-refined 58C melt point paraffin wax was RMB 6,245/mt, down 12.02% from last year. There were two factors leading to the drop of paraffin wax prices. First, due to the requirement of China’s environmental protection policies, the operating rates at paraffin wax downstream users dropped, and as a consequence, the demand for paraffin wax declined by around 10%-15%. Second, from 2017 to 2018, the prices of paraffin wax stayed at highs, and the output of paraffin wax at refineries kept increasing. However, the export volume of paraffin wax declined dramatically in 2018. Therefore, the paraffin wax inventory at refineries reached high levels from the end of 2018, and many traders stayed on the sideline.

In the first half of 2019, China’s total paraffin wax output was 745.5kt, up 12.12% from 2017 and up 7.04% from 2018. The main reason that led to the increase of paraffin wax output was the limited turnarounds at refineries, and the operating rates at refineries stayed over 70%. PetroChina is China’s major paraffin wax producer, and in the first half of 2019, the overall paraffin wax output at PetroChina’s refineries reached 593kt, accounting for 79.54% of the total paraffin wax output at China’s state-owned refineries.

From January to June 2019, China’s total paraffin wax import volume was 4,319.47mt, up 42.07% from last year. According to the data released by the General Administration of Customs, China’s imported paraffin wax that came from Malaysia and Japan accounted for 56.33% and 21.18% of the total respectively. Though the import volume of the paraffin wax in the first half of 2019 surged from last year, the imports of paraffin wax had slight influence on China’s paraffin wax supply.

From January to June 2019, China’s total paraffin wax export volume was 291.4kt, up 23.58% from last year. Therein, the export volume of paraffin wax to India, Myanmar and Hong Kong increased by 132.79%, 103.06% and 123.68% respectively. The U.S. and Mexico are the largest two importers of China’s paraffin wax, and their import volume of China’s paraffin wax increased by 4.06% and 5.06% respectively in the first half of 2019. Accordingly, SCI reckons that the Sino-U.S. trading war had limited influence on the China’s paraffin wax exports to the U.S.

From January to June 2019, China’s total candle export volume was 157.8kt, up 34.30% from 2017 and up 14.35% from 2018. Candle is the major downstream product of China’s paraffin wax industry, and Taiwan is the largest importer of China’s candles. China’s candle export volume to Taiwan accounted for 27.21% of the total export volume.

According to SCI’s statistics, from January to June 2019, China’s paraffin wax apparent consumption volume was 458.4kt, down 1.16% from last year. The main reason led to the decrease was the surge of the paraffin wax export volume. In 2019, China’s domestic demand for paraffin wax dropped significantly, and therefore, many refineries promoted their paraffin wax exports.

In the first half of 2019, the prices of paraffin wax in China kept declining due to the serious oversupply in the paraffin wax market. In the second half of 2019, paraffin wax market will enter its peak season. In September and October, many foreign paraffin wax traders will replenish their inventory for the Christmas Day, and China’s paraffin wax exports are likely to increase. After China’s National Day holiday, China’s candle industry will enter its peak season, giving support to the paraffin wax market. SCI reckons that the total paraffin wax export volume in 2019 will exceed over 520kt, hitting the highest level in the last three years. However, the paraffin wax inventory at China’s refineries is at high level. Therefore, the prices of paraffin wax in the second half of 2019 may only inch up, and the prices are unlikely to exceed RMB 7,000/mt.

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