Q1-Q3 Paraffin Wax Market Remained Largely Stable

Q1-Q3 Paraffin Wax Market Remained Largely Stable

In 2019, the paraffin wax market in China stayed largely stable, and the prices of paraffin wax fluctuated around RMB 6,200-6,500/mt. Up to September 18, the average price of semi-refined 58C melt point paraffin wax was RMB 6,251.25/mt, down RMB 1,033.75/mt or 14.2% from last year.

In Q1, 2019, most participants adopted cautious attitudes, and the prices of paraffin wax dropped at the end of Q1, 2019. In January, the prices of paraffin wax at refineries kept fluctuating, and the average price of semi-refined 58C melt point paraffin wax was RMB 6,500/mt, down 0.86% M-O-M and down 5.33% Y-O-Y. From the middle of January, a few refineries raised their offers, and many traders replenished their inventory for the upcoming Spring Festival holiday. Therefore, the inventory of paraffin wax at refineries declined, supporting the rise of the paraffin wax prices. In February, the prices of paraffin wax were stable-to-rising, and the average price of semi-refined 58C melt point paraffin wax was RMB 6,550/mt, up 0.77% M-O-M and down 4.95% Y-O-Y. After the Spring Festival holiday, the paraffin wax market started reviving, and many refineries raised their offers. In March, the prices of paraffin wax experienced fluctuations, and the average price of semi-refined 58C melt point paraffin wax was RMB 6,500/mt, down 0.76% M-O-M and down 10% Y-O-Y. During this month, many traders stayed on the sideline, while others purchased on a need-to basis. As a consequence, the inventory at refineries went up, and the dealings in the market were tepid, making the prices of paraffin wax decline.

In Q2, 2019, the overall prices of paraffin wax trended down. Therein, during April, most PetroChina’s refineries, excluding PetroChina Dalian Petrochemical, adopted “Baojia” policy on their paraffin wax sales. The prices of paraffin wax at Sinopec’s refineries continued dropping, and the price decrease was around RMB 600/mt. The prices of paraffin wax at PetroChina’s refineries declined by around RMB 200-400/mt. The monthly average price of semi-refined 58C melt point paraffin wax was RMB 6,237.5/mt, down 4.03% M-O-M and down 13.64% Y-O-Y. In May, the international crude oil prices fluctuated upward, supporting the paraffin wax market in China. Therefore, the dealings in the paraffin wax market revived to some extent, and the prices of paraffin wax went up. The monthly average price of semi-refined 58C melt point paraffin wax in May was RMB 6,256.25/mt, up 0.40% M-O-M and down 11.75% Y-O-Y. In June, the overall prices of paraffin wax inched down, and the average price of semi-refined 58C melt point paraffin wax was RMB 6,245/mt, down 0.08% M-O-M and down 12.02% Y-O-Y. Meanwhile, PetroChina started paraffin wax unified sales from June 1, changing the sales pattern in the paraffin wax market. As a consequence, the market prices of paraffin wax varied dramatically, and many downstream users adopted cautious attitudes. The sluggish downstream demand and the oversupply made the overall prices of paraffin wax continue declining.

In Q3, 2019, the paraffin wax supply-demand fundamentals stayed largely stable, and the market revived slightly. Therein, in July, the prices of high melt point paraffin wax remained stable, while due to the high temperature, the prices of some types of low melt point paraffin wax dropped by RMB 100/mt. The monthly average price of semi-refined 58C melt point paraffin wax was RMB 6,245/mt, down 13.24% Y-O-Y. In August, the prices of paraffin wax at PetroChina’s refineries stayed stable, while the prices of a few types of paraffin wax at Sinopec’s refineries increased by RMB 50-200/mt. The monthly average price of semi-refined 58C melt point paraffin wax was RMB 6,226.25/mt, up 0.3% M-O-M and down 14.3% Y-O-Y. The paraffin wax inventory at refineries remained at a relatively high level, and the demand for paraffin wax revived slowly. During September, the prices of paraffin wax at refineries went up by around 50-200/mt, and the monthly average price of semi-refined 58C melt point paraffin wax was RMB 6251.25/mt up 0.4% M-O-M and down 14% Y-O-Y. On the one hand, the demand for paraffin wax was sluggish; on the other hand, due to the Sino-U.S. trade war, the exports of paraffin wax underperformed. As a consequence, few downstream users were willing to replenish their inventory, and the inventory pressure at refineries kept rising.

Currently, the prices of paraffin wax stay largely unchanged. On the one hand, the sales pressure at refineries remains huge due to the high inventory; on the other hand, though the demand for paraffin wax may revive soon, the revival may be slow and limited. Therefore, the overall paraffin wax market still suffers from oversupply. SCI reckons that in the future, most refineries will maintain their prices of paraffin wax unchanged, while downstream users will purchase on a need-to basis. On the whole, the future paraffin wax market will stay stable for a short period.

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