LAB Market Faces Dampen Demand in Europe and USA, Prices Recovery Seen in China

In July, the Western market for Linear Alkyl Benzene (LAB) experienced a decline as demand remained low in both America and Europe. The Asian LAB market, however, has shown mixed sentiments as the Chinese market recovery has surged the prices in the domestic market while other regions experienced slumped prices. The downshift in demand from the downstream surfactant market coupled with a decline in feedstock Benzene costs have eased the cost pressures for the product.

European LAB supply was readily accessible during the second quarter, and this availability is expected to persist in the third quarter. In response to lower-than-expected demand, operating rates may have been reduced. Fortunately, the second-quarter maintenance turnarounds had minimal impact on availability because consumption was low, and stocks were built in advance to fulfill the contract. Considering the poor demand situation experienced in the first part of the year, the length of LAB supply might continue to be a significant aspect of the market. Moreover, the energy costs in the market have remained relatively stable compared to 2022, which has been beneficial. Additionally, feedstock Benzene costs dropped by 4%, further supporting the LAB market trend.

The USA's LAB market witnessed a similar decline in July, backed by the lackluster demand from the downstream surfactant industry along with ample product availability. Further, the feedstock Benzene has also lowered, leading to a dip in LAB prices in the region. The sluggish demand can be attributed to persistent economic instability and increased interest rates. Thus, the LAB detergent grade FOB Louisiana dropped by 3% in July.

In East and South Asia, the LAB supply has remained plentiful as the market enters a weaker third quarter, with demand staying at a low level. However, scheduled plant turnarounds in China during June and July have somewhat restrained the supply. Meanwhile, some manufacturers in India and the Middle East have been operating their plants at reduced rates to manage the issue of elevated inventories. In contrast, as reported by market sources, LAB buyers have chosen to maintain lean inventories, a prudent strategy in a declining market. Most buyers are hoping to procure cargo at even lower prices, as they have experienced in the recent past. Thus, the price of LAB increased by 2% in China as the Chinese market has seen a rebound in recent months, while prices declined in other parts of Asia due to reduced demand and ample availability of the product.

As per ChemAnalyst, the price of LAB is expected to surge globally in the third quarter of 2023 as the demand may increase for the downstream surfactant industry. Further, insufficient inventories may cause increased prices as some manufacturers have been operating plants at reduced rates to avoid surplus inventories. Feedstock Benzene and upstream Crude oil prices may also impact the product's price in the international market.