09 February 2011 06:37 [Source: ICIS news]
By Amanda Zhang and ?xml:namespace>
SHANGHAI (ICIS)--Asia’s petrochemical markets are expected to come to life as
Effective Wednesday, the People’s Bank of China – the country’s central bank – raised its one-year deposit and lending rates by 25 basis points to 3.00% and 6.06%, respectively.
The interest rate hike, which followed similar moves in October and December, did not come as a surprise to most market players since
“China is taking the right medicine by raising interest rates again … The central bank will continue to bring rates higher in coming months to fend off accelerating inflation risks,” said DBS Bank in a research note.
Analysts said two to three more policy rate hikes were likely to be implemented this year, but players in the petrochemical markets were not too worried about the immediate negative implications on overall demand.
Industry players in the styrene butadiene rubber (SBR) market remained upbeat that
“We expect SBR prices to continue to rise due to strong demand and tight supply,” said a China-based producer.
Offers for non-oil grade 1502 SBR had increased to $3,500-3,600/tonne (€2,555-2,628/tonne) CIF (cost, insurance & freight)
Industry players and analysts said the 25-basis point interest rate hike was too small to affect markets. It did not hold sway in the
“We do not expect today's rate action to significantly affect the overall market performance, as it is largely expected,” said Jun Ma, chief economist at Deutsche Bank.
“For banks, the rate hike's de facto asymmetric nature, which leads to virtually no increase in banks' net interest margin (NIM), may be a modest disappointment,” he said.
“For properties, it is also a small negative as mortgage demand will take a further hit,” Ma added.
China is now on its second year of curbing lending growth after its aggressive lending stance adopted in 2009 led to the release of a large amount of funds into its financial system, fuelling inflation.
“Slowly but surely, markets are now viewing rate hikes as positive because of their concern that central banks may be behind the curve on inflation,” DBS Bank said.
However, the resulting increase in
Additional reporting by Helen Yan and Felicia Loo
($1 = €0.73)
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