Underwhelmed Chinese SLES Prices to Surge on Double Whammy from Depleting Inventories and Raw Material Tightness Post Festive Slowdown
- 11-Jan-2022 1:51 PM
- Journalist: Nina Jiang
A majority of the Chinese chemical industries are projecting a bearish outlook ahead of the Lunar New Year in China which usually brings a two-week slowdown in business and production activities. China’s SLES market is no different as it too is reflecting the signs of weak market activity since the downstream buyers are refraining from bulk trading in the wake of looming temporary halts. However, a state of turbulence and price inflation awaits the China SLES market after it resumes operations in a full-scale post the holiday period.
The prices of Sodium Lauryl Ether Sulphate in China which had already been on a downtrend since December continued to stay underwhelmed in early January as well. As per the ChemAnalyst database, the prices for Sodium Lauryl Ether Sulphate (SLES) 28% Ex-Shanghai and SLES 70% FOB Nanjing during the week ending 7th January registered a fall of 11.5% and 6.3% from the average prices assessed in December. The freefall in the prices is a consequence of negative revisions in offered contracts by the manufacturers who are prioritizing stock clearance at the moment.
As we clear the stocks, the prices will remain down during the whole of January and any positive revisions will occur only after the festive break is over”- revealed a respondent from a leading SLES manufacturing company in China. SLES is a foaming agent which is widely applied in formulations of a variety of home and personal care products. A small percentage of its production is also consumed in the leather, printing and dyeing industry.
Amidst the current scenario, the market participants are worried about the tightness in palm oil raw material in the international market post the end-December floods in Malaysia which is the second-highest palm oil exporter in the world. The low palm oil output and supply chain disruption in the country has again pushed the prices of palm oil on the edge.
China, which greatly relies on palm oil imports from Indonesia and Malaysia, may soon have to extend the input costs on the higher side. Furthermore, as the downstream activity replenishes after the festive period, a sudden surge in demand and enquiries from the buyers is expected to deplete the available SLES inventories.
As per ChemAnalyst, the Sodium Lauryl Ether Sulphate market is expected to rise under the likelihood of the establishment of a wide supply-demand gap in the market. With no immediate relief in the raw material prices and expected rally in demand fundamentals, the manufacturers may find themselves under huge peril, consequently succumbing to quoting higher contracts in order to sustain their margins. The recovery in output may take time, till then the scarcity in Sodium Lauryl Ether Sulphate supplies and escalation in their prices will weigh on the downstream industries.