Surfactant prices have soared in the past year, like many chemicals, due to the surge in prices of crude oil, which is used in the manufacture of synthetic surfactants. But the big surprise for buyers is that prices for surfactants made from natural sources such as plant oils have also shot up, mostly due to heavy demand for plant oils in biodiesel production. As a result, the price gap has narrowed between synthetic surfactants and the traditionally cheaper natural ones, reducing the competitive edge natural surfactants once had over synthetic ones, especially in detergents, the largest end-use market for surfactants.

Typical of recent price trends in surfactants are the movements in linear alkylbenzene sulfonates (LAS), a widely used group of synthetic surfactants that are the main cleaning ingredients in household detergents. According to Purchasingdata.com's pricing information, LAS prices leaped from 51¢/lb in October 2006 to 71¢/lb in November 2007 (see chart, p. 32). Most of the LAS run-up has been blamed on comparable price increases for linear alkylbenzenes (LAB), petroleum-derived products that are the immediate chemical precursors of LAS.

Over the past year there has been "a continuous cycle" of rate increases for LAB, mostly linked to rising raw materials, energy and transportation costs, says Joel Houston, president of Colin A. Houston & Associates (CAHA), a Brewster, N.Y. firm that tracks the surfactants industry. In the six months ending January 2008, LAB prices will have increased by around 20¢/lb, he adds.

For the past several years, detergent formulators have eyed surfactants derived from palm, palm kernel, or coconut oils as promising lower-cost alternatives to synthetic surfactants based on petroleum. Their interest has focused particularly on naturally sourced surfactants called alcohol sulfates, which have many of the same performance characteristics of LAS.

Most of the plant oils used to make alcohol sulfates and other natural surfactants come from giant plantations in Southeast Asia, particularly Malaysia and Indonesia. But oils from this region have suddenly become a lot pricier. For example, tags for palm kernel oil "have essentially doubled" over the past year, says Neil Burns, general manager for the U.S. office of Brazilian surfactant maker Oxiteno.

Surfactant prices may level off somewhat in 2008 if petroleum rates continue to moderate, but those pauses may be only temporary.

Why have plant oils become so much more expensive? Ironically, the chief reason is that their rival, petroleum, has become more expensive. As Houston explains it, plant oils are increasingly being diverted into burgeoning biodiesel fuels programs around the world. As a result, plant oil prices are becoming more closely aligned to biodiesel fuel tags, which are pegged to petroleum rates.

Naturally sourced surfactants are also being hobbled in North America by a continuing shortage of facilities to manufacture ethylene oxide, a key chemical needed to convert plant-derived alcohols into such surfactants as alcohol ethoxylates and alcohol ether sulfates. The capacity shortage, says Houston, has made ethylene oxide quite expensive by historical standards and added to production costs of some of the natural surfactants. Burns notes that there are not many integrated ethylene oxide plants at North American surfactant facilities, so that surfactant producers there often must send their raw materials out for ethoxylation. This adds logistical complications to the manufacturing process.

Despite its dependence on volatile petroleum prices, LAB supply will continue to grow 2.5% annually through 2016, says a recent CAHA report on detergent alkylates. Competing surfactants like methyl ester sulfonates and alcohol derivates are forecast to grow at an annual rate of 5%, but from a much smaller base. The biggest expansion of LAB will be the Asia/Pacific region, which now consumes 45% of the world's LAB output.

Houston says that supplies of LAB should be adequate in North America and Europe through 2010, assuming no unexpected plant outages or shutdowns. As for prices of LAB and LAS, Houston says they may "stabilize somewhat" within the next year in response to recent retreats in crude oil. But he's not convinced that oil rates won't rocket back up to record levels. And if that happens, he warns that LAB, LAS and other surfactants, including the natural ones, will probably follow suit.