Asia LAB shrugs off feedstock issues; India ADDs support market

18 April 2017 04:59 Source:ICIS News

detergents 18 April

SINGAPORE (ICIS)--Spot linear alkylbenzene (LAB) prices in Asia appear to have brushed off the impact of recent feedstock shortages, but they are unlikely to fall back sharply anytime soon following India’s move to impose anti-dumping duties (ADDs) on some imports.

Prices in southeast and northeast Asia have eased about $30/tonne from their near-two-year highs hit in mid-March and have been stable through April so far, according to ICIS data.

A prolonged shutdown at Shell’s Pearl gas-to-liquid (GTL) plant in Qatar has curtailed supply of raw material normal paraffin (n-paraffin) to some key LAB producers in Asia. Some of the producers said they have since switched to alternative suppliers to ensure no significant disruption to LAB production.

“We do some business with Pearl GTL, mostly on contract basis,” said a source at a LAB manufacturer. “There has been no major impact on our operations.”

Other LAB producers declined comment on whether Pearl GTL was indeed their main supplier of n-paraffin but simply said they were running their LAB plants at normal rates.

Shell said in February that operations at its 1.5mn tonne/year Pearl GTL plant in Ras Laffan, Qatar, were suspended due to “unforeseen maintenance”. The plant, a joint venture between Shell and Qatar Petroleum, produces base oils, naphtha and n-paraffin, among others. High-purity n-paraffin is obtained by hydrotreating jet kerosene.

It was not clear when the plant can resume operations, but market sources said they expect Pearl GTL to be restarted around end-May at the earliest.

Some market participants said that the impact of the shutdown may be being downplayed.

Between February and May, n-paraffin output is estimated to have probably been reduced by 60,000-80,000 tonnes due to the shutdown, they said.

“It's surprising that there has not been any major impact from the shutdown. If it [shutdown] was one to two months, it's fine but this is going on longer than anyone thought,” said a market source.

LAB prices across Asia increased through February and traded up to almost two-year highs in mid-March, which coincided with rising prices of main raw materials benzene and n-parrafin.

By the week ended 15 March, LAB prices in southeast (SE) and northeast (NE) Asia had hit their highest since July 2015 while prices in India had jumped to their highest since June 2015.

Aside from the impact of higher benzene prices, the move in LAB prices at the time was linked by some market participants to the reported shortage of n-paraffin due to the shutdown of Shell’s Pearl GTL plant in Qatar.

Prices had since eased, but are not expected to weaken by much as they are supported in the near term by India’s imposition of ADDs on LAB imports from Qatar, Iran and China, market sources said.

India had initiated the investigation into the alleged dumping in late 2015 following complaints from domestic producers. In a circular dated 11 April 2017, the government imposed ADDs ranging from $23.78/tonne up to $300.22/tonne on LAB imports from the three countries, for five years.

“The domestic prices will go up, exporters will sell at domestic prices, making more money,” said one market source in India.

While there has been limited information about whether Indian producers and those producers not affected by the ADDs would really bump their prices higher, it appears unlikely that LAB prices will decline sharply anytime soon.

LAB prices in India have been stable at their recent highs since mid-March.

“Maybe some Indian producers may use this to their advantage but I don’t really think so. I think the (ADDs) would have been factored in already [in the prices],” said another market source.

Focus article by Izham Ahmad

Asia LAB 18 April

By Izham Ahmad