Asia petrochemical shares, oil prices rise on further easing of lockdowns

Nurluqman Suratman

18-May-2020

SINGAPORE (ICIS)–Asian petrochemical shares rose on Monday in cautious trade, while oil prices surged by more than $1/bbl as more countries are gradually lifting coronavirus-related restrictions on business activity and people movement.

At 02:55 GMT, JXTG Holdings was up by close to 2% in Tokyo, Formosa Petrochemical Corp was up more than 2% in Taipei and LG Chem rose by 2.60% in Seoul.

Japan’s benchmark Nikkei 225 Index rose by 0.70%, the Hong Kong Hang Seng Index was up by 0.54% and South Korea’s KOSPI Composite Index was 0.62% higher.

Company/Stock Exchange % Change
Nikkei 225 (Tokyo) 0.70%
Asahi Kasei Corporation 0.72%
JXTG Holdings, Inc. 1.85%
Mitsubishi Chemical Holdings Corporation -2.05%
Mitsui Chemicals, Inc. 0.58%
Hang Seng Index (Hong Kong) 0.54%
Sinopec Shanghai Petrochemical Company Limited 2.50%
PetroChina Company Limited 3.91%
KOSPI Composite Index (Seoul) 0.62%
OCI Company Ltd 0.79%
SK Innovation Co., Ltd. 0.85%
LG Chem, Ltd. 2.60%
Lotte Chemical Corporation -0.27%
Hanwha Corporation 0.53%
TSEC weighted index (Taipei) -0.21%
Formosa Petrochemical Corporation 2.31%
Nan Ya Plastics Corporation 0.48%
Formosa Chemicals & Fibre Corporation 0.28%
STI Index (Singapore) 0.70%
Wilmar International Limited -0.26%
Olam International Limited 0.67%
FTSE Bursa Malaysia KLCI (Kuala Lumpur) 0.24%
SSE Composite Index (Shanghai) 0.42%
Jakarta Composite Index 0.22%

The total number of coronavirus cases has grown to more than 4.5m, with more than 300,000 deaths, according to latest data from the World Health Organization.

“Fear and greed may continue to battle for the mindshare of investors as US-China trade tensions return to the fore amid growing concerns that key nations are also racing to obtain first rights to any Covid-19 [coronavirus disease] vaccine,” Singapore’s OCBC Bank said in a note.

China’s commerce ministry on Sunday said that it is opposed to the latest rules by the US against one of Chinese telecoms equipment giant Huawei Technologies and will take all necessary measures to safeguard Chinese firms’ rights and interests.

The US has reportedly moved to block global chip supplies to Huawei which went into effect on 15 May with a 120-day grace period.

Economic data out of Asia were mixed on Monday, with Japan’s economy slipping into a recession, while Singapore posted a third consecutive month of export growth in April.

The world’s third-biggest economy posted a 3.4% year-on-year contraction in the first quarter of 2020 after shrinking 7.3% in the previous quarter.

Japan has been under a state of emergency since April, but restrictions on some prefectures are gradually being lifted.

Neighbouring China and South Korea have requested Japan to allow business travel.

Singapore reported a 9.7% year-on-year growth in its April non-oil domestic exports (NODX), but petrochemical shipments slumped 25%, falling for the 20th consecutive month.

On 15 May, China reported a surprise 3.9% year-on-year increase in April industrial production, reversing the 1.1% fall recorded in March.

India has extended its lockdown until 31 May even as more economies in the west such as Italy, Belgium and Portugal prepare to lift some coronavirus-related restrictions.

Oil prices rose by more than $1/bbl early on Monday, supported by hopes of improved demand as more countries ease coronavirus lockdown measures and amid ongoing output cuts by major producers.

$/bbl (As of 03:05 GMT) Last price % change Net change Close High Low
July Brent 33.7 3.69% 1.2 32.5 33.89 32.69
June US TWI 30.75 4.49% 1.32 29.43 30.83 29.53

The June WTI contract expires on Tuesday.

Focus article by Nurluqman Suratman

Photo:  View of Shinjuku business and entertainment district on a rainy day in Tokyo, Japan, 1 April 2020. (By FRANCK ROBICHON/EPA-EFE/Shutterstock)

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