Asia petrochemical shares rise as oil extends gains on hopes of better demand

Pearl Bantillo

15-May-2020

SINGAPORE (ICIS)–Shares of petrochemical firms in Asia were mostly trading slightly higher on Friday, with oil prices extending gains on hopes that demand will improve as more economies ease lockdown measures amid the coronavirus pandemic.

Stock Exchange Index/Company (as of 04:45 GMT) % change
Nikkei 225 (Japan) 0.09%
Asahi Kasei Corp 1.38%
JXTG Holdings 0.29%
Mitsubishi Chemical Holdings Corporation 0.69%
Mitsui Chemicals -3.15%
Hang Seng Index (Hong Kong) 0.40%
Sinopec Shanghai Petrochemical 0.00%
PetroChina 0.00%
KOSPI Composite Index (South Korea) 0.06%
OCI Company 0.26%
SK Innovation Co 1.92%
LG Chem 0.73%
Lotte Chemical Corp 0.54%
Hanwha Corporation 0.79%
TSEC weighted index (Taiwan) 0.35%
Formosa Petrochemical Corporation 0.35%
Nan Ya Plastics Corporation 0.32%
Formosa Chemicals & Fibre Corporation -0.41%
SET Index (Thailand) -0.01%
PTT Global Chemical Public Company 1.24%
IRPC Public Company 0.71%
Indorama Ventures Public Company 0.00%
Thai Oil Public Company 1.82%
Siam Cement Group -1.47%
STI Index (Singapore) 0.21%
Wilmar International -1.55%
Olam International 0.00%
FTSE Bursa Malaysia KLCI (Malaysia) 0.49%
Philippine Stock Exchange index -1.99%
SSE Composite Index (Shanghai, China) 0.27%

Source: Yahoo Finance

At midday, Brent crude was up 49 cents at $31.62/bbl, while US crude rose 24 cents to $27.80/bbl, following on strong gains overnight as the International Energy Agency (IEA) revised up its demand forecast for 2020.

IEA data showed that number of people in lockdown are now down to 2.8bn people from more than 4.1bn in early April.

Nonetheless, the projected 8.6m bbl/day decline in oil demand for 2020 still remains the largest on record for a single year.

Economic data out of Asia were mixed, with April industrial production in China posting a 3.9% year-on-year growth while Indonesia slipped into a trade deficit in April.

China was first to enter into a lockdown that paralyzed its economy and disrupted global supply chains in February.

“The economy continued to recover in April following February’s sharp contraction, with industrial value added rising on the year and investment momentum improving strongly,” Tommy Wu, lead economist at Oxford Economics said in a research note on Friday.

“We expect the ongoing global recession to weigh on China’s recovery. But its growth now relies largely on domestic demand,” Wu said.

The world’s second-biggest economy gradually emerged from lockdown in March just as the rest of the world was adopting the same draconian measure that plunged the global economy into a recession.

Indonesia, which is southeast Asia’s largest economy, posted a $350m trade deficit in April, with exports down 7.0% and imports falling 18.6%.

India, which has a 1.3bn population and is a giant emerging economy in Asia, is due to lift its nearly two months of nationwide lockdown on 17 May.

Its government recently announced a massive $266bn fiscal and monetary stimulus for the economy, with the first tranche meant to keep small enterprises afloat.

Concerns about a second wave of coronavirus infections had been weighing on investor sentiment in the previous sessions in Asia.

In China’s central city of Wuhan, where the outbreak is believed to have originated late last year, a campaign was launched to test all its 11m population for the deadly virus.

Globally, confirmed coronavirus cases as of 14 May stood at 4.26m, with 294,190 deaths, according to World Health Organization (WHO) data.

Overnight, US-listed shares of most chemical companies rose amid a healthy rally in oil prices.

Focus article by Pearl Bantillo

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

(Photo by Xinhua/Shutterstock)

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