For the Quarter Ending June 2024
North America
In Q2 2024, Linear Alpha Olefin (LAO) pricing in North America has experienced a pronounced upward trend, driven by multiple market dynamics. The ongoing increase in feedstock ethylene and ethane prices, coupled with high freight charges and lower slot availabilities on tankers, has significantly impacted the LAO market. Rising natural gas prices and a shrinking ethane premium further exacerbated the cost pressures. Additionally, supply constraints due to unplanned plant shutdowns, such as those at ExxonMobil's Baytown and Shell Chemicals' Deer Park facilities, have tightened the market, leading to elevated prices.
Focusing on the USA, the region has seen the most substantial price changes. Throughout the quarter, the USA has maintained a bullish market sentiment, influenced by strong domestic demand for detergents, surfactants, and lubricants. Seasonal factors, especially the summer procurement period, have further bolstered demand, while the anticipation of hurricane season added upward pressure on prices due to potential supply disruptions. The overall trend has been one of price convergence between domestic and export deliveries, reflecting intense competition from Asian and Middle Eastern suppliers.
Throughout the quarter, prices have increased by 7%, indicating a consistent upward trajectory. The overall price change from the previous quarter is recorded at 10%. This quarter-ending price of USD 1180/MT for LAO C16-18 Blend FOB US Gulf underscores the positive pricing environment, driven by strong demand, supply constraints, and strategic inventory builds. Thus, the pricing context for LAO in North America during Q2 2024 has been decidedly positive, marked by robust market fundamentals and external pressures.
Europe
In Q2 2024, the Linear Alpha Olefin (LAO) market in Europe experienced a pronounced downturn, influenced by several significant factors. The region saw a notable decline in LAO prices, driven by increased feedstock availability, lower electricity charges, and high inventory levels following substantial stockpiling in previous months. This period was marked by bearish sentiment as a result of softened demand, deteriorating economic conditions, and persistent industrial downturns. Additionally, high freight charges and port congestion compounded the pricing pressures, making imports more cumbersome and costly. Furthermore, manufacturers faced intensified competition from Asian and Middle Eastern suppliers, which exacerbated the overall price decline. Germany, in particular, witnessed the steepest price changes in the region. The decreasing trend in LAO prices was significantly correlated with seasonality and industrial activities. The second quarter saw a marked 20% decrease over the quarter. This trend was further exacerbated by several disruptions and plant shutdowns, including the notable stoppage at the INEOS site, which profoundly impacted supply chains and pricing dynamics. The overall pricing environment in Germany was decidedly negative, reflecting the cumulative impact of reduced demand, heightened competition, and logistical challenges. At the end of Q2 2024, the price of Linear Alpha Olefin C12-14 FD Hamburg in Germany stood at USD 1120/MT, underscoring a consistent downward trajectory. This quarter underscores a challenging landscape for LAO, marked by adverse market conditions and significant price erosion.
Asia Pacific
The second quarter of 2024 has been particularly challenging for the Linear Alpha Olefin (LAO) market in the APAC region, characterized by a consistent downward trend in pricing. A confluence of factors has contributed to this bearish market sentiment. Predominantly, weak demand from the lubrication industry, combined with stable yet insufficient demand from surfactants, has placed downward pressure on prices. Additionally, the downward revisions in upstream ethylene prices, driven by lower crude oil prices averaging $81.75/MT Brent basis, have further compounded the cost pressures. An oversupply situation has emerged as inventories remained high across the region, exacerbated by logistical delays and disruptions, including significant congestion at major ports like Malacca and Chinese ports. No major plant shutdowns were recorded during the quarter, indicating that the supply glut was not due to production but rather a mismatch between supply and demand dynamics. In Japan, the LAO market has experienced the most substantial price reductions. The overall trend demonstrates a significant decrease, heavily influenced by seasonal factors and a marked decline in industrial demand. The second quarter saw price drop of 19% throughout , culminating in a quarter-ending price of USD 1310/MT for the Linear Alpha Olefin C16-18 Blend FOB Osaka. This stark decline highlights a negative pricing environment, underpinned by sustained oversupply and inadequate demand recovery. The persistent bearish sentiment suggests that the market remains under considerable strain, with little relief anticipated in the immediate future.
Middle East and Africa
In the second quarter of 2024, the Linear Alpha Olefin (LAO) market in the MEA region experienced a pronounced decline in prices. This downturn was largely driven by several interlinked factors. Firstly, the global increase in crude prices during March and April heightened feedstock costs, exerting substantial pressure on the downstream ethylene value chain, including Linear Alpha Olefin. Concurrently, geopolitical tensions and shipping disruptions in the MEA region further aggravated the situation by causing significant delays and elevated freight charges, which dissuaded international buyers and contributed to bearish market sentiment. Focusing on Saudi Arabia, which observed the most marked price changes, the overall trend showcased a persistent decrease. Seasonal factors, such as the reduced production hours during the Hajj pilgrimage, compounded the bearish outlook. The correlation between heightened supply and dwindling demand resulted in a stark price reduction, evident from the 16% drop throughout the second quarter. Despite no major plant shutdowns during this period, the market faced operational challenges due to geopolitical instability and fluctuating crude outputs. By the end of the quarter, the price of Linear Alpha Olefin C16-18 Blend FOB Al Jubail in Saudi Arabia had plummeted to USD 1280/MT, underlining a negative pricing environment exacerbated by oversupply and weak demand dynamics. This quarter's performance highlights a market grappling with high inventory levels and subdued global economic activity, leading to consistently declining prices.
Latin America
In Q2 2024, Linear Alpha Olefin (LAO) pricing in Latin America has experienced a pronounced upward trend, driven by multiple market dynamics. The ongoing increase in feedstock ethylene and ethane prices, coupled with high freight charges and lower slot availabilities on tankers, has significantly impacted the LAO market. Rising natural gas prices and a shrinking ethane premium further exacerbated the cost pressures. US revised their prices upwards for hexene deliveries into Latin America as domestic cost have continued to remain higher than US supply cost. Focusing on Brazil, the region has seen the most substantial price changes. Throughout the quarter, Brazil’s markets have maintained a bullish market sentiment, influenced by strong domestic demand for detergents, surfactants, and lubricants. Seasonal factors, especially the pre- winter procurement period, have further bolstered demand, while the anticipation of hurricane season in the Northern American regions added upward pressure on prices due to potential supply disruptions. The overall trend has been one of price convergence between domestic and export deliveries, reflecting intense competition from Asian and Middle Eastern suppliers. Throughout the quarter, prices have increased by 7%, indicating a consistent upward trajectory. This quarter-ending price of USD 1130/MT for LAO C16-18 Blend FOB US Gulf underscores the positive pricing environment, driven by strong demand, supply constraints, and strategic inventory builds. Thus, the pricing context for LAO in North America during Q2 2024 has been decidedly positive, marked by robust market fundamentals and external pressures.
For the Quarter Ending March 2024
North America
The North American market for Linear Alpha Olefin (LAO) experienced a mixed pricing environment in the first quarter of 2024. Overall, prices remained bullish but with a slight downward trend early in the quarter. Several factors influenced market prices during this period. In the USA, which saw the maximum price changes, the LAO market experienced a bearish sentiment in the first half of the quarter. Prices for LAO C10 blend FOB US Gulf decreased by USD 50/MT, representing a significant decrease of 5.9% from the previous quarter. This downward trend can be attributed to cooling demand and falling feedstock prices. The manufacturing sector, a key consumer of LAO, remained subdued, leading to weakened demand. Additionally, competition from Middle Eastern and American suppliers further pressured prices in the region. Comparing to the same quarter last year, prices of LAO in the USA were significantly lower, recording a decrease of 19% from the previous fiscal year as downturns intensified previously. This decline can be attributed to the overall economic challenges faced by industry.
Looking at the price comparison between the first and second half of the quarter, prices moved upwards due to newer contracts for ethylene supply being sought with cost escalations observed over USD 200/MT to the market participants. However, it can be inferred that prices remained relatively stable during this period. The quarter-ending price for LAO C10 blend FOB US Gulf in the USA was recorded at USD 900/MT. This represents a slight decrease from the previous quarter but still reflects a stable recovering pricing environment.
In conclusion, the pricing environment for LAO in the North American market during the first quarter of 2024 was bullish, with prices experiencing a slight downward trend. Recovery in demand and falling feedstock prices were the main factors influencing market prices. However, prices remained relatively stable throughout the quarter.
Europe
The pricing environment for Linear Alpha Olefin in Europe during Q1 2024 has been largely negative, with prices experiencing bullish trend. This can be attributed to rising ethylene prices and easing of the downturns in European manufacturing. The market has been influenced by factors such stabilization and bottoming out of demand, including in the lubrication and surfactant sectors. Additionally, high interest rates and consumer prices have dampened consumer sentiment, resulting in lower demand for Linear Alpha Olefin in Europe.
Belgium has seen the maximum price changes during this period. The market in Belgium has been particularly bullish with producers observing easing of downturns due to newer supply contract of feedstock and raw materials with US and Middle Eastern suppliers. The Belgian consumer market, including the cosmetics sector, has also been impacted by high interest rates and consumer prices. The pricing trend in Belgium reflects a consistent bearish sentiment, with prices rose by approximately 5.7% compared to the previous quarter.
Overall, the pricing environment for Linear Alpha Olefin in Europe has been characterized by increasing downstream production and inventory building. The market has been influenced by factors such as supply chain disruptions, including strikes and adverse weather conditions. While there have been some signs of improving demand in certain sectors, the overall pricing trend remains positive. In conclusion, the latest quarter-ending price for Linear Alpha Olefin C10 Blend FD Antwerp in Belgium is USD 1340/MT. The pricing environment for Linear Alpha Olefin in Europe during Q1 2024 has been bullish, with prices experiencing a bullish trend due to moderate demand and cooling off high contract prices.
Asia Pacific
The first quarter of 2024 has seen mixed trends in the pricing of Linear Alpha Olefin (LAO) in the APAC region. Overall, the market has experienced positive sentiment, with prices showing an upward trend. However, there have been fluctuations in prices due to various factors. In Japan, the price of LAO has seen significant changes during this quarter. The market has been influenced by factors such as supply shortages, high inventory requirements, and increased demand from the domestic market. The Lunar New Year festivities have also contributed to the rise in demand for LAO, particularly in the cosmetics and homecare products sectors. Additionally, freight charges and global inflation concerns have impacted prices.
In terms of overall trends, the APAC region has experienced a bullish market situation, with moderate to high demand for LAO. Supply has been moderate, with suppliers increasing their inventory volumes to meet the growing demand. However, supply has also been affected by shipping container shortages and disruptions in the Middle East. Looking at price changes, there has been a positive growth in prices compared to the same quarter last year. The percentage change from the previous quarter in 2024 has also been positive. However, there have been fluctuations in prices within the quarter, with prices surging towards the end of the quarter due to supply chain challenges.
As of the quarter-end, the price of LAO in Japan was recorded at USD 1410/MT for the C10 Blend FOB Osaka. This indicates a stable pricing environment, albeit with some volatility throughout the quarter. Overall, the pricing environment for LAO in the APAC region during the first quarter of 2024 can be characterized as positive, with an upward trend in prices driven by factors such as increased domestic demand and supply chain challenges.
Middle East and Africa
The first quarter of 2024 has been a mixed period for Linear Alpha Olefin (LAO) pricing in the MEA region. Overall, market prices have been influenced by several significant factors. In particular, the ongoing export demand from Europe and Asia has contributed to positive sentiment and a surge in prices. Additionally, rising feedstock ethylene prices have impacted the downstream surfactant and detergent product chain, further driving up LAO prices. In Saudi Arabia, which has experienced the maximum price changes, the LAO market has seen a tightening supply situation. Suppliers have been increasing their inventory volumes to meet the continuous delivery schedule, but domestic stocks remain on the low side due to strong sales. The prices have almost recovered to the levels of the previous fiscal year, primarily due to suppliers restricting supply to maintain prices. However, the negative pressure from energy costs has partially offset the gains in downstream LAO polymer pricing.
Demand for LAO in the region has been moderate to high, driven by outstanding business orders and rising new order books. The Saudi construction market, in particular, has contributed to strong market activity for LAO. However, demand has also been impacted by factors such as cooling off export sentiment to China and Europe, as well as subdued manufacturing and high interest rates.
Overall, the pricing environment for LAO in the MEA region during the first quarter of 2024 has been bullish, with prices experiencing both upward and downward trends. However, the latest quarter-ending price for LAO C10 Blend FOB Al Jubail in Saudi Arabia is USD 1230/MT, reflecting a decrease of USD 20/MT or 2.2% compared to the previous quarter. In summary, the LAO pricing environment in the MEA region has been influenced by export demand, feedstock prices, supply tightness, and demand dynamics. The market has experienced both positive and negative trends, with Saudi Arabia being the most affected.
For the Quarter Ending December 2023
North America
Prices of Linear Alpha Olefin showed a bearish sentiment in Q4 FY2023. Feedstock ethylene and energy prices followed bearish sentiment in the given timeframe amidst strong US crude and gas production. Supply of Linear Alpha Olefin largely remained domestic with oversupply sentiments. Ethylene markets remained bearish largely due to oversupply and negative feedstock pressures.
Demand from downstream Polyethylene grades remained muted due to weak consumption triggered by rising interest rates by US Federal reserve leading to high inventory stocks across the value chain of PE products. Retail consumption continues to show resilience despite high interest rates while October mortgage rates further slowdown of demand. Winter situation arrived late in December with requirements for Linear Alpha olefin surfactant and lubrication grade further slowed down. As inflation soared again in December, major suppliers have been reducing their inventory stocks further as US Federal Reserve signaled late rate.
Construction market has been showing gradual signs of recovery in USA with mortgage rates falling and consumers showing willingness for newer houses. By the end of December, demand for Linear Alpha Olefin slowed down further amidst rising uncertainty as Suez Crisis deepened forcing downstream polyethylene producers to reduce operating volumes as supply tightened coupled with slowing of demand as interest rates and fear of inflation dominated the market players tactical buying strategies.
Europe
Prices of Linear Alpha Olefin showed a bearish sentiment in Q4 FY2023. Feedstock pressures continued to remain negative largely due to US and Chinese overproduction keeping up the supply of Linear Alpha Olefin. INEOS and LyondellBasell oligomers continue to run at lower operating capacities as downstream demand for Linear Alpha Olefin slowed down largely on the back of lower automobile demand in the given timeframe. In the given quarter, feedstock ethylene began their bearish trend by falling down by 8% in the given timeframe since the beginning of the quarter. Supply of Ethylene was largely domestic with substantial imports from US and Middle East to stabilize the pricing. Till December, the market players observed weaker demand due to high inventories of Linear Alpha Olefin/ethylene copolymer due to lower heating demand. HCOB Germany Manufacturing PMI index continues to show contraction in the entire quarter. Similar contractions occurred in Italy, Belgium, Netherlands in construction sector. Linear Alpha Olefin demand from energy efficient and renewable renovations fell drastically amidst as major Eurozone countries reduced subsidies for transitioning into sustainable sector. Furthermore, Natural gas volumes in Europe remained on the higher end to satisfy the quarter demand forcing destocking of Natural gas by Europe pulling down feedstock prices. Major crackers across Europe underwent downturn maintenance in the given week which balanced falling demand significantly pulling down the market prices. In December, supply chain started tightening globally due to Suez Canal crisis and lower navigability of riverine logistics, further slowing down Europe’s capacities for Q4FY24. Consumer demand remained lower on a Q-o-Q basis. With European nations reducing subsidies for transition comes to an end on January 1 FY24, elevated temperatures for the winter season till December, demand for Linear Alpha Olefin is anticipated to remain subdued till the first half of FY24.
Asia Pacific
Prices of Linear Alpha Olefin turned bearish sentiment in Q4 FY2023. Prices declined by 8% from the beginning of quarter till 29th December 2023. Feedstock ethylene prices showed mixed sentiment with prices remaining stable in the months of October and November with prices declining in the month of December. Chinese demand for downstream lubrication, surfactant remained on the lower end on the back of lower demand sentiment as construction demand coupled with major plants remaining off-streams and lower demand for conventional passenger vehicles due to higher fuel prices in APAC region kept demand for Linear Alpha Olefin low. Chinese continued to expand Linear Alpha Olefin. C10 grade. Furthermore, Consumer demand driven segment for Linear Alpha Olefins remained subdued as large section of consumers in China are currently facing financial shortages due to real estate crisis and high cost of finances. South Korean, Japan’s domestic market continued for Linear Alpha Olefin largely driven by automotive demand which remained subdued due to lower global exports. APAC North America trade for Linear Alpha Olefin showed marginal improvements largely driven by improvement in US markets due to improved sales of automobiles as fuels prices deflated significantly in North America. APAC regions continue to show improvement in the volumes. In the South Korean markets, domestic demand for Linear Alpha Olefin remained low largely due to subdued construction and lower automobile demand as interest rates remained on the higher end. Export orders of Linear Alpha Olefin derived goods to European markets remained on the lower end due to seasonal slump with the quarter ending with supply disruptions and further falling export demand due to high CIF charges.
South America
The fourth quarter of 2023 was challenging for the South American region's Linear Alpha Olefin (LAO) market. Several key factors influenced the market and prices during this period. Firstly, there was an oversupply situation in the market, leading to a decline in demand. This was partly influenced by high corporate debt and interest rate charges, which resulted in reduced domestic demand and increased imports, particularly from the USA. Additionally, domestic producers faced cost pressures compared to their US counterparts due to higher energy and feedstock costs.
In terms of Brazil, which experienced the most significant price changes, the market saw a bearish trend in November. Domestic demand for LAO declined, while imports from the USA continued to dominate the market. The financial crunch faced by major players like Petrobras also impacted the market, as government spending was tightened to control debt. Despite lower domestic volumes, prices continued to deflate on a year-on-year basis due to the costlier feedstock sales by Petrobras compared to the USA.
The latest price for Linear Alpha Olefin C10 Blend CFR Santos Port in Brazil for the current quarter is USD 870/MT. The price change from the previous quarter was -7%, indicating a decrease in prices. Additionally, the price comparison between the first and second half of the quarter showed a -6% decline.
Middle East Asia (MEA)
The fourth quarter of 2023 was characterized by a mixed market for Linear Alpha Olefin (LAO) in the MEA region. Several factors impacted the market and prices during this period. Firstly, there was a moderate supply of LAO, with feedstock ethylene shortage observed globally. This led to supply constraints and production cuts in some countries. Secondly, the demand for LAO remained low to moderate, with marginal declines observed in the international market. Weak seasonal demand and rising costs of feedstock and energy contributed to this trend. Lastly, the geopolitical factors and higher crude prices affected the overall supply situation and market dynamics. Focusing on Saudi Arabia, the largest producer in the region, there was a significant increase in the price of LAO. The price of C10 Blend FOB Al Jubail rose by 10.0% to USD 1420/MT. This increase was mainly driven by the global rise in crude oil prices and supply constraints.
In comparison to the same quarter of the previous year, there was a 4% increase in prices. However, when comparing to the previous quarter, there was a 2% decrease in prices. Additionally, during the second half of the quarter, there was a 3% decrease in prices compared to the first half. Overall, the market for LAO in the MEA region experienced mixed conditions during the fourth quarter of 2023, with supply constraints and geopolitical factors impacting prices. The price of LAO in Saudi Arabia at the end of the quarter was USD 1140/MT.
For the Quarter Ending September 2023
North America
Prices of Linear Alpha Olefins (LAO) showed a mixed sentiment in Q3 2023. LAO feedstock ethylene followed a similar sentiment in the given quarter. Prices of LAO continued their bearish trend in July due to weak demand sentiments and limited supply. Inventories of LAO continued to be maintained on the adequate level in July due to rising cost of supply and materials. OPEC+ introduced production cut of 1 million bbl/day forced US to increase their production to equalize their domestic pricing. Demand of LAO continues to stay muted in the month of July as US Fed hiked interest rates again discouraging consumption, with price declining significantly reflecting weak chemical margins of major LAO producers like Shell. As prices began to soar by the end of July, consumption in the retail sector picked up as inflation moderated to 3%. Imported inflation and overpriced goods continued to stay in the inventories begin to fall. Europe’s aggressive purchase of Natural gas for heating oil in winter continues to raise the feedstock ethylene prices. Manufacturers continued to push the price down the value chain despite weakening demand to maintain a positive cash flow and deteriorating chemical margins. As inflation soared again, major destocking of inventories including olefins was observed as construction and real estate continues to build up large inventories. September was characterized by weak demand sentiment reflected in falling freight charges across Atlantic and pacific. LAO Prices continued to observe bullish trend despite weak demand due to global inflationary pressure generated by OPEC+ price hikes, USA’s gas procurement and Chinese aggressive procurement strategies for the month. PMI manufacturing in US continues to remain contracted with signs of recovery observed in September. Demand forecasting projects muted demand in Q4 and gradual recovery expected in FY 2024.
Asia Pacific
Prices of Linear Alpha Olefins (LAO) showed a mixed sentiment in Q3 2023. In July, prices continued to decline due to global price decline in feedstock, deflating energy prices and weak demand in Asia Pacific. Supply of LAO continued to remain higher due to China’s expansion in LAO. Supply disruptions due to cyclones and plant failures created price fluctuations in the regional market. Input cost escalations were observed across the value chain in Asia Pacific due to high import dependency from Middle East. Progressing into August and September, Chinese markets saw a bullish sentiment on the account stimulus injected into economy and rise in procurement activities. Feedstock ethylene prices rallied strongly as Chinese procured significant amount from the global market pushing up the prices in LAO, Hexene and other olefin prices. PMI showed improvement in newer orders, positive manufacturing output and seasonal increment in demand made commodities market in China bullish. In August and September, chemical margins of major chemicals showed improvement in Asia pacific on the back of improved price realization and sales volume. Korean and Japanese markets showed deterioration in chemical margins despite rising prices as sales volume declined. Demand of LAO based plastics and intermediate chemicals continue to remain weak despite bullish sentiment in China as they oversupplied the domestic market. Energy prices rose in August forcing manufacturers to hike up the LAO prices while the downstream plastics prices declined due to weak demand higher inventories. Caixin PMI recorded expansion in Chinese manufacturing output in September while newer orders fell again on the back of rising inflation and weakening global demand. Labor market in China and East Asia continued to remain tight with service sector expanding at a slower rate in the month of September indicating weaker growth momentum in the next quarter. Demand forecasts for LAO derived goods continue to show weak prices as European and American consumption is expected to fall due to winter drop.
Europe
Prices of Linear Alpha Olefins (LAO) showed a mixed sentiment in Q3 2023. In July, LAO maintained a bearish stance as demand continues to stay muted. Supply largely remained domestic and inventories were maintained at the lower end due to tightening of labor market and rising management cost. Energy prices continued to show deflation in the month of July. CEFIC reported that price differentials between North America and Europe continue to stay wider as Europe continues to face huge inventories at dearer cost. Multiple vendor inquiries in the month of July revealed that weakening industrial sector due to supply disruptions, Gazprom Russia reducing supply and Norway’s major gas line undergoing maintenance posed significant supply challenges. Cash flows in the value chain of LAO was maintained through stable demand from retail business. Manufacturing continues to stay muted in the entire quarter as PMI continues to record contraction. Construction sector observed a demand drop with house prices, according to Halifax House Index, falling by 5% in UK. Chemical margins of Shell, INEOS, Lyondelbasell continue to deteriorate in the given quarter. In the months of August and September, we see rising interest rates by European Central Bank to curb consumption and bring inflation below 2%. Chemical margins deteriorated, and trade volumes continued their bearish trend between Asia and Americas. Sales volume continues to fall on a Month-on-Month basis across Europe. Operating rates continue to remain in the range of 65-70%. Antwerp INEOS olefin plant underwent maintenance with limited supply as demand continued to remain weak. Gas prices began their bullish trend forcing manufacturers to reduce operating rates and pushing up the prices of LAO derived products down the value chain. CEFIC projects significant buildup of inflation in feedstock and basic chemicals are going to pose significant challenges to the LAO and other chemical pricing with inflated prices staying longer in the economy causing very slow recovery. Petrochemical markets are expected to begin their recovery in H2 FY 2024.
For the Quarter Ending June 2023
North America
The prices of Linear Alpha olefins showed a bearish trend in Q2 2023. The demand from downstream polyethylene and polypropylene remained weak. As a result, polypropylene and polyethylene prices also declined. The manufacturing PMI registered a drop from 50.2 to 46.3 due to a decrease in production rates and a sharp drop in new orders on the back of inflationary pressure and higher interest rates. The price of feedstock Ethylene showed bearish sentiments, with the price of feedstock declining by more than 20 percent amid deflationary pressure and sluggish demand sentiment in the downstream polymer market. The demand from international markets remained bleak due to the inflationary situation in Europe, weak demand sentiment, and pale economic recovery in China. ExxonMobil has been committed to starting production from its new LAO plant by mid-2023 amidst an industrial slowdown. The upstream value chains showed a similar bearish trend in Q2 2023. Prices of Linear Alpha Olefin C12-C14 blend FOB Gulf (USA) were settled at USD 930/MT in the closing month of June 2023.
APAC
The prices of Linear Alpha Olefins showed mixed sentiments in Asia in Q2 2023. In April, the Linear Alpha Olefins Market continued the bullish trend in the Chinese domestic region owing to robust demand from the downstream polymer industry for the manufacturing of polyethylene (PE), polypropylene (PP), and other polyolefins in the region. The demand outlook improved amid increased new orders, and downstream consumers increased the procurement rates in the region. In the months of May and June 2023, the price of Linear Alkyl Olefins declined because the consumer demand in the downstream Polyethylene (PE) and Polypropylene (PP) markets has remained suppressed amid the economic downturn in China. The overall plastics market observed a slowdown in the region amid bearish demand and increasing supply. Moreover, due to growing inflation, fears of a recession in the world's big economies, and geopolitical with the US, overseas inquiries into finished goods were shown to be declining. China has added new olefins capacity PetroChina's at Guangdong and Jiangsu Shengdong petrochemicals recently to acquire market share. Prices of Linear Alkyl Olefins C12-14 blend CFR Nanjiang were settled at USD 1380/MT in the end week of June 2023.
Europe
The prices of Linear Alpha olefins showed a bearish trend in Q2 2023. The demand from downstream polyethylene and polypropylene remained weak. As a result, polypropylene and polyethylene prices also declined. The manufacturing PMI registered a drop from 54.2 to 49.8 due to high energy costs leading to a decrease in operation rates and a sharp drop in new orders on the back of inflationary pressure and higher interest rates. The price of Ethylene showed a bearish pattern amid inflationary pressure. The imports of Naphtha from Norway, the Gulf, and the United States moderated naphtha prices in Q2 2023. The domestic demand in Germany remained bleak due to high unemployment of 5.7% and weak GDP numbers. The inquiries from overseas markets dropped further, especially from Asian markets like China, amid uncertain business sentiments and a strong wait-and-see consumer attitude. Prices of Linear Alkyl Olefins C12-C14 blend FD Hamburg were settled at USD 1250/MT in the closing month of June 2023. Furthermore, LANXESS has reported a decline in consumption from the construction and electronics industries in the European region.
For the Quarter Ending March 2023
North America
The Linear Alpha Olefin market in the USA showcased bullish sentiments in the first quarter of 2023. In January, the market remained segregated, and the slow start of the resins market was largely impacted by the winter storm Elliot. In February, a slight improvement was registered in the market prices of Linear alpha Olefins supported by the US push to increase the export shipments for downstream polyethylene. In addition, weather-related issues also impacted the supply chain in early February. In March, the prices improved further, backed by increased demand from the downstream polymer industry for the manufacturing of polyethylene, polypropylene, and other polyolefins. Although, the domestic inventories were insufficient to cater to the downstream demand, and hence the supply-demand gap widened. Thus, the prices of Linear Alpha Olefin C10 Blend FOB US Gulf settled at USD 1100 per tonne at the end of Q1 2023.
APAC
In the first quarter of 2023, the market prices of Linear Alpha Olefins remained on the bullish trajectory in the Chinese domestic market. In January, the prices fluctuated in the domestic market amid a rebound in market activities following the Lunar New Year holidays. The pressure on logistics enterprises soared, whereas the constrained availability of Linear Alpha Olefins was registered. In February, the prices remained in the uptrend amid increased economic and commercial activities in China. Also, in March, the market prices of Linear Alpha Olefins observed a considerable upsurge in the Chinese domestic market owing to increased demand outlook from the downstream polymer and other related industries. Thus, the prices of Linear Alpha Olefins C10 blend CFR Nanjing settled at USD 1395 per tonne at the end of Q1 2023.
Europe
In the first quarter of 2023, the overall Linear Alpha Olefins market exhibited a bullish pricing trend in the European region. In the first month, a slow start was observed as the activities remained dampened due to the looming crisis across the region. In the last two weeks of January, the manufacturing PMI surged, showcasing better economic activities across the European market. In addition, the polymers market rebounded globally, impacting fresh inquiries in the European region. In February, the enthusiasm amongst the refineries improved, and the PMI boosted further. In March, the prices surged substantially amid improvement in supplier performance. The outputs rose in the region, and the demand from the downstream polymer and solvents industries increased in the region. Thus, the offered quotes for Linear Alpha Olefins C10 Blend FD Hamburg settled at USD 1425 per tonne at the end of Q1 2023.
For the Quarter Ending December 2022
North America
Overall, the Linear Alpha Olefins (LAO) market in the USA has observed mixed sentiments in the fourth quarter of 2022. The Linear Alpha Olefins market in the USA has plunged on an anticipated trajectory as the numerous petrochemical indexes fell in the last quarter. The U.S. Gulf index has dropped by 8.4% amidst the weaker demand levels and lower Crude Oil values. However, multiple market participants have still considered that the supply-demand contradiction will intensify further. The Linear Alpha Olefins in the U.S. have witnessed mixed sentiments over the past few weeks. The market has moved proportionally with the movement of Crude Oil in the international market. As a ripple effect, the FOB US Gulf discussions for LAO C-10 Blend were assessed at USD 800 per tonne in November 2022.
Asia Pacific
The LAO market in the Asia Pacific witnessed mixed sentiments in the fourth quarter of 2022. This development has been majorly attributed to the weaker demand perspective for LAO in the far east Asian market, which has been further coupled with the constant fluctuation in the cost support from feedstock amidst the irregularities concluded on the international crude oil values. At the same time, the inadequate performance of the polymers sector has kept market enthusiasm subdued in the Asia Pacific region. However, the market observed a bullish outlook in the mid-of the fourth quarter, as the prices of Linear Alpha Olefins traced an upward trajectory amidst the rush period ahead, coupled with the market shutdown during national day holidays. As a ripple effect, the FOB Osaka C10-blend discussions were assessed at USD 1176 per tonne during the quarter ending December 2022.
Europe
Overall, the Linear Alpha Olefins market in the European region has observed mixed sentiments. The reduced operations have a little to negligible impact in the backdrop of dull buying trends. As per the market experts, the manufacturers sought to reduce the production margins as the gas prices have soared to historically high. The cost support from essential monomers has consistently fluctuated amidst the uncertainties in the Crude Oil market. However, its impact was negligible as the curtailed operations balanced the market scenario. However, due to the participation of overseas players, the region observed a lack of enthusiasm amongst the players to match the price competitiveness. As a ripple effect, the F.D. Antwerp discussions for C16-18 Blend were assessed at USD 1208 per tonne during the quarter ending December 2022.
For the Quarter Ending September 2022
North America
In the third quarter of 2022, the LAO market in the North American region witnessed mixed sentiments that varied monthly. As per the market experts, the consistent fluctuation in the values of upstream Crude Oil in the international market coupled with the unstable demand pattern from the downstream solvent and polyolefins industry. In addition, the queries from the overseas markets, especially from the European region, remained restricted due to the holidays. Consistent poor inland logistics have primarily plagued the U.S. C10-C20 olefins market, & with a deficit in the spot offers and insufficient pricing competitiveness on the exported volumes. As a ripple effect, the discussions for the LAO C16-18 blend were assessed at USD 890 per ton during the quarter ending in September.
Asia Pacific
Overall, the sentiments for LAO in the Asia Pacific region were mixed that varied based on the economic conditions of the countries across the subregions. The weaker performance of the major economy like China in the Northeast Asian region due to the zero COVID policies, further coupled with the power rationing, has impacted the manufacturing sector. The cost support from the feedstocks has consistently fluctuated, and OPEC+ consistently manipulated the Crude Oil supply by curtailing the output, despite its negligible impact across the value chain. The poor performance of LAO is primarily attributed to the lackluster demand, as the region witnessed an oversupply of key Polyolefins such as PP. In addition, the operations at the downstream facilities were curtailed in China amidst the extreme heat-led power rationing. As a ripple effect, the LAO C16-18 blend was settled at USD 1230 per ton in September.
Europe
In the third quarter of 2022, the LAO market in the European region witnessed a steep plunge in the offers quoted in the domestic markets. The commercial and economic activities remained suspended for the third quarter amidst the summer holidays. Therefore, the inquiries were more concentrated on a long-term contractual basis, and the spot inquiries remained muted during July and August. In addition, the demand for polyolefins remains bearish has further dampened the will of the domestic and overseas players regarding the arbitrage for LAO. As a ripple effect, the FD Antwerp discussions for LAO were assessed at USD 1260 per ton in September.
For the Quarter Ending June 2022
North America
Natural gas prices went off the charts during the second quarter, which consistently increased the cost pressure over downstream Ethylene and Polymer grade Propylene (PGP). Hence, both Ethylene and PGP witnessed significant price spike in the first half of Q2. However, stagnation in demand and ample inventory levels eased the demand pressure from both olefins, resulting in reduced cost pressure over Linear Alpha olefins. LAO prices increased during the initial part of Q2 and were assessed at USD 1040 per MT on FOB basis for the C10 grade in April 2022. LAO demand eased towards the end of the quarter as the speculations around a US recession gained traction, and consequently, prices fell by more than 10% by June 2022.
APAC
During the second quarter of 2022, the Linear Alpha Olefins prices increased in the first half of the quarter owing to upheaval in the feedstock olefins and upstream energy market. Ethylene and Polymer grade propylene, primary feedstocks, both went through a robust bullish rally in which prices gained more than 10% in the first half of the quarter. The Russia-Ukraine war crippled the global energy dynamics, which resulted in soaring crude oil prices. Though the demand plunge in China due to covid did ease some inflationary pressure, crude oil prices remain resurgent for most of the quarter. SABIC, a key producer of Linear Alpha Olefins, increased the prices of all major categories of Linear Alpha Olefins in the first two months to incorporate high production costs. Furthermore, market dynamics shifted the balance towards the latter stages, where feedstock pricing sentiment deteriorated. Hence, C10 Linear Alpha Olefins prices settled at USD 940.81 per MT in India after the conclusion of the second quarter.
Europe
The European market witnessed a similar market pattern where prices of LAO increased consistently in the first half of the quarter and eased towards the end of the quarter. Europe has been a major producer of LAO; however, the European nations also import a significant amount of Linear Alpha Olefins from Middle East Asia, particularly from Saudi Arabia, where SABIC maintains a stronghold. Despite a resurgent price trend of the material produced in the local market on the back of the rising cost of production, prices of imported materials did provide relief for the European consumers. Hence, in the first two months, the C10 Linear Alpha Olefins price increased by 5%, and in the latter stages of Q2, LAO prices declined by 7% and dropped to USD 1619 per MT on an FD basis in Germany.
For the Quarter Ending March 2022
North America
Olefins market remained bullish for a significant part of the first quarter of Q1 on the back of strong crude oil and natural gas prices. Firm prices of olefins culminated in robust cost pressure on Linear Alpha Olefins. Crude oil prices started the quarter on a healthy note; however European crisis turned the tight market chaotic and crude oil prices went off the charts pressuring downstream derivatives. Chevron Phillips, a key producer of LAO, in the region, reported limited to no production disruption during the 1st quarter, which ensured stable production rates. On-demand side, consumption of surfactants, plasticizers, and lubricants remained firm. Demand from other regional markets has also been robust, further contributing to inflationary pressure on LAOs. As of March 2022, C10 Linear Alpha Olefins blend prices were assessed at USD 790 per MT on FOB basis while C16-18 LAO prices settled at USD 850 per MT.
Asia Pacific
In South Asia, the Linear Alpha Olefins market has been termed as firm during Q1 due to strong cost pressure from upstream energy feedstock. Several market participants reported that both imported, as well as domestically produced material, have been facing sustained cost pressure from the incessant rise in upstream crude oil and its derivatives. Crude oil prices have gained more than 10% since mid-January assessments. Consequently, Olefins, crude oil derivative, have faced inflationary cost pressure, and in turn, refiners have been prompted to increase the prices of downstream. SABIC, the key producer of LAO in the region, has ensured strong availability of the material given the strong demand in the market. Downstream industry detergents, and surfactants have observed robust production rates, and consequently, buyers have little space for negotiations. Hence, the price of Linear Alpha Olefin was assessed at INR 52700 per MT for C20-24 grade, while C24-28 LAO prices were measured at INR 70100 per MT on CFR basis in March.
Europe
Brent crude oil prices have been volatile since the beginning of Q1, and LNG prices went off the charts once the Russian invasion of Ukraine began in late February 2022. High Brent crude oil and LNG prices have increased the cost pressure on downstream Linear Alpha olefins, and consequently, LAO prices rose considerably in Q1. Meanwhile, demand dynamics remained firm where consumption from downstream plasticizer, surfactants, and lubricants industry remained firm throughout the quarter. Shell and other producers have reported increased cost of production and supply chain issues amid growing conflict in the European continent. Hence, as of March 2022, LAO C10 blends were assessed at USD 1891 per MT on FD basis while C16-18 blends were assessed at USD 2263 per MT on FD basis.
For the Quarter Ending December 2021
North America
Skyrocketing prices of crude oil has culminated in substantial rise in overall cost of Linear Alpha Olefins causing market participants to increase prices of the material in both domestic as well as international markets. Continuous climb in crude oil and natural gas price has been speculated to be caused by underutilized capacities around the world and production disruptions in Q3. Strong lubricant and detergent demand along with increased demand polymers in USA has kept an upward pressure on the demand of LAO in the market further extrapolating the overall prices. However, demand declined towards the end of the quarter and crude values stabilized in H2 which provided necessary reprieve for the downstream buyers as prices declined in December.
APAC
Linear Alpha Olefins (LAO) market observed strong volatility throughout the last quarter as Linear Alpha Olefins rely heavily on upstream crude oil values. Strong uptrend in crude oil prices H1 of Q4 resulted in robust prices of LAO across Indian domestic market however sudden substantial drop in crude oil prices in late November spur the deterioration in LAO prices in the second half. Consequently, LAO prices fluctuated significantly in Q4 and settled at INR 78300 Linear Alpha Olefins C14-18 Ex-Location. Domestic market in China mirrored the above market sentiment where increased cost pressure from strong crude oil values resulted in upward trend of Linear Alpha Olefins prices in October and November. While LAO prices dropped substantially in December owing to declined market sentiment and deteriorated crude oil values.
Europe
Linear Alpha Olefins market remained on an uptrend during major part of the last quarter owing to strong costs of feedstock Crude oil and Natural gas. Natural gas prices skyrocketed in Q4 as supply fundamentals deteriorated in the light of declined exports from Russia while winter demand remained on the upward trend. Olefins which rely heavily on Natural gas for production face strong production challenges amid snug natural gas supply. Therefore, Linear Alpha Olefins prices continued to rally upwards throughout the quarter which was driven by firm upstream costs and continued supply tightness in the market. Persistent tightness in the market has led to a spike in pricing indications as well in the export markets. Demand has been primarily driven by lubricant segment along with detergent segment. Imports have been limited as freight charges and shipping costs continue to soar upwards which made Asian exports uncompetitive and unsustainable.
For the Quarter Ending September 2021
North America
In Q3 of 2021, Linear Alpha Olefins market witnessed an upward trend in North America. LAO prices strongly traced the values of upstream Ethylene throughout this period. Hike in prices has been driven by other factors including logistic disruption and raw material shortages caused by Ida hurricane that made landfall in the Gulf Coast of the US in August end. Shell, one of the giant producers of LAO shut down its production plant at Geismar, Louisiana ahead of the Ida hurricane for about two weeks as an emergency plan that consequently affected the overall production rates and led to the hike in the prices of LAO in the regional as well as international market. Demand outlook remained firm throughout the quarter due to the improvement in the offtakes from the downstream manufacturers.
Asia
In Asia, Linear Alpha Olefins (LAO) prices shot up tremendously backed by the squeezed supply and firm demand from the downstream manufacturers after the active resumption in the industrial as well commercial activities since July. In addition, tight Ethylene supplies also supported the pricing trend of LAO during this period. In India, LAO prices witnessed an exponential rise in this quarter backed by several factors including tight supplies due to logistic issues and prolong port congestion in China. Moreover, LAO market in India experienced bolstered sentiments as the downstream demand strongly improved during this quarter after the resurgence in the market activities. Moreover, spike in the values of feedstock Ethylene also contributed well to surge its domestic prices. Thus, LAO C30+Ex-Depot Vadodara prices reached USD 2487.30 per MT in September showcasing a hike of USD 151.52 per MT since July.
Europe
In Europe, Linear Alpha Olefins market appeared to be bullish backed by the robust demand from the downstream sectors and the tight supply fundamentals. Moreover, LAO market in Europe emulated the pricing trend of other regions including North America and Asia as feedstock Ethylene prices spiked up globally. In addition, exorbitant freight charges and critical shortage of shipping containers also sent ripples to the prices of LAO in this timeframe. Moreover, many leading manufacturers across the European region were compelled to cut down their production rates due to the natural gas crisis that further led to the increment in the prices of Linear Alpha Olefins in the region.
For the Quarter Ending June 2021
North America
Prices of Linear Alpha Olefins (LAO) remained firm during Q2 2021 across the North America region. Rapid economic recovery in USA, increased the consumption of petrochemicals and polymers during this timeframe. Thus, the inadequate availability raised concerns over the supply of feedstock Ethylene in USA, and it was observed that prices of polymers rose more effectively in USA than any other region. Ethylene prices were very high during the month of April in USA due to supply shortage, which gradually came down in June with improvement in supply activities. However, rising upstream crude oil value was also affected the prices of LAO in USA. Thus, prices of Linear Alpha Olefins climbed up continuously and reached USD 1350/MT and USD 1510/MT for C-10 and C-12 respectively by the end of June 2021.
Asia
Mixed sentiment was observed for Linear Alpha Olefins (LAO) in APAC region, as the demand varied country over country. In China, prices kept on rising throughput the quarter, bolstered by firm offtakes from the domestic and international market. However, in India, prices declined marginally on monthly basis, as no signs of recovery was observed in the enquiries of LAO in the country. Under the second wave of pandemic, consumption of LAO in the country was reduced, that dented the overall demand and supported this overall price decline. Prices of LAO reached USD 439.2/MT (C20-C24) and USD 693.7/MT (C24-C28) during the month of June in India.
Europe
European market witnessed significant hike in prices of Linear Alpha Olefins during this quarter, backed by firm offtakes from the regional buyers. Effective pandemic recovery in the major European economies increased the demand for several petrochemicals and polymers in the respective market. In addition, steep rise in prices of feedstock Ethylene was observed that further supported this upward price momentum of LAO. Moreover, sturdy demand for LAO from the downstream surfactant and lubricant segment controlled the overall market activities across the region in the meantime.
For the Quarter Ending March 2021
North America
Rigorous winter storm adversely affected the US Linear Alpha Olefins market, where the production was literally snapped off. Several olefins’ giants were forced to shut down their plants for weeks which led to a supply crisis across the US Market. Manufacturers like LyondellBasell, ExxonMobil, INEOS Olefins & Polymers and Formosa Plastics, were forced to shut down their plants. Apart from these big plants, around 30 plants also remained idled for many days. Firm demand and low supply opportune some manufacturers to increase their olefins prices. Likewise, a major manufacturer increased their polymer grade and refinery grade Propylene prices by 33.5% and 10.7% respectively.
Asia
Asian Linear Alpha Olefins (LAO) market witnessed stable domestic demand from downstream sectors during Q1 2021. Although the supply remained tight across the region due to the global shortage, following the US Gulf storm crisis in February. Local supply for LAO in Southeast Asia also reduced due to the Chinese Lunar holidays. Chinese lunar holidays affected the supply in other Asian countries as well, like Inedia and South Korea. In India, CFR prices of C24-C28 increased by 8.15% from January to March ending. On the other hand, GS Caltex announced a project to build mixed feed cracker having 700,000 TPA Ethylene and 350,000 TPA Propylene capacity which is likely to enhance the production capacity of South Korea and ultimately reduce the supply crisis of Asian market in the long term.
Europe
Linear Alpha Olefins (LAO) prices remained in uptrend across January, during Q1 2021. After January price acceleration was halted by the improved supply, as some cracker units restarted in the region. Shortage of supply amid high import demand from the Asian countries supported the prices of Linear Alpha Olefins (LAO). Borealis Stenungsund and INEOS Dormagen restarted their crackers in March, that improved the supply crisis across the region and effectively halted the price acceleration.
For the Quarter Ending December 2020
Asia
In the Asia Pacific region, overall demand for LAO marginally increased, as some countries like China received some good demand while its consumption in several Northeast Asian countries remained dull. Dow, one of the world’s leading olefins supplier revealed that they received appreciable offtakes of LAO from downstream Polyethylene sector specifically by Sadara, Kuwait and Thai joint venture due to the consistent upliftment in its polyethylene profit margins. Consequently, the average product prices were also increased by 8% in Q4 2020 compared to the previous quarter. In the Indian market, CFR prices of LAO C20-C24 increased from USD 366.83 USD to 464.16 per MT from October to December.
North America
For North America region, Dow revealed that, in USA & Canada, the demand for packaging and speciality chemicals marginally declined due to the regional impact of hurricane outage in November, but the overall demand for LAO in the final quarter was deemed good. Some olefins like C4-C8 which are used in packaging and plastics sector faced extraordinary demand that let to increase in its prices by 8% from the previous quarter. Exxon Mobil, another leading supplier of LAO also revealed that, they observed appreciable sales from downstream LAO segments, moving from Q3 to Q4 2020.
Europe
During the final quarter of 2020, imports from USA faced severe disruption due to the adverse seasonal hurricanes specially in November, which created supply shortage and contributed to hike the prices of downstream Polyethylene and Polypropylene in the packaging industry. Exxon Mobil also showed that in the final quarter 2020, production of petroleum products as well as olefins downstream products remained low compared to same quarter of 2019, due to the second wave of COVID-19 in several parts.
