Paraffin Wax Prices Fall as Supply Surpasses Demand Towards Year-End

The global Paraffin Wax market experienced a downward trend in the first half of November 2024, driven by economic factors and volatile feedstock Crude Oil prices, which predominantly leaned bearish. This pressure led to softened Paraffin Wax prices as producers and traders adjusted to fluctuating input costs. In Western markets, demand remained modestly stable, with steady consumption from key downstream sectors. However, in Asia, domestic demand for Paraffin Wax was subdued due to sluggish industrial activity and cautious purchasing behaviour. Weak economic indicators and limited festive-driven demand further dampened the region's performance.

In the North American market, Paraffin Wax prices saw a significant decline during the first half of November 2024, largely due to an oversupply of imported material. A key factor behind this surplus was the proactive stockpiling by North American traders, driven by concerns over potential disruptions in supply chains. Fearing ongoing port congestion in China, traders sought to secure Paraffin Wax ahead of time to mitigate the impact of possible delays. This stockpiling was further compounded by scheduled maintenance activities at the Panama Canal, which were anticipated to disrupt shipping flows, prompting traders to adjust their purchasing strategies well in advance. Shipping rate trends also played a significant role in the price dip. While container rates from Asia to the US East Coast remained stable, there was a notable 5% drop-in rates for shipments to the US West Coast. This reduction in shipping costs further supported the influx of cheaper imports of various commodities including Paraffin Wax, contributing to the downward pressure on Paraffin Wax prices.

Despite this price decrease, demand from downstream industries, particularly the candle-making and cosmetics sectors, remained relatively steady. This resilience in demand can be attributed to the approaching Christmas and New Year festivities, which traditionally drive higher consumption of Paraffin Wax for holiday-related products such as candles, packaging, and personal care items.

In the Asian market, Paraffin Wax prices remained stable to slightly soft during the week, primarily driven by a decrease in the cost of key feedstock, Crude Oil. This drop in Crude Oil prices was influenced by easing geopolitical concerns, as reports indicated progress toward a ceasefire agreement between Israel and Hezbollah. The dip in feedstock costs led to lower production rates, exerting downward pressure on Paraffin Wax prices. While demand from Western markets remained steady, it had a limited impact on Asian market prices. On the domestic front, however, demand remained subdued, further contributing to the downward trend in prices. Despite these challenges, supply conditions in the region remained stable, with adequate inventory levels to meet market requirements and no significant supply chain disruptions reported.

According to ChemAnalyst, it is anticipated that the price of Paraffin Wax may continue to decline in the coming days, as traders look to offload excess inventory ahead of the year-end. This typical end-of-year strategy could increase supply in the market, putting additional downward pressure on Paraffin Wax prices.