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LABSA Market Faces Decline in Europe and the Middle East, Prices Show Mixed Sentiment in Asia
LABSA Market Faces Decline in Europe and the Middle East, Prices Show Mixed Sentiment in Asia

LABSA Market Faces Decline in Europe and the Middle East, Prices Show Mixed Sentiment in Asia

  • 18-Aug-2023 12:12 PM
  • Journalist: Patricia Jose Perez

The Linear Alkyl Benzene Sulphonic Acid (LABSA) market in the Western region experienced a decline in July due to weak demand in Europe and the Middle East. In contrast, the Asian LABSA market had varied sentiments. The Chinese market's rebound led to higher prices domestically, while other Asian markets saw prices drop. Decreased demand from the downstream surfactant industry and lower feedstock Benzene and Sulphuric Acid costs have supported downward price movement for LABSA.

The supply of LABSA in Europe was easily accessible during the second quarter, and this accessibility is anticipated to persist into the third quarter. In response to demand being lower than expected, there have been reductions in operating rates to avoid stockpiling. Also, the maintenance turnarounds in the second quarter had minimal impact on availability since consumption was low and stocks were built up beforehand to meet the demand. Due to the weak demand experienced in the initial part of the year, the duration of LABSA supply could continue to be a significant factor in the market. Furthermore, energy costs in the market have remained relatively stable. Additionally, the costs of the feedstock Benzene and Sulphuric Acid have decreased, further supporting the market trajectory for LABSA.

In July, the LABSA market in Saudi Arabia experienced a significant decrease due to subdued demand from the downstream surfactant sector and abundant product supply. Additionally, the reduced costs of feedstock Benzene and Sulphuric Acid contributed to a decline in LABSA prices in the region. The sluggish demand can be linked to ongoing economic uncertainty and rising interest rates. As a result, the LABSA Spot Ex-Jeddah prices recorded a 5% decrease in July.

In East and South Asia, the availability of LABSA remains abundant as the market enters a weaker third quarter, with demand remaining subdued. However, scheduled plant maintenance in China throughout June and July has impacted the supply. Meanwhile, certain manufacturers in India and the Middle East have been operating their facilities at diminished rates to address the challenge of high inventories. On the other hand, LABSA buyers have opted to maintain minimal stockpiles, a sensible approach in a declining market, according to the market participants. Many buyers anticipate the possibility of securing shipments at even lower prices, similar to their recent experiences. The price of LABSA has risen by 4% in China due to a rebound in the Chinese market over the past few months, while prices have declined in other regions of Asia due to weakened demand and a surplus availability of the product.

According to ChemAnalyst, there is an anticipation of a global rise in LABSA prices during the third quarter due to a potential uptick in demand from the downstream surfactant sector. Moreover, inadequate inventories could lead to price escalations, given that certain manufacturers have been running their plants at diminished capacities to prevent excessive stockpiles. Additionally, feedstock Benzene and upstream Crude oil prices might influence the product's price in the international market.

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