Paraffin futures at ¥3,650/t, down 1.62% on the day and hitting a three-week low. The price breached the prior low of ¥3,710/t, triggering algorithmic stop-loss orders and prompting a long-short shift with short positions increasing by 12,800 contracts. The primary driver is a sharp decline in downstream demand for candle and packaging waxes: candle factory operating rates in East China dropped notably in late October; export order cancellation rates rose significantly, primarily due to the EU REACH Annex XVII amendment introducing new paraffin migration limits (mandatory from 1 November 2026), prompting buyers to defer shipments en masse.

Inventory pressure continues to build

Petcoke inventory is elevated. Independent cokers in Shandong have reached full storage capacity, and turnover days at North China port transshipment terminals have lengthened, indicating declining logistics efficiency across the chain. This pressure stems from two structural mismatches: first, delayed coking unit loads remain high domestically, yet aluminum smelters’ procurement pace has slowed, resulting in low contract fulfillment rates for anode-grade petcoke in October; second, the export window has effectively closed—USD/KRW strengthened, compounded by tight East China tankage utilization, leading to substantially extended barge waiting times, disappearance of FOB premium pricing, and diversion of Korean and Indian buyers toward direct Middle Eastern supply sources.

Spread structure confirms bearishness

The paraffin–fuel oil spread narrowed to ¥1,580/t (down ¥210/t), the narrowest this year; the petcoke–asphalt spread widened to ¥1,290/t (up ¥170/t), reflecting stronger economics for residue-upgrading routes versus coking routes. The Brent–WTI spread narrowed to $9.43, signaling relative strength in US crude, yet the RMB exchange rate at 6.6670 (-0.03%) failed to offset collapsing domestic demand.

For SNSUC clients: the paraffin import price-locking window has passed; new CIF contracts are advised against. Petcoke re-export should shift to Singapore-based offshore warehouse receipts to avoid demurrage risk arising from elevated domestic inventory levels. View remains bearish on paraffin and neutral-to-bearish on petcoke; revision to ‘neutral’ would be warranted if paraffin rallies to ¥3,820/t or petcoke inventory rises further.