A larger share of European fully-refined (FR) paraffin wax imports came from China in the first half of the year, as prices for Chinese imports reached multi-year lows.
Although European imports of Chinese FR wax rose by just 2pc, or 46,000t, from a year earlier, the share of total imports coming from China reached 67pc, up from 58pc.
European imports were subdued earlier in the year — they fell by 37pc on the year to 4,400t in January — after Chinese exporter raised their prices in December. It usually takes up to six weeks from ordering to receiving Chinese wax in northwest Europe, so wax ordered and shipped in December would arrive in January and February.
Chinese exporters then slashed their prices in March, after Covid-19 lockdowns cut demand and stocks that had been built ahead of the lunar new year holiday remained high. This more than doubled the discount of Chinese FR solid slabs with 58-60°C melting point to liquid European-produced wax of the grade delivered to northwest Europe, from $38/t to $84/t. Liquid wax is typically priced at a premium to solid slabs, which are often melted down to a preferred liquid form by buyers.
European imports were also helped by the EU revoking a 2.2pc import duty on Chinese FR wax from 1 April. The duty had been in place since 1 January, and would have narrowed the discount of $84/t for Chinese wax in March by $16/t.
Widening discounts increased Europe's appetite for Chinese wax, and imports were 12,000t in April. Between 74-76pc of European imports in April and May were from China, up from 66-67pc in February and March and 56pc in January.
Chinese exporters cut prices again in April, but prices also fell for European-produced wax so the discount for Chinese wax remained roughly steady at $80/t. Demand from Europe and the US shrank, and was persistently low in domestic Chinese and regional Asia-Pacific markets.
Chinese export prices bottomed out in May, resulting in a record $232/t discount to European wax for 58-60°C grade wax. The latter was $699/t, down from $963/t in May 2019 and $1,082/t in May 2018. This led some European buyers to source certain grades to cover their demand for the remainder of the year.
Having reduced wax output since February and eased pressure on stock levels from April by cutting prices, Chinese refinery stock levels came down in June and export prices to Europe went up. The discount of Chinese 56-58°C to European wax more than halved to $112/t.
