Linear Alpha Olefin (LAO) prices show moderation after three months as the global oversupply continues to persist. The decline was substantiated by declining ethylene and naphtha prices in November 2023 as destocking in Europe and North America continued after the US and Europe's data on sales reflected slower demand sentiments than anticipated. Market experts remain bullish on Chinese economic recovery despite Europe and North America remaining on the back foot.

Looking at EUROSTAT data, demand sentiments remained in the negative territories despite inflation cooling down to averaging 4% YoY basis. LAO trade balance between Europe and others remained in the negative territory YoY basis regarding revenue. It revealed that the volume transported between the two remained lower, pulling down the shipping prices throughout the month, Freightos reported. Shipping companies tried to cordon off the declining freight charges by reducing the supply. At the same time, LAO and the upstream Ethylene and Natural gas markets saw active destocking as NASA and Copernicus predicted a bearable winter situation. One factor that contributed to this was the high natural gas inventory. European databases revealed that Europe's 95% capacity was stocked by September 2023, 40 days ahead on a YoY basis. Downstream demand for surfactants and detergents remained subdued, with retailers finally planning to reduce the inventory stocks as sales remained weaker. Consumer insights showed improvement in business confidence in Germany and the Netherlands, while consumer confidence remained muted on the back of higher interest rates and the European Central Bank maintaining a cautious stand. LAO markets were significantly impacted by the Polyethylene markets, which saw weak demand sentiments and an oversupply of feedstock ethylene. Europe continues to observe the trimming of major crackers. LyondellBasell reported in Q3 that LAO markets are expected to recover in the second half of 2024, complementing the ethylene markets.

American and Asian markets showed some gains for shorter durations due to increased consumer spending despite high-interest rates and rising employment numbers, which were offset by the October downfall in sales. Ethylene spot prices remained largely on the lower end due to weak Polyethylene demand. LAO market observed reactive destocking in the value chain. ExxonMobil reportedly stopped the LAO plant in the Baytown area to control the supply and arrest the falling LAO prices. LAO markets in Asia, supplied largely by Saudi Arabia and the Middle East, continue to remain on a bearish note. Galaxy Surfactants, an LAO consumer, observed that feedstock prices continue to remain inflated, and it's taking longer to cool off the inflationary trend coupled with Central Banks' high-interest mandate, forcing both consumers and producers to economize with active destocking.

ChemAnalyst studies observed that retail demand in Europe and North America continues to stay muted, and the LAO value chain is observing a reduction in stock depth. While this makes LAO producers sustain for a longer time, challenges of overcapacity and oversupply persist. PMI manufacturing in China and the USA returned to 50.0 in the given month, providing green shoots, but major issues of overcapacities, rising debt burden, and charges in the coming months may further pull down the recovery we expect and may take longer.