Asia petchem shares up on China data; PTT up on Mab Ta Phut

01 September 2010 07:13  [Source: ICIS news]

SINGAPORE (ICIS)--Asian petrochemical shares were trading higher on Wednesday, taking the cue from a rebound in China’s manufacturing activities in August after steadily falling for three months.

China’s Purchasing Managers’ Index (PMI) indicated a slightly stronger expansion in industrial output last month with a 51.7 reading from 51.2 in July, based on official data.

At 13:27 hours Singapore time (0527 GMT), Chinese petrochemical giants Sinopec and PetroChina gained 0.97% and 0.83%, respectively, in the Hong Kong market.

While China’s data had remained on an expansion mode, with readings at above 50 for 18 consecutive months, there were definite signs that the world’s third largest economy was cooling down.

PMI had steadily declined in May, June and July. With fears of a double-dip recession in the US and continued weakness in the eurozone still gripping the market, investors have a tendency not to welcome any soft economic data coming from China.

The market may be in for a disappointment later on Wednesday when the US releases its own set of manufacturing indicator for August.

“The ISM (survey of manufacturing) is expected to drop by nearly 3 points to 52.7. That’s a hefty drop that would put manufacturing sector growth too close to zero for comfort,” said DBS Bank in a research note.

In Thailand, shares of petrochemical major PTT and its affiliates - PTT Chemical, PTT Aromatics – gained as hopes build that their stalled projects in Mab Ta Phut would finally be allowed to proceed.

PTT edged up 1.51%, PTT Chem was 0.94% higher and PTT Aromatics rose 1.71%. Siam Cement was also up 1.01%.

The Thai Cabinet had approved Tuesday night the list drafted by the National Environmental Board (NEB) that excluded downstream petrochemicals among those industries considered as environmentally harmful.

The PTT group has 17 projects under court suspension, while conglomerate Siam Cement also has a number of projects stalled. The final hurdle for the projects’ restart was the approval of Thailand’s Central Administrative Court due tomorrow.

Shares of Japanese petrochemical companies tracked the rebound in the benchmark stock market index – the Nikkei 225, after slumping to a 16-month low on Tuesday.

Asahi Kasei gained 1.20%, Mitsubishi Chemical was up 1.50% and Mitsui Chemicals was 0.93% higher, while the Nikkei 225 index added 76.05 points or 0.86% to 8,900.11.

The Japanese government hoped to revive the slumping economy through an $11bn fiscal stimulus package announced this week but it may have to address the continued strength of the yen, which was hurting exports.

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By: Pearl Bantillo
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