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.
