Asia petrochemical shares, oil slump as China sets no 2020 GDP goal

Author: Pearl Bantillo

2020/05/22

SINGAPORE (ICIS)--Shares of petrochemical firms in Asia slumped along with oil prices on Friday on heightened concerns about demand after China skipped setting a GDP goal for the first time in 30 years.

Consumption of many plastics in the region is expected to stay limited, with supply outstripping demand, as uncertainties cloud global economic prospects even as more countries are emerging from pandemic-induced lockdowns.

Company/Stock Exchange (as at 04:30 GMT) % Change
Nikkei 225 (Japan) -0.82%
Asahi Kasei Corporation -1.61%
JXTG Holdings, Inc. -1.44%
Mitsubishi Chemical Holdings Corporation -1.37%
Mitsui Chemicals, Inc. -2.54%
Hang Seng Index (Hong Kong) -4.61%
Sinopec Shanghai Petrochemical Company Limited -5.88%
PetroChina Company Limited -5.86%
KOSPI Composite Index (South Korea) -1.48%
OCI Company Ltd -5.20%
SK Innovation Co., Ltd. -3.76%
LG Chem, Ltd. -0.13%
Lotte Chemical Corporation -3.44%
Hanwha Corporation -2.54%
TSEC weighted index (Taiwan) -1.53%
Formosa Petrochemical Corporation -1.74%
Nan Ya Plastics Corporation -2.03%
Formosa Chemicals & Fibre Corporation -1.49%
STI Index (Singapore) -1.99%
Wilmar International Limited -0.52%
FTSE Bursa Malaysia KLCI (Malaysia) -0.65%
SSE Composite Index (Shanghai, China) -1.31%
Jakarta Islamic Index (Indonesia) -1.16%
PSE Index (Philippines) -1.10%
SET index (Thailand) -1.85%
PTT Global Chemical -4.44%
Siam Cement -1.45%

Source: Yahoo Finance

At midday, Brent crude was down $1.43/bbl at $34.63/bbl, while US crude was down $1.97/bbl at $31.95/bbl, on worries over global oil demand after China decided not to set a GDP growth target for the first time since 1990 amid the economic devastation being wrought by the pandemic.

There is a possibility that the world’s second-biggest economy and Asia’s largest would post a full-year contraction in 2020, although the International Monetary Fund (IMF) forecasts that China could pull off a 1.2% growth.

The Chinese government will focus instead on providing stimulus to support the economy, country Premiere Li Keqiang said on Friday before members of China’s National People’s Congress (NPC) on the first day of the parliament's annual session.

NPC's annual session is usually held in early March, but was postponed  because of the coronavirus outbreak, which started late last year in the Chinese central city of Wuhan.

Japan’s central bank, in an emergency monetary policy meeting on Friday, maintained its key interest rate at minus 0.1%, while it launched a new lending facility for small and medium enterprises hit hard by the coronavirus pandemic.

The country’s core consumer price index, which excludes fresh food prices, showed a deflation of 0.2% year on year, with the index posting its first decline since December 2016.

Japan, which is the world’s third-biggest economy is in recession after posting two consecutive quarter of GDP contraction, and is bracing for a deeper downturn in April to June 2020.

Overnight, US-listed chemical shares were mixed as oil prices rose while general stock markets fell, along with general markets after signs of rising tensions between global economic giants China and the US.

The US - whose economy is widely expected to suffer a heavy blow as it has the highest number of coronavirus cases globally - reported weekly jobless claims of 2.44m, down 249,000 from the previous week.

No vaccine has yet been fully developed against the novel coronavirus disease, which originated late last year in China and is now on its fifth month of deadly rampage across the globe.

As of 21 May, the global tally of coronavirus infections stood at more than 4.9m, with over 323,412 deaths, according to data from the World Health Organisation (WHO).

Additional reporting by Felicia Loo, James Dennis and Fanny Zhang

Focus article by Pearl Bantillo

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

(Image credit: Amer Ghazzal/REX/Shutterstock)