Low Demand Sparks US Paraffin Wax Prices Decline in November 2023

The prices of Paraffin Wax have been observed to witness a bearish situation during the first half of November in the US market, but across the Asian markets, the situation has remained largely stable. Some of the factors that account for the depreciation of the prices of Paraffin Wax across the US market include a low demand from the downstream cosmetic industry and the anticipated revival of demand from another downstream candle-making industry owing to the upcoming festive season, which was yet to be materialized.

Currently, prices of Paraffin Wax across the US market have declined by almost 1.5% in the first half of November, owing to declining prices of upstream Crude Oil, which also declined more than 8% globally, which eased production costs. Removal of sanctions from Venezuelan Crude Oil and an overall low demand for gasoline and diesel played significant roles in depreciating Crude Oil prices, which eased Paraffin Wax's production costs. The festive demand for Paraffin Wax from the candle-making market is yet to gain momentum, which is expected to counter depreciating production costs, which have continued to ease since the beginning of November on the back of cooling Crude Oil prices. The current economic situation of the United States promises a positive outlook as cooling inflation rates, which currently stand at 3.7% (according to the FRED), are expected to further improve the purchasing sentiments of the local populace in addition to the incoming festive season as hikes in interest rates are not expected until the end of December.

Across the Asian market, prices of Paraffin Wax have largely stabilized, as evidenced by the unchanged prices of the product in South Korea and China. This was largely due to the creation of an adequate gap between the existing demand and current supplies of Paraffin Wax in circulation. Depreciating prices of upstream Crude Oil were generally countered by the progressing winter season, which necessitated purchasing activities in the downstream cosmetic and skincare industries, stabilizing Paraffin Wax's prices.

Overall, the market for Paraffin Wax in the United States is expected to be driven by anticipated increments in upstream crude oil prices as demand is expected to increase due to the requirement for heating applications across US households. The incoming festive season is also expected to cause an increment in the demand for candles, which is further expected to drive up the demand for Paraffin Wax. Secondary demand from the downstream wax paper packaging from the downstream FMCG industries as purchasing activities strengthen during the festive season.

In the Asian market, the demand from the downstream cosmetic and skincare industries is expected to drive the prices of Paraffin Wax along with anticipated increments in crude oil prices. The demand for Paraffin Wax from the downstream skincare and cosmetic industries is expected to strengthen till March 2024 in the Asian market generally.