March 2024 Sees a Contrast of LABSA Price Trend in the US and MEA

In the US market, the week ending on March 15, 2024, witnessed a noteworthy increase in the price of LABSA (Linear Alkyl Benzene Sulfonic Acid), rising by approximately 0.4%. This surge was directly linked to a concurrent uptick of around 0.5% in the price of its feedstock, LAB (Linear Alkyl Benzene), thereby escalating production costs and fostering a bullish trend within the LABSA market.

Moreover, there has been a slight uptick in demand for LABSA, largely driven by heightened orders from overseas markets such as Europe and Mexico. This increased demand coincides with the gradual normalization of the Red Sea crises, signifying a positive shift in market dynamics of LABSA.

Simultaneously, the upstream Crude Oil market has displayed stability during this period. Notably, there has been a significant change in crude oil inventory, with a draw of 1.5 million barrels reported for the previous week. Alongside this decline, gasoline inventories also experienced a substantial decrease, plummeting by 3.3 million barrels by the end of the week ending March 15.

During this timeframe, crude oil production averaged 9.6 million barrels daily, showcasing a drawdown from the 5.7 million barrels reported in the preceding week, with production averaging 9.9 million barrels daily. Additionally, middle distillate inventories saw a modest increase of 600,000 barrels during the same week, with production averaging 4.7 million barrels daily, contrasting with the inventory build of 900,000 barrels reported for the previous week, during which production averaged 4.6 million barrels daily.

This week, the price of LABSA in the Saudi Arabian market has held steady, thanks largely to a balanced equilibrium between demand and supply. Simultaneously, both the feedstock LAB and the upstream Crude Oil market have shown stability over the same period which further supported the price trend of LABSA.

In a recent development, SC Ports in the United States has secured state support and unanimous approval from its Board of Directors to acquire the former WestRock paper mill site in North Charleston. This strategic move aims to bolster port capacity at the Port of Charleston, aligning with SC Ports' objective of enhancing port infrastructure to accommodate regional growth effectively. The 280-acre industrial waterfront property, positioned adjacent to the North Charleston Terminal, offers a prime opportunity for SC Ports to seamlessly extend its container terminal operations. This expansion is vital to meet the escalating demand for port services across South Carolina and the Southeast.

Integrating the acquired land into operations is expected to substantially increase port capacity. The initiative is projected to enable the Port of Charleston to handle up to 5 million containers in the future, along with providing 5,000 feet of linear berth space for container ships and around 400 acres of terminal space for cargo handling operations. With this expansion, the port will witness a surge in import and export activities across various commodities, including LABSA a crucial ingredient in the production of detergents.

The increased port capacity is likely to impact LABSA prices due to improved logistics and supply chain efficiencies. As the Port of Charleston becomes more adept at handling larger volumes of cargo, including LABSA imports, it will lead to a smoother flow of goods and reduced transportation costs. This, in turn, could exert downward pressure on LABSA prices as manufacturers benefit from cost savings associated with transportation and handling. Additionally, the expanded facilities may attract more LABSA suppliers to utilize the port, fostering competition and potentially driving prices further down in response to market dynamics.

Furthermore, the enhanced efficiency in cargo handling and reduced congestion at the port are expected to optimize LABSA supply chains, enabling manufacturers to meet demand more effectively and maintain stable prices. Overall, the expansion of port facilities at the Port of Charleston is poised to have a favourable impact on LABSA prices, contributing to the competitiveness and sustainability of industries reliant on this vital commodity.