In Tuesday's Asia Papers

18 April 2006 03:21  [Source: ICIS news]

A summary of political, economic, trade, business and product news affecting the chemical and related industries.

International Economics & Politics

Asia-Oceania FTA pitch surprises

Japan's Trade minister Toshihiro Nikai's announcement earlier this month that Japan plans to start talks with 15 other nations in 2008 to create an Asia-Oceania free-trade zone took many by surprise, sparking speculation about the ministry's true intentions. On 4 April, the Ministry of Economy, Trade and Industry (Meti) proposed a new economic framework to strengthen trade relations beyond current bilateral free-trade agreements (FTA), saying it involves not only tariff reductions but also investment, services and rules on intellectual property - a comprehensive economic partnership agreement. Meti has already received a lot of positive feedback from the 15 countries, which include the 10 in the Association of Southeast Asian Nations (Asean) plus China, South Korea, India, Australia and New Zealand. But many experts question the timing of the proposal. Other experts speculate Meti felt pressure to move forward because China and South Korea are ahead of Japan in terms of FTAs struck with Asean, which includes Indonesia, Malaysia, Thailand, Singapore, the Philippines, Brunei, Vietnam, Laos, Cambodia and Myanmar.

Japan Times, Japan (online edition)

China ban may breach UN treaty

A reported Chinese ban on ship traffic around disputed gas fields in the East China Sea could violate the United Nations Convention on the Law of the Sea, Chief Cabinet Secretary Shinzo Abe said on Monday (17 April). Japan had requested confirmation from China of news reports saying Beijing has imposed the ban, while Chinese workers laid pipelines and cables in the area, he said. Prime Minister Junichiro Koizumi said Japan would "respond calmly" to the development. Japan and China have been deadlocked in negotiations over rights to the Pinghu gas field, which lies in an area that straddles a median line that Japan considers the border between the two countries' territorial claims. China, however, makes a wider territorial claim that includes the entire field.  Media reports over the weekend said Chinese maritime authorities have posted a notice that all unauthorised ship traffic would be banned around the Pinghu field from 1 March to 30 September. Both China and Japan hope to exploit undersea gas reserves in the East China Sea to drive fuel-hungry economies.

Japan Times, Japan (online edition)

China may top US as India trade partner

China will likely emerge as India's largest trading partner, overtaking the US within a few years with the two-way trade hitting $100bn (Euro82bn) in the near future, predicted a senior Indian businessman. Saroj Kumar Poddar, president of the Federation of Indian Chambers of Commerce and Industry (FICCI), said on Monday (17 April) in Beijing that "tremendous potentials" exist in regards to bilateral trade between the world's two fastest-growing economies. Trade between China and India last year hit a record of $18.7bn, up 38% year-on-year. If the growth is sustained, the bilateral trade could soon overtake Indo-US trade, which is hovering around $30bn, said Poddar, who is leading a FICCI CEO delegation in China this week. The visit by the Indian delegation, comprising a dozen representatives from modern Indian industries, is regarded as a crucial step for the sustainable long-term growth of Sino-Indian trade. Poddar said the delegation members come from a wide range of industries, including fertiliser, energy, food processing, petrochemicals, textile and tobacco sectors.

China Daily, China (online edition)

Hindustan Times, India (online edition)

Japan's exploration angers Seoul

Cabinet ministers on Monday (17 April) agreed to strengthen the nation's countermoves against Japan's plan to conduct a maritime survey in the South Korean exclusive economic zone (EEZ) near Dokdo, saying that the current situation is "more serious'' than ever. President Roh Moo-hyun will meet leaders of the governing and opposition parties at Chong Wa Dae on Tuesday to exchange views on what Seoul calls Japan's attempts to violate South Korean territory, presidential spokesman Kim Man-soo said. Leaders of the main opposition Grand National Party will not attend the meeting, Kim said. Tokyo is expected to dispatch survey ships to the South Korean economic waters this week. Claiming that the survey area falls within its EEZ, Tokyo notified the International Hydrographic Organization of its plan to carry out the survey from 14 April to 30 June in waters in the East Sea. In reaction to Seoul's stance, a ranking Japanese official told Yonhap News Agency in Japan that Tokyo will "likely'' notify Seoul of its survey plan before sending its vessels to the South Korean EEZ.

Korea Times, South Korea (online edition)

Japan Times, Japan (online edition)

Korea to limit car use over Iran crisis

Car use, and air conditioning in buildings will be restricted in order to reduce oil consumption, if the United Nations embargos Iran's oil exports as part of sanctions against its nuclear program in May, the South Korean government said on Monday (17 April). The Ministry of Commerce, Industry and Energy announced a three-level energy saving measure amid concerns the escalating crisis over Iran's nuclear program will push oil prices up further. However, the ministry ruled out a rise in oil taxes in the near future. Iran is the world's fourth largest oil producer. Minister Chung Se-kyun told reporters that under the government's three-step plan, citizens will be encouraged to voluntarily reduce energy consumption at the level 1 stage. But if a grave situation occurs in the Middle East, level 2 measures will be enacted and people will be forced to limit air conditioning and leave their vehicles at home once a week to cut oil demand. At level 3, vehicles will only be allowed to be used every other day, and the government will take control of fuel distribution. Electricity use will be limited by region, the ministry said.

Korea Times, South Korea (online edition)

Malaysia to spend $2.7bn on LRT system

Malaysia is trying hard to convince residents in the capital Kuala Lumpur to leave their cars at home and use the public transport system. It is spending a whopping $2.7bn (Euro2.2bn) to improve the city's Light Rail Transit (LRT) network over the next five years.  While residents complain about the unreliable public transport system, officials say the poor public demand is to be blamed. Currently, only about half a million people in the Klang Valley area, which includes Kuala Lumpur, commute by bus or LRT daily. According to government statistics, there was still about 1.5m people who drive into the city centre daily and the number are set to rise with more and more Malaysians now buying their own cars. To reverse that trend, Kuala Lumpur's transport system will be given a face-lift. Part of the funding will come from the $1.2bn saved from reduced oil subsidies. Rapid KL which operates the city's public buses has vowed to provide better quality services.

Channel News Asia, Singapore (online edition)

New Straits Times, Malaysia (online edition)

Singapore's NODX up 16.8% in March

Singapore's non-oil domestic exports (NODX) grew 16.8% to S$15bn (Euro9bn) in March compared to a year ago. The figure was largely at the lower end of expectations. But economists said it won't scupper the advance estimate that first quarter growth would come in at around 9.1%. On a month-on-month basis, NODX contracted 4.2% from February due to slower growth in the key electronics sector. Singapore's non-oil domestic exports were boosted in March by a surprise surge in pharmaceutical shipments but slowing growth in electronics. Exports of electronics - the bulk of non-oil exports - rose 16.4%. That was only about half the pace recorded in February due to weak sales of disk-drives and printers. The pharmaceuticals sector was the star performer, with shipments jumping 51% on year in March compared with just 4.8% growth in the month before. That led some economists to believe that the government might revise up its preliminary estimate of 9.1% growth for the first quarter. But they said a repeat performance was unlikely for the rest of the year as the economy was expected to slow in the second half of the year.

Channel News Asia, Singapore (online edition)

Business Times, Singapore (online edition)


Jurong Island: 15 new chem projects '05

Singapore's Jurong Island saw the birth of 15 chemicals projects last year, resulting in a 19% rise in the number of companies on the island compared with 2004.  That was revealed by the Second Minister for Trade & Industry Vivian Balakrishnan at the Singapore International Symposium 2006 on Monday. Among the 15 new companies that set up home on Jurong Island in the last year were Lucite International from the UK and Swiss-based Ciba Specialty. The minister also highlighted the phenomenal growth of the chemicals industry in Singapore over the last 10 years. Output of the sector has almost quadrupled to reach S$66.5bn (Euro41.5bn) last year. As a result, the chemicals industry's share of total manufacturing output has expanded from 15% to 32%.  That makes it the third largest manufacturing sector in Singapore.

Channel News Asia, Singapore (online edition)

Business Times, Singapore (online edition)

Oil & Gas

Oil hits $70, US stocks drop

US stocks fell on Monday (17 April) as oil broke the $70 barrier and reached its highest closing price ever. The price for an ounce of gold surged past $600 for its highest close in 25 years.  Investors were concerned that the high oil prices could stifle economic growth as it makes goods more expensive to produce and higher petrol prices take income out of the pocketbooks of consumers. Crude oil for May delivery was up 1.6% to $70.40/barrel on New York on concerns that the crisis over Iran's nuclear ambitions could hurt supplies. Chicago Federal Reserve Bank President Michael Moskow said in a speech in Iowa that the Fed must be "vigilant" as it tries to contain inflation.

Bangkok Post, Thailand (online edition)

Company News

LG Petrochemical profit down 35%

South Korean chemicals manufacturer LG Petrochemical said yesterday its first-quarter net income fell 35 percent from a year ago, hit by surging costs of raw materials. Net profit was Won33.8bn ($35.4m) for the January-March period, compared with Won52bn a year ago, LG Petrochemical said in a regulatory filing. First quarter operating profit also declined 39% to Won42.2bn, but sales rose 12% to Won513.4bn, the company said. Compared to Q4 of last year, however, net profit grew 17%. Sales inched up 0.2% and operating profit increased 36%. Rising prices of naphtha lowered its profitability despite bullish sales in the industrial chemical bisphenol-A and strong prices of overall products, it said. The company, however, painted a rosy outlook for the rest of the year thanks to high prices of petrochemical products.

Korea Times, South Korea (online edition)

China firm to launch CDM project

A chemical plant in Southeast China's Jiangsu Province has revealed that it is close to getting the green light to launch a massive greenhouse gas reduction project. The announcement by Changshu 3F Zhonghao New Chemicals Material follows its signing last December of the world's largest emission purchase reduction deal with the World Bank. A spokeswoman said the company is likely to get approval for the Clean Development Mechanism (CDM) project by mid-June. The company signed a $530m (Euro434m) greenhouse gas emission reduction purchase agreement with the World Bank's Umbrella Carbon Facility last December. Under the agreement, the World Bank will purchase reductions in the company's emissions of HFC-23 (trifluoromethane), which has a global warming potential that is 11 700 times that of carbon dioxide and is one of the six most potent greenhouse gases responsible for global warming as defined by the Kyoto Protocol. The company is expected to reduce emissions equivalent to about 73m tons of carbon dioxide between 2007 and 2013.

China Daily, China (online edition)

(Some stories may not appear in all editions of the cited news media.)

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