Asia petchem shares tumble on virus fears; oil up on Saudi output cut

Nurluqman Suratman

12-May-2020

SINGAPORE (ICIS)–Asian petrochemical shares fell on Tuesday on fears over a second wave of coronavirus infections, while oil prices rose on Saudi Arabia’s surprise announcement of a further cut in production.

Spikes in coronavirus cases in China and South Korea after easing restrictions on people movement, are weighing on investor sentiment.

At 04:10 GMT, Mitsui Chemicals fell by 2.11% in Tokyo, LG Chem was more than 2% lower in Seoul and Formosa Petrochemical Corp was down by 2.81% in Taipei.

Japan’s Nikkei 225 Index slipped by 0.28%, South Korea’s KOSPI Composite Index fell by more than 1% and Singapore’s Straits Times Index was 1.08% lower.

Company/Exchange % Change
Nikkei 225 (Japan) -0.28%
Asahi Kasei Corporation -1.54%
JXTG Holdings, Inc. 0.37%
Mitsubishi Chemical Holdings Corporation -1.37%
Mitsui Chemicals, Inc. -2.11%
Hang Seng Index (Hong Kong) -1.80%
Sinopec Shanghai Petrochemical Company Limited -0.96%
PetroChina Company Limited -3.27%
KOSPI Composite Index (South Korea) -1.08%
OCI Company Ltd -2.03%
SK Innovation Co., Ltd. -2.46%
LG Chem, Ltd. -2.45%
Lotte Chemical Corporation -2.41%
Hanwha Corporation -2.34%
TSEC weighted index (Taiwan) -1.32%
Formosa Petrochemical Corporation -2.81%
Nan Ya Plastics Corporation -1.39%
Formosa Chemicals & Fibre Corporation -1.74%
STI Index (Singapore) -1.16%
Wilmar International Limited 3.67%
Olam International Limited 1.32%
FTSE Bursa Malaysia KLCI -0.04%
SSE Composite Index (Shanghai, China) -0.59%
Jakarta Composite Index (Indonesia) -1.13%
Chandra Asri Petrochemical Tbk -5.03%

China reported on Monday five new coronavirus cases in Wuhan, where the outbreak began late last year, after confirming a day earlier its first case in more than one month.

On 11 May, China had 17 new cases – the highest daily increase recorded since 28 April – bringing the total number of infections in the country to 82,918, according to data from the World Health Organization (WHO).

Globally, the number of total confirmed coronavirus cases has grown to more than 4m, while the number of deaths stood at 278,993 as of 11 May, the data showed.

US stocks ended mixed on Monday as investors remained jittery about the prospects of a second wave of coronavirus cases as the economy re-opens.

The Dow Jones Industrial Average slipped 0.45%, The Nasdaq Composite was up by 0.8% and the S&P 500 ended flat.

Oil prices rose on Tuesday following Saudi Arabia’s announcement to cut its production levels further from 1 June.

$/bbl (At 04:48 GMT) Last price % change Net change Close High Low
Brent July 29.69 0.20% 0.06 29.63 30.11 29.62
US WTI June 24.33 0.79% 0.19 24.14 24.77 24.22

Saudi Arabia will reduce output next month by an additional 1m bbl/day, which combined with the cuts agreed to by OPEC and its oil-producing allies, brings the Kingdom’s total cut to roughly 4.8m bbl/day below its April record production level.

“This means global supply for June is expected to be reduced by 10.7mbpd [million barrels per day] by OPEC+ members,” Singapore’s OCBC Bank said in a note.

“This move by Saudi Arabia adds another factor to a list of supporting bullish factors for the oil market, including rising crack spreads and refinery run rates in both the US and China,” it added.

Focus article by Nurluqman Suratman

Photo: An aerial view of skyscrapers standing in the city center of Wuhan in China’s central Hubei province. 8 May 2020 (Source: Shutterstock)

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

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