20241216~20241222 paraffin market analysis of China

The relevant information this week is as follows:

1. Raw material

Crude oil: During this statistical period, international crude oil prices rose slightly, with the average price of Brent crude oil at US$73.52 per barrel. However, except for  the rise on Friday, international oil prices have been falling for the other four working days; it seems that there is a certain pattern in oil prices now, and they always rise and fall in the adjacent two weeks.

The most critical economic event this week is the Federal Reserve’s year-end economic meeting. Although the Federal Reserve decided to cut interest rates by 25 basis points as scheduled, it also pointed out that there will be only two interest rate cuts in 2025 and lowered the previous interest rate cut expectations. This means that the Fed’s stimulus process for the economy will slow down, and the downward trend of international oil prices will be strengthened again.

2. Production capacity

Among the major production refineries in China, Maoming and Dalian Petrochemical has stopped production, the rest of the refineries are operating normally.

Period	Factory	Status
20241213—1219	Daqing Pec	Normal
20241213—1219	Daqing Ref & Che	Normal
20241213—1219	Dalian Pec	Closed and Relocating
20241213—1219	Fushun Pec	Normal
20241213—1219	Lanzhou Pec	Normal
20241213—1219	Jingmen Pec	Normal
20241213—1219	Gaoqiao Pec	Normal
20241213—1219	Maoming Pec	Suspended
20241213—1219	Jinan Ref & Che	Normal
20241213—1219	Nanyang Pec	Normal
20241213—1219	Panjing Beiran	Normal

 

3. Stock

The paraffin market continued to improve this week, with traders and end users purchasing on demand. Currently, the national inventory is about 12,000 tons.

4. Market demand

The paraffin market was good this week, and the demand of manufacturers and traders who had been on the sidelines due to the downward trend of paraffin prices was released.

5. Industry analysis overview

Paraffin prices remained stable this week, but as the news of Dalian’s complete suspension of production and relocation became more widely known, demand parties that had been on the sidelines seemed to start purchasing on demand. Dalian Petrochemical Company has an annual production capacity of 250,000 tons, and this year’s daily output is about 500 tons, accounting for 11% of the total output of PetroChina and Sinopec. The loss of this part of production capacity is bound to support the price of paraffin to a certain extent, resulting in the current delay in the price reduction of paraffin.

6. Price expectations

Paraffin prices are currently high, and the international oil price is clearly on a downward trend, which will most likely cause paraffin prices to remain flat for a period of time before starting to fall. However, due to the suspension and relocation of Dalian Petrochemical (restart is unknown), the price reduction time may be delayed than previously expected.