LAB Prices Plummet as Global Market Faces Sluggish Demand Amid Seasonal Slowdowns

In the first half of October 2024, the global price trajectory for Linear Alkyl Benzene (LAB) exhibited a bearish trend, with prices softening across key markets in the U.S., Europe, and Asia. This decline was primarily driven by sluggish demand from the downstream Linear Alkyl Benzene Sulfonic Acid (LABSA) industry, which has significantly reduced the consumption of LAB. Contributing to this downward price movement was a notable decrease in the cost of feedstock Benzene, further influencing LAB pricing dynamics. Market sentiment has been shaped by anticipations of reduced demand for detergents and cleansing products as the year draws to a close, a trend that typically results in lower consumption during this period and exerts additional downward pressure on prices. Compounding these challenges, the U.S. market faced disruptions due to hurricanes, which affected regional market dynamics. Consequently, LAB prices in the U.S. experienced a 5% decline for detergent grade FOB Louisiana, while prices in Germany fell by 3.3% FOB Hamburg, and in China, LAB saw a decrease of 3.5% FOB Nanjing. 

During this period, the price of Linear Alkyl Benzene (LAB) experienced a notable decline in the U.S. market, primarily attributed to a softening detergent market. As the fourth quarter commenced, the anticipated weaker demand from the detergents and cleaning agent’s industries added to the overall sluggishness in the market, a trend that typically intensifies with the onset of winter. Seasonal factors play a significant role in this dynamic, as the year-end often witnesses a slowdown in manufacturing activities due to holidays and festivities, further dampening downstream demand. 

Furthermore, market dynamics were significantly affected by Hurricane Milton, which struck the west coast of Florida, leading to power disruptions that forced the Port of Tampa Bay to close last week. This closure hampered logistics and delayed shipments, compounding existing supply chain challenges. Further, congestion in the ports has resulted in a buildup of products in the region, contributing to an oversupply of LAB. Consequently, the ample product supply has exerted downward pressure on prices, leading to significant depreciation in LAB values as market participants contend with both logistical delays and shifting supply-demand dynamics.

A similar trend for LAB was observed in the European and Asian markets, where sluggish performance in the downstream LABSA and surfactant sectors continued to exert pressure on LAB prices, despite existing regional supply constraints. This weak demand environment contributed to a downward price trajectory of LAB, reflecting broader market challenges. However, a notable reduction in freight rates from Asia to Europe has helped alleviate some cost pressures, providing a slight respite for market participants. Trading activity across these regions remained subdued, with players cautiously monitoring the situation as they emerged from the summer months.

According to ChemAnalyst, the price of LAB is projected to remain sluggish through the end of the year in the global market. This forecast is primarily driven by persistently low demand from the downstream LABSA industry, which is experiencing a downturn due to reduced consumption in the detergent sector. Additionally, fluctuations in feedstock Benzene prices are expected to further influence market dynamics, potentially exacerbating the challenges faced by LAB producers.