Quarterly Update on Linear Alkyl Benzene (LAB) Market
For the Quarter Ending March 2021
Devastated production activities across the US Gulf coast halted the overall output of LAB across the region. Amidst freezing weather, several major refineries like ExxonMobil, Total, Shell etc. faced unplanned turnarounds that reduced the availability of all prime upstream chemicals like feedstock Benzene. USA faced critical shortage of Benzene, which affected the prices of almost all the downstream chemicals including LAB. It is estimated that more than 74% of total Benzene output was halted during this period, which made the LAB prices to shoot up during the quarter.
The Asian market observed mixed sentiments during this quarter, the demand remained firm from downstream detergent segments and varied country wise across the region. Sturdy crude oil values and lower spot availability of Benzene supported the price of LAB during this quarter. Hence prices of LAB followed an upward trend across the region. In the Indian markets, LAB value surged from USD 1383.7per MT (January 2021) to USD 1467.5 per MT (March 2021) despite stable demand fundamentals in the market.
Unlike the Asian and North American countries, Benzene prices in the European region followed a downward trajectory backed by adequate availability and feeble demand. Second wave of COVID-19 impacted the functionality of downstream industries, hence the demand for LAB remained low from downstream segments. However, high freight cost and shipping container shortage supported the export prices for the region.
For the Quarter Ending September 2020
Discussions in the Asian Linear Alkyl Benzene (LAB) market were mostly thin for the quarter ending September 2020. Although negligible change was observed in demand fundamentals due to the pandemic, negotiations prompted by the traders to initiate better offtakes shrouded the contract prices due. Nonetheless, the skyrocketing demand from the detergent and cleaning industry failed to provide prominent gains as manufacturers flooded the market with excess supply. However, with consistent growth in market sentiments of feedstock Benzene, the hovering outlook of LAB is anticipated to bounce back by the next quarter.
With increased consumption from surfactants and cleaning products as a preventive measure of the global contagion, the demand for Linear Alkyl Benzene in the region has witnessed appreciable gains. However, with reduced panic procurement and stockpiling of the product, the market fundamentals of LAB have considerably stabilized. Manufacturers have suffered fall in their profit intakes on mounting inventories of the product and no severe cut implemented in the operating rates. However, LAB market dynamics are likely to trace fast recovery with surface chemical industry continuously experimenting with new products expressing optimism over improved demand by the next quarter.
The third quarter for the LAB market in Europe remained firm with continuous demand for surface cleaning products under strict industrial practices to maintain hygiene. Consumption of LAB in the surfactants and derivatives further exacerbated with resurgence of the coronavirus contagion in several parts of the region. With no planned turnaround in the near term, market players were cautious over supply outstripping the demand that ultimately led to reduced profit margins. As there are no hopes for complete abatement of the virus till date, the demand is likely to observe no appreciable change in future.