Asia petrochemical shares mostly higher on recovery hopes

SINGAPORE (ICIS)–Asian petrochemical shares were mostly higher on Tuesday as muted action from US President Donald Trump on the dispute with China over Hong Kong raised further hopes of a global economic recovery.

Risk appetite in equity markets remained supported after global manufacturing data in May signaled some stabilisation from April lows as economies re-open.

At 03:15 GMT, Mitsui Chemicals was up by 0.99% in Tokyo, Lotte Chemical was 0.26% higher in Seoul and Nan Ya Plastics was up by 0.32% in Taipei.

Japan’s Nikkei 225 Index was up almost 1% and South Korea’s KOSPI Composite rose by 0.49%.

Company/Stock Exchange	% Change
Nikkei 225 (Tokyo)	0.99%
Asahi Kasei Corporation	2.60%
JXTG Holdings, Inc.	1.99%
Mitsubishi Chemical Holdings Corporation	-0.27%
Mitsui Chemicals, Inc.	0.27%
Hang Seng Index (Hong Kong)	0.47%
Sinopec Shanghai Petrochemical Company Limited	-0.51%
PetroChina Company Limited	-0.74%
KOSPI Composite Index (Seoul)	0.49%
OCI Company Ltd	1.40%
SK Innovation Co., Ltd.	0.00%
LG Chem, Ltd.	0.13%
Lotte Chemical Corporation	0.00%
Hanwha Corporation	-0.74%
TSEC weighted index (Taipei)	0.51%
Formosa Petrochemical Corporation	-0.11%
Nan Ya Plastics Corporation	0.32%
Formosa Chemicals & Fibre Corporation	0.41%
STI Index (Singapore)	1.01%
Wilmar International Limited	1.53%
Olam International Limited	0.00%
FTSE Bursa Malaysia KLCI (Kuala Lumpur)	-0.10%
SSE Composite Index (Shanghai)	-0.05%
Jakarta Composite Index	1.93%
PT. Chandra Asri Petrochemical Tbk	-0.34%

In Singapore, the benchmark Straits Times Index was up more than 1.06% following the end of the country’s soft lockdown called “circuit breaker” that was implemented to curb the spread of the deadly novel coronavirus.

South Korea’s central bank on Tuesday said that that the country’s economy posted a slower quarter-on-quarter contraction of 1.3% in January-March 2020, compared with 1.4% in the advanced estimate.

On a year-on-year basis, the country’s GDP posted a 1.4% growth in the first quarter, according to the Bank of Korea.

The South Korean government on Monday revised down its 2020 growth outlook to 0.1% from   the previous forecast of 2.4% set late last year.

Economic concerns have slightly eased, with manufacturing data in China returning to expansionary mode as indicated by Caixin’s May purchasing managers index (PMI) which registered a reading above 50.

“Markets are likely to be volatile in the coming days as the domestic protests and rising tensions between the US and China act as downside risks to the reopening economy,” Singapore’s OCBC Bank said in a note.

Overnight, US chemical stocks rose in tandem with broader equity markets after Asian equity indexes rallied across-the-board following Trump’s speech late last week which did not immediately lay out concrete steps to retaliate against China’s proposed new security law in Hong Kong.

Crude oil prices rose on Tuesday on expectations of an extension of the current supply cuts by OPEC and its allies when they meet later this week.

$/bbl (As of 02:40 GMT)	Last Price	% Change	Net Change	Close	High	Low
August Brent	38.51	0.50%	0.19	38.32	38.62	38.26
July US WTI	35.51	0.20%	0.07	35.44	35.66	35.28

“If OPEC+ can deliver on the reported extension, we expect Brent to possibly test $40/bbl,” OCBC Bank said.

Crude supply will continue to drop in June, as OPEC+ continues with production cuts of 9.7m bbl/day, according to ICIS senior analyst Ajay Parmar.

On top of this, Saudi Arabia is expected to implement an additional voluntary cut of 1m bbl/day in June, further adding to overall cuts, Parmar said.

Focus article by Nurluqman Suratman

Photo: Singapore is starting to ease its circuit breaker measures with the first phase being the reopening of some businesses and students from graduating cohorts returning to school. 2 June 2020 (By HOW HWEE YOUNG/EPA-EFE/Shutterstock)

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