Chemical profile: Asia LAB

USES

Linear alkylbenzene (LAB) is an organic compound used almost wholly as an intermediate in the production of surfactant linear alkylbenzene sulphonate (LAS), which is also known as linear alkylbenzene sulphonic acid (LABSA). In the past five decades, LAB has emerged as an important feedstock for producing biodegradable detergents and other cleaners.

LAS is used widely in the manufacture of detergents for household and industrial use. The common use form is as a sodium salt.

SUPPLY/DEMAND

Global LAB demand in 2014 was estimated to be 3.15-3.3m tonnes. Market sources expect growth of up to 2% in 2015. Asia represents 48% of global LAB demand. LAB demand is expected to continue growing in the Asian region by 3.5%/year, with southeast Asia and India considered to increase at a quicker pace.

With 12 LAB plants (eight of them based in China and India), Asia is responsible for 45% of global production. LAB supply was balanced to long throughout 2014 up to Q1 2015, as falling crude oil prices resulted in LAB feedstock price declines, which in turn weighed on LAB demand in Asia.

Several China-based producers decreased their production rates because of low domestic demand.

However, supply tightened from the second quarter of 2015. Several LAB producers in India and the rest of Asia had been on decreased production rates because of technical issues at their plants or feedstock normal-parrafin (n-paraffin) shortages. In addition, several producers in Asia and the Middle East conducted maintenance, tightening supply further.

Two Middle East-based n-paraffin producers underwent maintenance in March and April 2015.

PRICES

Import prices of LAB in southeast Asia are 24% lower than in June 2014, tracking drops in feedstock benzene and jet kerosene resulting from weaker crude oil prices. Meanwhile, import prices in the Indian market were down by 21% compared to June 2014.

At the end of June 2014, import prices in southeast Asia stood at $1,785-1,850/tonne CFR (cost and freight) SE Asia. However, prices gradually fell to as low as $1,200-1,250/tonne CFR SE Asia at the end of January 2015. Import prices have been gradually recovering to reach $1,350-1,400/tonne CFR SE Asia in mid-June 2015.

Import prices in India have moved at a similar pace, falling from $1,760-1,790/tonne CFR India at the end of June 2014 to $1,200-1,250/tonne CFR India in early/mid-February 2015. In a similar way to the southeast Asian market, they have picked up since early March 2015 to $1,380-1,410/tonne CFR India in mid-June 2015.

TECHNOLOGY

N-paraffin and benzene are the main feedstocks for LAB. High-purity n-paraffin is obtained by hydrotreating jet kerosene. This is then dehydrogenated to form linear olefins, which are then exposed to benzene in the presence of a catalyst to produce LAB.

There are three types of catalysts used in producing LAB. Hydrogen fluoride (HF) is the major catalyst used. The second type of catalyst used is aluminium chloride, but this is being phased out. The HF process, in particular, was seen to be the most commercially viable. However, because of environmental concerns around the use of HF, it has been replaced since 1995 by a fixed bed catalyst system – for example, the DETAL process, which does not use HF.

Surfactant LAS is typically sold at a 96% minimum purity level in liquid state.

OUTLOOK

The LAB markets generally follow feedstock benzene and jet kerosene markets, which usually track the crude oil markets. However, LAB supply and demand also play an important role, as do economic factors.

LAB supply in Asia is expected to be balanced to short, at least for the third quarter of 2015. At least three major Asia-based producers are expected to conduct maintenance on their plants in the third and fourth quarters.

The supply situation is expected to ease in the third quarter of 2015 as Thai Oil and Japan’s Mitsui & Co are planning to start commercial operations at the new 100,000 tonne/year LAB facility at Sri Racha, Thailand.