Surging LAB Prices in the US and Europe Amid Rising Feedstock Costs and Demand Dynamics

Linear Alkyl Benzene (LAB) prices increased in the US and Europe in August. The price rise is mainly attributed to heightened demand and rising feedstock Benzene costs. The supply disruptions for LAB were observed due to backlogs in the Panama Canal, which have impacted market conditions in the USA. The European LAB prices also surged amid increased demand from the downstream surfactant industry. The demand from the Asian market also impacts the price movement of the product.

During August 2023, the LAB market in the USA saw a significant increase of 2% in Detergent grade FOB Louisiana prices. This upward price movement of LAB was driven by a noticeable rise in demand, particularly from the downstream LABSA and surfactant sectors. This increased demand was supported by the moderate supply of LAB products in the market. Further, the feedstock, Benzene, cost also experienced an increasing trend due to rising upstream Naphtha prices as the upstream Crude oil prices have increased in the USA amid production cuts announced by OPEC+ countries, which has impacted the cost of the product in the region. Furthermore, the demand from the overseas market, particularly Asia, has been robust, which has led to an increase in the cost of LAB in the USA while supply disruptions were observed in August due to hurricane season and also the backlogs in Panama Canal due to reduced water levels have impacted the product's supply chain.

The LAB prices surged by 1% in Germany on a monthly basis in August 2023 due to increased downstream demand from the LABSA and surfactant industry. The feedstock Benzene also witnessed an upshift in prices amid healthy demand from the domestic market. The increment in the upstream Naphtha prices has led to increased production costs for the product, thus supporting the price trend in Europe. Several factors are contributing to uncertainty in the European naphtha market. Firstly, the crude oil market upstream has become more volatile and unpredictable. Secondly, exports have been impacted by the substantial rise in freight rates. Lastly, there is a lack of clarity in the overall economic outlook, which is compounding the uncertainty within the market.

According to ChemAnalyst, the price of LAB is expected to rise in September and October in the US and Europe due to the anticipated rise in feedstock Benzene prices amid increasing Crude oil prices. The demand for LAB from the downstream sectors is also expected to surge in the coming months as the economic conditions are expected to improve, which might impact consumer sentiments in the region. Further, the overseas demand from the Asian countries is anticipated to remain healthy, which might lead to high prices of LAB.