Asia petrochemical shares tumble on slumping crude prices

SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Wednesday morning, tracking the slump in crude prices overnight following poor manufacturing data from China and lingering worries about the global crude supply glut.

At 10:20 Singapore time (2:20 GMT), Mitsui Chemicals plunged by 7.70%, JX Holdings slipped by 2.82% and Mitsubishi Chemical Holdings was 5.50% lower as Japan’s benchmark Nikkei 225 index shed 3.41% to 17,145.73.

In South Korea, LG Chem fell by 0.70% and SK Innovation was down by 1.88% as the KOSPI index fell by 1.06% to 1,886.33.

In Hong Kong, Sinopec Shanghai Petrochemical was 2.27% lower while energy major PetroChina slumped by 2.27% as the key Hang Seng Index was down by 3.21% at 18,821.64.

NYMEX WTI crude futures continued to hover under the $30/bbl mark in early Asian trade on Wednesday after closing $1.74/bbl lower in the previous session at $29.88/bbl.

Fading expectations of a coordinated effort between OPEC and non-OPEC producers on oil output reduction weighed on the market.

At 02:40 GMT on Wednesday, NYMEX WTI crude for March fell by 15 cents/bbl to $29.73/bbl, while April Brent was down by 5 cents at $32.67/bbl.

“Overnight market sentiments turned softer again amid renewed fall in equities and crude oil prices that could continue to cloud global growth and inflation prospects,” said Malaysia-based HongLeong Bank in a note.

Global monetary policy is expected to remain “ultra loose in the wake of uncertainties in the world economy and financial markets”, it said.

The market also continued to factor in the continued downtrend in Asia’s manufacturing sector.

China’s official manufacturing purchasing manager’s index (PMI) fell to a three-year low of 49.4 in January from 49.7 in December, marking the sixth consecutive month that the reading stayed below 50, indicating contraction. The country’s non-manufacturing PMI also fell to 53.5 in January from 54.4 December.

Meanwhile, the Nikkei’s January manufacturing PMI reading for South Korea fell to 49.5 from 50.7 in the previous month, while its reading for Taiwan slipped to 50.6 from 51.7 in December.