Prices in the European paraffin wax spot market registered further reductions this week as lower offers from both importers and domestic sellers weighed heavily on the market, players reported.
There is a growing consensus that the market is becoming further oversupplied, as more product is reportedly available from Russia and China at lower prices, providing an attractive alternative to those buyers who are able to participate in the spot market.
Weakening stearic acid prices in Asia and aggressive US offers pushed Chinese paraffin wax buyers to the sidelines of the market this week, as they adopted a wait-and-see stance to determine the direction of the market.
This pushed Chinese FOB prices in the region down by $20/tonne for certain grades.
Spot prices
This in turn weighed heavily on European spot prices, with one consumer saying that Chinese paraffin wax producers had dropped their offers by $80/tonne over the previous week.
European and Chinese origin prices registered falls of $20-60/tonne to reflect the downtrend. Russian material remained steady at €1,020-1,080/tonne FOB Poland/Belarus border.
Domestic Prices
Many players expected these lower spot prices to exert downward pressure on August domestic prices, as numerous buyers said they are holding high stock levels – built up when Chinese import prices fell to low levels in the previous months.
Meanwhile, demand is still yet to show any clear signs of an upswing following the summer holiday lull, several sources said.
As such, reductions of €45-80/tonne have reportedly been passed for August business, while one or two buyers were more bearish, saying decreases could breach the €100/tonne mark before the end of the month for those who had no immediate need to buy material.
The sources outlined European suppliers – particularly those in central and eastern Europe – are now beginning to lower their offers and approach non-traditional consumers in a bid to move product and remain competitive.
Those candle manufacturers who could take quantities of palm oil and blend it with paraffin wax applications also reported that prices of palm wax were around €980/tonne FD, providing an attractive alternative to higher paraffin wax prices and exerting further pressure on the market.
However, this could not be confirmed among suppliers who are keen to hold on to current prices ahead of an anticipated rebound in demand, as the downstream candle manufacturing industry approaches its strongest season.
Several sources – including numerous buyers – felt that this anticipated upswing in demand would commence towards the middle of the month and would absorb any additional quantity available in the market.
To reflect the downwards trend, the above domestic prices of 52-54c and 56-58c melt point paraffin wax were assessed between a rollover and minus €20/tonne for August business.
60-62c melt point and candle grade 56-58c melt point paraffin wax appeared to be the only grades bucking the downward trend, with a number of consumers confirming steady prices into August.
The majority of players termed these two markets more or less balanced in terms of demand, although one or two buyers said there was some emerging length in central and eastern Europe and in Germany, although this was not widely reflected.
At least one producer confirmed that it had dropped its 56-58c melt point candle wax offers by some €45/tonne into August, but affirmed that this movement had left its prices within the €1,300-1,350/tonne FD NWE range.
A second producer was reportedly offering fully refined 56-58c melt point paraffin wax at €1,270/tonne FD for August, but this could not be confirmed at the source.
Upstream
Slackwax with an oil content of 10-15% was reportedly available between €700-740/tonne FD, according to one producer.
At 12:00 GMT on Wednesday, September Brent was trading at $115.65/bbl, as crude prices weakened driven by concerns over the US economy with credit agency Moody’s and Fitch assigning a negative outlook for the World’s largest economy.
($1=€0.70)
(€1=$1.42)
Covering editor: Stephanie Wilson
This week on ICIS ( www.icis.com ):
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