Asia petrochemical shares, crude oil rebound on upbeat China March data

Nurluqman Suratman

31-Mar-2020

SINGAPORE (ICIS)–Shares of petrochemical firms in Asia were trading higher on Tuesday while crude oil rebounded after China’s surprise upbeat manufacturing data for March.

At 02:15 GMT, JXTG Holdings was up more than 3% in Tokyo, PetroChina was higher by close to 3% in Hong Kong and Hanwha Corp rose nearly 4% in Seoul.

Asian bourses were all in the green, with Japan’s Nikkei 225 up almost 1% and the Hang Seng Index rising 1.63% after China posted a sharp improvement in its official March purchasing managers’ index (PMI).

Company/Stock Exchange % Change
Nikkei 225 (Japan) 0.93%
Asahi Kasei Corporation -2.54%
JXTG Holdings, Inc. 3.37%
Mitsubishi Chemical Holdings Corporation -1.54%
Mitsui Chemicals, Inc. 1.09%
Hang Seng Index (Hong Kong) 1.63%
Sinopec Shanghai Petrochemical Company Limited 3.33%
PetroChina Company Limited 2.67%
KOSPI Composite Index (South Korea) 1.69%
OCI Company Ltd 1.33%
SK Innovation Co., Ltd. 0.70%
LG Chem, Ltd. 0.00%
Lotte Chemical Corporation 3.04%
Hanwha Corporation 3.72%
TSEC weighted index (Taiwan) 0.79%
Formosa Petrochemical Corporation -0.12%
Nan Ya Plastics Corporation -0.18%
Formosa Chemicals & Fibre Corporation 0.00%
STI Index (Singapore) 2.92%
Wilmar International Limited 4.56%
Olam International Limited 3.52%
FTSE Bursa Malaysia KLCI (Malaysia) 1.13%
SSE Composite Index (Shanghai, China) 0.48%
Jakarta Composite Index (Indonesia) 3.04%
PT. Chandra Asri Petrochemical Tbk 2.78%

China’s official PMI in March rose to 52.0, indicating expansion, after February’s record low of 35.7 due to city lockdowns and production stoppages as the government attempted to contain the novel coronavirus epidemic.

The PMI is a barometer of an economy’s manufacturing health, with reading above 50 signaling expansion, while a lower number indicates contraction.

MORE CASH INJECTION FROM CHINA
China’s central bank on Monday slashed its key interest rate on loans to banks by the largest margin in five years.

The People’s Bank of China (PBoC) launched a yuan (CNY) 50bn reverse repurchase operation to inject fresh funds into the financial system and lowered the seven-day reverse repurchase rate from 2.40% to 2.2%.

The 7-day and 14-day reverse repo rates were previously cut by 10bps on 3 February.

The sudden move by the PBoC followed the 27 March meeting by the Chinese Communist Party’s politburo, the country’s top decision-making body, to strengthen counter-cyclical policy measures and scale up the stimulus package to support the economy from shocks arising from the coronavirus outbreak.

Gains in Asian stocks were capped by fresh data from Japan which showed industrial output contracting 4.7% year on year in February, weighed by supply chain disruptions caused by the coronavirus.

Major Asian equities indices ended 30 March in the red, weighed down by grim news of further intensification of the coronavirus outbreak across Europe and the US.

The total number of confirmed coronavirus cases globally was nearly at 700,000 as of 30 March, with 33,257 deaths, the latest World Health Organization (WHO) data showed. 

Overnight, US stock exchanges traded higher for the fourth session in five days amid expectations of more stimulus.

Shares of US-listed chemical companies were mixed as oil prices reached 18-year lows.

OIL REBOUNDS ON HOPES OF US-RUSSIA TALKS
Crude oil prices rebounded on Tuesday on news that US President Donald Trump and Russian President Vladimir Putin have agreed to have their energy ministers discuss the current slump in global oil markets.

$/bbl (As of 03:15 GMT) Last price Change Net change Close High Low
Brent 23.04 1.23% 0.28 22.76 23.55 22.88
US WTI 21.12 5.13% 1.03 20.09 21.75 20.23

“What is more possible, however, is the possibility that the US might lift sanctions on Russia’s Nord Stream 2 gas pipeline in exchange for reduced output from Russia,” it added.

Nord Stream 2 is a new export gas pipeline running from Russia to Europe across the Baltic Sea.

“It will be difficult to envisage the US and Russia working together on a centralised output plan,” Singapore’s OCBC Bank said in a note.

“What is more possible, however, is the possibility that the US might lift sanctions on Russia’s Nord Stream 2 gas pipeline in exchange for reduced output from Russia,” it added.

Nord Stream 2 is a new export gas pipeline running from Russia to Europe across the Baltic Sea.

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

Focus article by Nurluqman Suratman

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