Seoul petchem shares tumble on North Korea shelling

23 November 2010 09:21  [Source: ICIS news]

SINGAPORE (ICIS)--Shares of petrochemical companies traded in Seoul fell on Tuesday, in line with losses across regional bourses triggered by news of North Korea’s firing of artillery shells that hit the South’s Yeonpyaong island.

Online newspaper Korea Herald reported that the North fired artillery rounds at 14:34 hours Korea time (05:34 hours GMT), quoting Lee Bung-woo, the spokesperson for South Korea’s Joint Chiefs of Staff (JCS).

South Korea fired back at the North in response to the “military provocations”, Korea Herald quoted Lee as saying.

The news of shelling, which South Korean media said had killed at least one soldier and injured 13 more, came in the last minutes of stock market trade in Seoul, sending the KOSPI Composite Index falling 15.40 points or 0.79%, to close at 1,928.94.

Among petrochemical majors, SK Energy tumbled 2.97%, LG Chemical declined 1.01% and Hanwha Chemical slipped 0.15%.

In Hong Kong, the Hang Seng index had its biggest one-day loss in six months on Tuesday, falling 2.67% to close at 22,896.14.

Meanwhile, South Korean petrochemical players were unperturbed by the new geopolitical development.

"I think most market players are hopeful that this won’t develop into a major flare-up,” said a local producer.

Petrochemical plants were operating as usual, industry sources said.

“The shelling is at the coastal areas, so business in Seoul is as usual,” said a Korean polymer producer.

“Currently, there is no market impact,” said a naphtha trader in Seoul.

Others said the integrated crackers in South Korea were still operating at high rates, if not 100% amid robust cracker margin, traders said.

Heightened political tensions usually served to boost oil prices. At 16:57 hours Singapore time (08:57 hours GMT), ICE Brent crude for January delivery was recouping its early losses and was now down just 13 cents at $83.83/bbl.

Additional reporting by Felicia Loo, James Dennis, Chow Bee Lin and Prema Viswanathan

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