Linear alkyl benzene prices may go up again

For the fourth time since January, the price of linear alkyl benzene (LAB) may go up again.

Basic LAB prices in the domestic market are ruling around Rs 110-115 a kg . “Compared to less frequent (quarterly or biannual) revision in prices generally, this year since January, companies have increased prices thrice. Each time by Rs 3-5 a kg. It may go up once gain this month by Rs 3-5 a kg,” said an official in a LAB manufacturing company.

According to company sources, the demand for LAB is quite captive with almost 95 per cent of LAB produced being consumed in the manufacturing of synthetic detergents.

The remaining five per cent is used for other products like liquid detergents, pesticides and paint. Besides, LAB accounts for 45 per cent of costs of synthetic detergents.

Now, on the other hand, raw material for LAB, kerosene and benzene prices have been rising following high crude prices, both in the spot and in futures market globally. Sources said the Asian benzene market is on an uptrend through the past quarter, with prices breaching $1,100/tonne FoB (free on board) Korea, the highest since September 2008. It is expected to rise further tracking the rising crude prices which is the feedstock for benzene and kerosene.

Sources also said end users like detergent companies have started reducing the size of soap cakes and detergent packs. “The soap and detergent market is very price sensitive. Slight price increase in any product category leads to shift in consumer preference. Thus, the detergent makers cannot resort to price increase often and pass on the rising price of its main ingredient (LAB) to the consumers. By reducing the size of product, they are not only avoiding rapid price rise but are also putting a limit to the use of LAB at the existing high prices,” they added.

Less than a year back, the domestic LAB industry was facing stagnant demand and prices were quite stable. There was heavy supply of LAB from Asian markets, prices of which used to be lower than domestic prices. The domestic industry had earlier appealed for a safeguard duty or anti-dumping duty on the overseas supply, which was rejected by the government.

Now, high crude prices have also forced global players to increase prices which is making imports expensive for the domestic users and they are depending more on the domestic market unlike last year.