Asia petchem shares fall as new tariffs in US-China trade war hit

Author: Nurluqman Suratman

2019/09/02

SINGAPORE (ICIS)--Shares of petrochemical companies in Asia were mostly lower on Monday after the US and China implemented their latest round of tariffs in their tit-for-tat trade war.

Container port in Qingdao, Shandong Province, China. (Photo by Yu Fangping/Pacific Press Via Zuma Wire/Shutterstock)

At 04:00 GMT, Japan’s Mitsui Chemicals fell by 0.26%, while Asahi Kasei was stable as the benchmark Nikkei 225 Index was 0.24% lower.

In South Korea, LG Chem fell by 3.03% while Lotte Chemical dropped 2.22% as the Korea Stock Exchange KOSPI index inched up by 0.02%.

In Hong Kong, Sinopec Shanghai Petrochemical was 0.44% lower while PetroChina was down by 0.26% as the benchmark Hang Seng Index was down by 0.46%.

Brent crude was trading 30 cents lower at $58.95/bbl, while US WTI was down by 8 cents at $55.02/bbl.

The new tariffs on about $110bn of Chinese goods reaching the US came into effect on 1 September. On the same day, China’s retaliatory tariffs ranging from 5% to 10% on a portion of $75bn worth US goods also came into effect.

Poor outlook on manufacturing conditions across the region is expected to weigh on investor sentiment in the months ahead.

August manufacturing data released on Monday were downbeat, with major economies in the region indicating contraction in activity as overseas demand continued to languish.

China’s official manufacturing purchasing managers’ index (PMI) fell to 49.5 in August from 49.7 in July, marking the fourth consecutive month that the reading was below 50.

Its production sub-index dropped 0.2 points to 51.9, while new orders fell 0.1 points to 49.7, and new export orders rebounded 0.3 points to 47.2 in August.

Reflecting a resilient services sector, China’s non-manufacturing PMI rebounded to 53.8 from 53.7 in July and was better than consensus forecast of 53.7.

The declines in manufacturing PMI “continued to paint a relatively dismal environment for Asia’s manufacturing” sector, Singapore’s UOB Global Economics & Markets Research said in a note.

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