23 August 2013 09:30 [Source: ICB]
Depreciation of the Indian rupee is expected to curtail India's LAB imports and keep LAS at low operating rates
Spot prices of linear alkyl benzene (LAB) and downstream LAB sulphonate (LAS) in Asia and the Middle East are expected to increase in tandem next month, on the back of improving demand from the detergents segment, industry sources said on 15 August.
Greater sales of washing powder in Asia may fuel price hikes as "one-dose" detergents grow in popularity
LAS prices, on the other hand, had been holding steady at $1,560-1,580/tonne CFR SE Asia and $1,550-1,570/tonne FOB India over the previous two weeks, according to ICIS.
Market players expect LAS prices to eventually track rising LAB prices. LAB and LAS are surfactants used in the manufacture of detergents.
In recent weeks, demand had been sluggish in Asia and the Middle East as buyers retreated to the sidelines during the Muslim fasting month of Ramadan that started in mid-July, and ended with the Eid ul-Fitr holiday on 10 August.
In India, demand was further dented by the onset of the monsoon season - which lasts from June to August - during which purchases of most chemical products seasonally weakens.
After the Eid holiday, buyers re-entered the market to replenish LAB and LAS stocks, and buying activity is expected to improve further in the coming weeks, market sources said.
Snug supply has also been helping drive up LAB and LAS prices, as suppliers and buyers saw a sharp decline in their inventories during Ramadan.
Buying activities typically slows down during the month-long Ramadan, as market players work shorter hours and go on leave with the arrival of summer.
Supply is expected to remain tight in the coming weeks as shortage of feedstock normal-paraffin (n-paraffin) is expected to restrict LAB supply, which in turn will curtail LAS production, market sources said.
Low operating rates at Indian Oil Corp's LAB plant at Vadodara, and another plant in the same city operated by Reliance Industries shut, will keep availability of the material tight in India.
The continued depreciation of the Indian rupee, meanwhile, is also expected to curtail India's LAB imports, and keep LAS plants running at low operating rates, industry sources said.
A weaker currency makes imports more expensive. On Friday, the rupee was trading at above Rs61 to the US dollar.
Iran's ban on LAB exports is also part of the reason for reduced availability of material in Asia and the Middle East.
LAS demand is being revived with the emergence of "one-dose" detergent, which is a combination of washing liquid and softener.
The popularity of liquid detergents over powders in the laundry sector had slightly dented demand for LAS in recent months. The proportion of LAS used in liquid detergents is lower compared with washing powders.
However, in other applications such as floor cleaners and dish washing liquids, LAS continues to be widely used.
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