LAB Market Softens Globally with Falling Feedstock Prices and Reduced Demand

Linear Alkyl Benzene (LAB) experienced a depreciating trend across global markets over the past week, largely driven by reduced demand from downstream industries and declining feedstock prices. The price trend for LAB was further influenced by the decrease in Benzene and upstream crude oil prices, with WTI Crude oil falling by approximately 4% and Brent Crude oil by 3%. The surfactant industry, a key downstream consumer of LAB, also saw a slowdown in demand, despite adequate supply levels that persisted even amidst port congestion due to ample domestic inventories. These combined factors contributed to a decrease in LAB prices, with LAB Detergent grade FOB Louisiana (USA) dropping by 1%, LAB FOB Nanjing in China falling by 3.2%, and LAB FOB Hamburg in Germany easing by 2% for the week ending August 23, 2024.

In the US, the LAB market witnessed an easing trajectory as the demand for the product has eased due to low downstream demand from the detergents and cleaning industry. Further, the easing cost of feedstock Benzene as the prices fell by about 2% has impacted the price trend of LAB. Export business weakened due to competitive pricing from overseas traders, leading North American producers to adopt flexible export pricing strategies to stay competitive in incremental sales and prevent excessive inventory accumulation.  Despite the increase in sales volume in the second quarter across the laundry, cleaning, and other end markets, the LAB market weakened in August due to dwindling demand in both domestic and global markets.

Meanwhile, the European and Asian LAB markets faced sluggish downstream demand as regional markets eased following the summer season. Supply remained adequate to meet market needs, prompting traders to lower prices to stimulate buying activity. Further, reduced feedstock Benzene costs, coupled with declining crude oil prices, eased cost pressures on LAB. The decrease in crude oil prices reflected market expectations of increased supply from both OPEC and non-OPEC producers amid signs of weakening global demand.  In addition, port congestion persisted throughout the past week, particularly in North Asia and South America, with significant delays at key Chinese ports like Ningbo and Shanghai. The situation was exacerbated by an explosion at the Ningbo Beilun Second Container Terminal (NBSCT) on August 9, which temporarily impacted operations. However,  the Ningbo port remained operational, ensuring a continuous flow of products, including LAB, thereby preventing any major supply disruptions in the market.

According to ChemAnalyst, the price of LAB is expected to increase in September in the U.S. and European markets, primarily driven by the anticipated surge in feedstock Benzene prices, even though demand is likely to remain moderate. In contrast, the Asian markets may observe further easing of product prices due to sufficient product supplies and moderately low demand, which will continue to shape the price trajectory in the region.