LAB Prices Surge in the US Market Amidst Increased Demand and Supply Disruptions

During the first half of August, the Linear Alkyl Benzene (LAB) sector in the United States displayed a favorable trend. At the beginning of this month, LAB costs experienced an uptick, which later stabilized by the end of the first half of the month. This price trend was driven by heightened demand from the downstream surfactant industry. The price escalation of LAB can also be linked to the cost increase of its feedstock, Benzene, within the US market. Additionally, adverse weather conditions during this period have led to disruptions in the domestic supply chain.

LAB price in the US was USD 2040/MT Detergent grade FOB Louisiana on 18th August 2023. Throughout this period, the US LAB market has witnessed a surge of 2%  in its trajectory, driven by a substantial increase in demand stemming from the downstream LABSA and surfactant sectors. The product supply has been moderately low, keeping the prices high. Additionally, there has been an increment in the feedstock Benzene, which has supported the price escalation observed in the domestic LAB market.

The hurricane season and heavy rainfall have affected production and supply interruptions in the United States, influencing the market dynamics. With its potential to induce flooding, Hurricane Hilary is anticipated to impact the supply chain particularly. Additionally, the ongoing backlog of ships at the Panama Canal has contributed to disruptions in supply. The El Nino phenomenon has resulted in decreased water levels, prompting authorities to limit the number of ships permitted to traverse the canal. These phenomena have impacted the pricing of LAB in the US market.

There has been a surge in demand for US LAB in the Asian market, specifically in China and India, driven by a resurging economy. The conditions within the LAB market have been on the upswing following the revival of the domestic market. Additionally, purchasers from Southeast Asia are actively replenishing their inventories,  prompted by declining stock levels. This optimistic perspective indicates that these fresh purchasing activities might play a role in the prospective economic rebound of China. Despite heightened demand, the prices of LAB have been ascending steadily due to the stable trajectory of feedstock Benzene prices.

As per ChemAnalyst, the third quarter is expected to witness an increase in LAB prices, driven by a potential surge in demand from the downstream surfactant industry. Furthermore, insufficient inventories could result in price hikes, as some manufacturers have been operating their facilities at reduced capacities to avoid excessive stockpiling. Variations in feedstock Benzene and upstream Crude oil costs could also impact the international LAB market prices.