Asia petrochemical shares higher; oil gains as easing lockdowns could boost demand

Pearl Bantillo


SINGAPORE (ICIS)–Shares of petrochemical firms in Asia were trading higher on Friday, tracking gains in global crude prices on hope that demand would improve amid easing lockdown measures in various countries.

Stock Exchange Index/Company (as of 04:35 GMT) % change
Nikkei 225 (Japan) 2.10%
Asahi Kasei Corp 1.61%
JXTG Holdings, Inc 1.17%
Mitsubishi Chemical Holdings Corp 2.04%
Mitsui Chemicals 3.06%
Hang Seng Index (Hong Kong) 0.99%
Sinopec Shanghai Petrochemical Company 2.00%
PetroChina Company 1.50%
KOSPI Composite Index (South Korea) 1.08%
OCI Company 4.90%
SK Innovation Co 0.10%
LG Chem -0.28%
Lotte Chemical Corp 0.26%
Hanwha Corporation 1.06%
TSEC weighted index (Taiwan) 0.73%
Formosa Petrochemical Corp 4.50%
Nan Ya Plastics Corporation 1.75%
Formosa Chemicals & Fibre Corporation 1.10%
SET Index (Thailand) 0.43%
PTT Global Chemical 1.35%
IRPC Public Company 0.77%
Indorama Ventures 2.80%
Thai Oil Public Co 1.23%
Siam Cement Group 0.90%
STI Index (Singapore) 0.12%
Wilmar International 0.29%
Olam International -0.67%
FTSE Bursa Malaysia KLCI (Malaysia) 1.01%
Philippine Stock Exchange index -0.54%
SSE Composite Index (Shanghai, China) 0.91%

Source: Yahoo Finance

South Korean chemical major LG Chem was an exception, with shares trading down 0.28% following a deadly gas leak at its manufacturing site in India early on 7 May.

The death toll from the incident has increased to 11 as of Friday morning, while hundreds were hospitalized, according to media reports.

The leak occurred at the polystyrene (PS) plant of its subsidiary LG Polymers in Visakhapatnam district of Andhra Pradesh state. Residents in the surrounding area were evacuated as a precaution.

LG Polymers can produce 118,000 tonnes/year of PS and 35,000 tonnes/year of expandable PS at the site, according to ICIS data.

Oil prices on Friday were trading higher on hopes that demand would pick up amid the easing of lockdown restrictions in some countries.

At midday, Brent crude was up 26 cents at $29.72/bbl, while US crude inched up 24 cents at $23.79/bbl.

While most countries in Asia have remained in extended lockdown, some restrictions are being eased to allow a gradual re-opening of their economies.

First-quarter data in Asia, however, showed ravages sustained by economies in the region due to lockdowns adopted to contain the deadly coronavirus pandemic.

The Philippine economy posted a 0.2% year-on-year contraction in the first quarter, the first time in two decades. It was a sharp reversal of the 6.7% growth recorded in the December quarter of 2019.

“A gradual relaxation of the containment measures, against an extremely weak global backdrop, is expected to push growth to -6% y/y in this quarter and pull-down growth for the full year to -2%,” said Thatchinamoorthy Krshna, economist at research firm Oxford Economics said in a note on 7 May.

The southeast Asian country’s lockdown, which began in mid-March, was extended up to 15 May. It has more than 10,000 coronavirus cases with 658 deaths, according to latest data from the World Health Organisation (WHO).

Eyes will also be on the US jobs data due to be released later on Friday.

“The latest US labour report is likely to post a record jobs loss in April dating back to 1939,” Singapore-based UOB Global Economics and Markets Research said.

US non-farm payrolls are expected to plummet 21.25m, much higher than the 800,000 loss in March 2009 during the Global Financial Crisis, it stated.

The world’s biggest economy has the highest cases of coronavirus infection globally.

At nearly 1.2m, US’ confirmed virus cases accounted for about a third of the global tally of around 3.68m, latest WHO showed.

The novel coronavirus is believed to have emerged late last year in China’s central city of Wuhan and has since spread globally.

Overnight, US chemical stocks moved in tandem with weaker crude. Chemical producers in the US tend to lose their cost advantage when oil prices fall in relation to gas-based feedstock.

Focus article by Pearl Bantillo

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

(Traffic in Beijing before the outbreak: Photo by Imaginechina/REX/Shutterstock)


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