Global LAB Prices Witnesses a Surge as Raw Material and Freight Rate Escalate

In February 2024, the global market for Linear Alkyl Benzene (LAB) witnessed an upward trajectory, with notable implications observed in the United States. Within the U.S. market, the price of LAB saw an increment of approximately USD 20 per metric ton during this period. The surge in prices can be attributed to adverse weather conditions, particularly freezing temperatures, which posed challenges to the petrochemical industry. This led to a constrained supply of Benzene and subsequent shutdowns or reduced operating rates at various plants. Consequently, the constrained supply exerted upward pressure on LAB prices. The combination of increased demand, reduced stocks, and the resultant upward pressure on LAB prices collectively contributed to the emerging bullish trend in the North American market. Notably, the sharp increase of approximately 14% in the price of feedstock Benzene during the week played a pivotal role in influencing the production costs of LAB. This increase in production costs further reinforced the bullish trend in the North American market.

Similarly, the Asian market experienced a similar bullish trend in the price of LAB over the course of this month, marking a monthly increase of 1.7%. This upward trajectory was primarily influenced by the escalation of freight charges due to the Red Sea crisis in the Asian region. A secondary factor contributing to this price trend was the noteworthy surge in the cost of raw material Benzene, registering an increase of approximately 10% during the same period. The consequential rise in feedstock costs elevated the overall production cost of the product, consequently leading to a bullish trend in the Asian market for LAB.

Concurrently, within the European market, the price of LAB experienced a discernible increase of approximately 1.3% over the course of the current month. This upward trajectory in pricing is primarily attributed to several contributing factors. Firstly, the cost of importing the product from overseas sources has escalated, exerting upward pressure on the overall price dynamics. Additionally, the market has grappled with a constrained supply of raw materials and finished products within the region, further intensifying the upward trend in LAB prices. Notably, the European market has been confronted with elevated freight rates, a consequence of the ongoing Red Sea crisis. Although the freight situation was gradually normalizing across the region, it has remained above the threshold limit during the specified period. This sustained elevation in freight rates has exerted a direct influence on the pricing trend of LAB in the European market throughout February 2024.

As per ChemAnalyst, analysis, there is an anticipation of a potential increase in the price of LAB during the first half of March 2024. This expectation is rooted in the projected continued high and fluctuating prices of feedstock Benzene, which is anticipated to persist and exert an influencing effect on LAB pricing. Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have decided to extend their voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter. This strategic move aims to provide support to oil prices amidst concerns about global economic growth and the increasing production levels outside the OPEC+ group. This development has the potential to induce fluctuations in upstream Crude Oil prices, subsequently impacting the overall dynamics of the global LAB market.