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In the first half of the year, the domestic paraffin market continued to experience a tug-of-war between supply and demand. Looking ahead to the second half, considering market policies and macroeconomic uncertainties, the weak demand expectations for paraffin may persist, with price trends likely to weaken.
Moving forward, the paraffin market is expected to maintain a pattern of tight supply and weak demand in the second half of the year. On the demand side, while there may be periodic improvements in the terminal market, the anticipated growth in demand may fall short of expectations. Coupled with the time needed to digest existing social inventories, this could increase price volatility risks. On the supply side, refinery operations, maintenance schedules, and industry policy adjustments will remain key factors influencing market trends. Overall, the paraffin market is expected to face continued pressure in the second half of the year. Market participants are advised to closely monitor changes in refinery production policies and dynamic adjustments in supply-demand dynamics.
In the second half of the year, the drivers of paraffin market prices will still revolve around cost and supply-demand dynamics. The price trend may lean downward, though periodic fluctuations will depend on macroeconomic and policy disruptions, as well as shifts in downstream demand sentiment. The market is likely to remain under pressure, with tight supply and weak demand persisting.
Cost Factors: In the second half of 2025, the oil market will focus on tariff risks, macroeconomic interest rate cuts, OPEC production policies, and seasonal demand fulfillment. Assuming a baseline scenario of a "soft landing" for the U.S. economy and an oversupply of crude due to OPEC's accelerated production increases—while keeping financial and geopolitical risks under control—international oil prices may follow a "rise-fall" trajectory. Prices could rebound in Q3 due to seasonal demand but face greater inventory buildup pressure in Q4, maintaining an overall downward trend. Fluctuating oil prices will influence paraffin market costs and sentiment, with paraffin price trends broadly aligning with oil price movements.
Supply Side: Paraffin supply is expected to remain tight in the second half of the year. Refinery production is likely to be constrained by maintenance and shutdowns, with total output projected at around 650,000 tons—a year-on-year decrease of 20.5%. This tight supply will provide some support for paraffin prices.
Demand Side: Paraffin demand may show a "high-then-low" trend in the second half of the year, with overall demand lacking resilience. Given uncertainties in paraffin and candle exports due to tariff policies, overseas procurement may slow. Paraffin exports are estimated at 310,000 tons, with candle exports at around 170,000 tons. While demand may offer limited price support, it remains insufficient to drive significant gains.
Tariff Factors: The impact of U.S. tariffs in the first half has already been reflected in declining commodity prices. Although the U.S. has engaged in multiple rounds of tariff negotiations with several countries and granted some a 90-day grace period, outcomes remain uncertain. If tariffs are resolved in the second half, it could provide short-term relief and price recovery for the commodity market. However, long-term trends will still depend on structural industry challenges.
Overall Supply-Demand Outlook: Seasonal fluctuations in the paraffin market may weaken in the second half of the year. Given domestic and international uncertainties, the market will continue to face significant challenges. Amid the struggle between tight supply and weak demand, prices may trend downward, with policy and macroeconomic uncertainties adding short-term volatility risks.
In this challenging market environment, timely insights and flexible sourcing strategies are crucial. KH Honor Wax stays ahead of industry trends, helping our partners navigate price fluctuations and secure stable, high-quality supply. Contact us today to discuss tailored solutions for your paraffin wax needs in the months ahead.
