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Global Demand Lackluster Leads LAB and LABSA Prices to Trace Downtrend in June 2023
Global Demand Lackluster Leads LAB and LABSA Prices to Trace Downtrend in June 2023

Global Demand Lackluster Leads LAB and LABSA Prices to Trace Downtrend in June 2023

  • 04-Jul-2023 3:56 PM
  • Journalist: Nicholas Seifield

Recent price assessment shows, global market sentiments have been bearish since the start of June 2023, in terms of demand for Linear Alkyl Benzene (LAB) and its downstream derivative Linear Alkyl Benzene Sulfonic Acid (LABSA). The major factor behind the downturn of prices in European region being the recession, occurred as a consequent effect of prolonged Russo-Ukrainian war. The US baking crisis along with weaker Chinese market post Covid has affected the consumer outlooks across the US and Asian region, as the demand has drastically reduced from downstream surfactant industry.

The market for LAB and LABSA and its downstream surfactant has seen a price drop in the European nations as the demand has been sluggish amidst inflation and uncertainties in the global market. Purchasing activities for both LAB and LABSA have slowed down as the market participants are expecting the prices to fall further. Moreover, the high supplies of LABSA coupled with lackluster demand and competition in the business has caused the sellers to reduce the feedstock LAB prices to attract consumers. However, market sentiments have been bearish despite reduced price.

In Germany LAB and LABSA prices witnessed a drop of 3% in June. Further, the upstream Benzene and Crude oil prices has also shown downward price trajectory in Germany as the country falls in recession, influencing LAB and LABSA prices. The annual inflation rate in Euro area fell to 5.5% in June 2023 from 6.1% in May 2023, as per Eurostat data, the statistical office of the European union, although the inflation rate has reduced from all time hike, inflation rate is still higher than normal.

The US market has also faced a similar downturn in prices as prolonged inflation has a major impact on the economy of the country. The prices of the LAB and LABSA prices have declined by 6% and 5% respectively during June 2023. On the other side, the feedstock Benzene has also dwindled by 7% in June affecting the prices of LAB and LABSA. The upstream crude oil prices have also shown an overall decline after witnessing multiple fluctuations in the USA. As per the Institute for Supply Management (ISM) report, the manufacturing PMI index fell to 46 in June with a decline of 0.9% indicating minor contraction in the manufacturing sector.

The Asian countries, which is a major market of LAB and LABSA has witnessed a lackluster demand amid uncertainties in the economic outlook. The weaker Chinese market for the downstream derivative of LAB and LABSA has caused the surplus product availability amid subdued demand leading to reduced prices. Therefore, producers have started to put their plants on maintenance due to this offseason, a plant shutdown was reported in China as Jintung Chemical shutdowns for maintenance turnaround from 18th June 2023. The plant is located in Nanjing, Jiangsu in China with a plant capacity of 130,000 mt/year.

As per ChemAnalyst, the LAB and LABSA prices in the Europe are expected to fall further in the third quarter as the recession is expected to keep on influencing the purchase activities of the product. However, the US market for LAB and LABSA is expected to grow stronger with improvement in the demand from downstream surfactant industry also the upstream Benzene prices are expected to increase.

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