SINGAPORE (ICIS)--Shares of petrochemical companies in Asia slumped on Tuesday, tracking the global equity downturn overnight, after the US threatened to slap new tariffs on China, heightening fears of a trade war between the world’s two economic giants.
US President Donald Trump warned late on Monday that the US will impose a 10% tariff on another $200bn worth of Chinese goods.
At 11:00 hours Singapore time (03:00 GMT), Hong Kong-listed Sinopec Shanghai Petrochemical was down by 1.81%, PetroChina fell by 2.65% and CNOOC Ltd was 2.63% lower. The key Hong Kong Hang Seng Index fell by 1.97% to 29,712.94.
In Japan, Mitsubishi Chemical was down by 1.80%, Asahi Kasei Corp slipped by 0.38% and Mitsui Chemicals was down 1.64% as the benchmark Nikkei 225 fell by 0.87% to 22,482.89.
In South Korea, LG Chem slumped 3.41%, while Lotte Chemical lost 3.38% as the Korea Stock Exchange KOSPI Index was down by 0.68% at 2,360.18.
Crude futures were also trading lower, with US crude for July delivery down by 23 cents at $65.62/bbl, while Brent crude for August was 38 cents lower at $74.96/bbl.
Trump on Monday directed the US trade representative to pick out the Chinese products to be subject to the new tariffs.
“The United States will no longer be taken advantage of on trade by China and other countries in the world. We will continue using all available tools to create a better and fairer trading system for all Americans,” Trump said.
China will have “no choice but to take comprehensive measures combining quantitative and qualitative ones to resolutely strike back”, a spokesperson from the country’s Ministry of Commerce (MOC) was quoted by state-owned news agency Xinhua as saying on Tuesday.
"Such practice of imposing extreme pressure and blackmailing is contrary to the consensus the two sides have reached through rounds of consultations, and disappoints the international community," the MOC spokesperson said.
The US on 15 June moved ahead with plans to impose initial tariffs on $50bn worth of goods from China, to which the Asian economic powerhouse responded with a 25% tariff on $50bn of US imports.
Petrochemical and oil products are included in the list of products that would be hit by the tariffs.
US trade representative (USTR) Robert Lighthizer in a statement said that his office is “preparing the proposed tariffs to offset China’s action”.
“The initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese,” Lighthizer said.
“It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting US workers, farmers, ranchers, and businesses,” he said.
The USTR said that it will announce the additional tariffs proposed and provide a similar legal process as the proposed tariffs announced on 3 April and which are now implemented.
“No additional tariffs will go into effect until the legal process is complete,” it added.
Picture: US President Donald Trump (Source: REX/Shutterstock)