Asian petchem stocks tumble on BASF move

20 November 2008 10:12  [Source: ICIS news]

SINGAPORE (ICIS news)--News of drastic cost-cutting measures to be taken by German chemical major BASF and continued weakened global demand sent Asian petrochemical stocks down on Thursday, tracking another session of losses in regional markets.

BASF announced on Wednesday that it would idle 80 plants and cut production at 100 more given the prevailing market conditions.

Petrochemical companies need to deal with their own problems individually as market fundamentals have turned sour and chances of a near-term recovery look slim, with economies across the world falling into recession one by one, analysts said.

At the close of trading, Japanese petrochemical industry major Asahi Kasei fell 6.16%, Mitsui Chemicals was down 4.32% and Mitsubishi Chemical declined 2.19% as the Nikkei 225 shed 6.89% to 7,703.04.

For the first time since 2002, Japan’s exports fell 7.7% in October because of the strong yen and weak global demand.

South Korea’s SK Energy declined 6.53%, Hanwha Chemical shed 12.80% and LG Chem was down 10.10% as the KOSPI composite index fell 6.70% to 948.69.

China’s state-owned oil refiners listed in Hong Kong also saw declines. Sinopec was off 3.63% and PetroChina eased 5.60% as the Hang Seng Index closed 4.04% lower at 12,298.56.

As global consumers have started cutting back on spending for big-ticket items like cars, US auto makers have looked to the US government for a $25bn rescue package, analysts said.

Slowing car sales spell more gloom for the petrochemical markets, particularly for styrene-butadiene rubber (SBR).

Prices of most petrochemical product prices have been tumbling as buyers disappeared in the market while traders and producers were agonising over huge inventories and maybe being forced to sell at a loss, market players said.

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By: Pearl Bantillo
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