US AES prices hold steady in the first half of May amid supply disruptions

Texas (USA): Throughout the first half of May 2024, the US market observed sustained stability in AES (Alkyl Ether Sulfates) prices, attributed to careful management of demand and supply dynamics. Conversely, the prices of the key feedstock, ethylene oxide, experienced a marginal depreciation of approximately 1%, promising potential relief in AES production costs.

During this period, the US AES market was predominantly influenced by robust demand from downstream soap and detergent industries, juxtaposed with limited AES supplies and production capacities. The primary factor contributing to the constrained availability of AES was adverse weather conditions prevailing across the US, resulting in the suspension of operations in numerous chemical plants. Notably, severe thunderstorms in Houston and the Gulf Coast disrupted chemical plant operations, leaving over 700,000 individuals without power as of May 17, 2024. According to several sources, Texas reported over 777,000 outages, while Louisiana, home to several petrochemical plants and refineries, reported an additional 90,000 outages. Consequently, there was a moderate buildup of AES inventories.

Despite sluggish growth in consumer spending, exacerbated by persistent inflationary pressures, tepid income growth, and deteriorating consumer sentiment, demand for AES remained resilient. Most purchasing activities were concentrated in essential sectors, where AES serves as a primary surfactant. In May, US consumer sentiment hit a six-month low, primarily attributed to concerns about inflation, interest rates, and rising unemployment anxiety, despite a robust job market. Additionally, Unilever, a major player in the downstream soap and surfactant manufacturing sector, reported a 2.2% increase in sales volumes, marking the second consecutive quarter of growth after several declines. Prices also saw a corresponding 2.2% rise, particularly in the downstream soap and detergent segment.

In terms of manufacturing activities, manufacturers across the US were reported to have been scaling back their purchasing activity in response to lower new orders, with pre-production inventories also down, which kept the production and supplies of AES regulated. Meanwhile, output prices increased at a slower pace, but the rate of input cost inflation quickened, hinting at sustained near-term upward pressure on selling prices, which may have counterbalanced the depreciation witnessed in the prices of feedstock ethylene oxide.

Overall, robust demand coupled with logistical constraints prevented significant fluctuations in AES prices across the US market, despite the decline in ethylene oxide prices. Looking ahead to the end of May 2024, AES prices are expected to rise as Dow Chemical, a major ethylene oxide manufacturer, implemented force majeure at its Plaquemine, Louisiana site due to a series of explosions, with operations anticipated to resume towards the end of the second quarter of the year.