Why is paraffin wax supply so tight in China and how does it affect pricing?

Why is paraffin wax supply so tight in China and how does it affect pricing?
Chinese paraffin wax supply has been structurally tight, with monthly production normally around 140,000 tons but frequently falling short due to refinery maintenance. In August 2023, output dropped to 112,400 tons, down 19.4% month-on-month, and September was projected at only 120,000 tons. Refinery inventories have stayed exceptionally low, ranging from 5,800 to 24,000 tons in recent years, with PetroChina affiliates holding over 70% of stocks. This supply squeeze has kept prices at historically high levels, with the benchmark 58 semi-refined grade averaging around RMB 8,589 per ton in September, and market transactions often commanding premiums of RMB 150-350 per ton over list prices. Producer margins remain healthy, estimated at RMB 2,300-2,900 per ton, despite crude oil price volatility. Seasonal demand patterns are clear: prices tend to strengthen in Q1 and Q4 ahead of Christmas, Chinese New Year and Qingming festival stocking.