Asia petrochemical shares, oil slump on renewed global recession worries

SINGAPORE (ICIS)–Asian petrochemical shares fell along with oil prices on Thursday following warnings of an unprecedented global recession.

Oil prices fell by more than $1/bbl, further weighed down by record-high crude inventory levels in the US.

At 02:53 GMT, Asahi Kasei was down 3.59% in Tokyo, Hanwha Corp was down by 5.55% in Seoul and PetroChina fell by 2.47% in Hong Kong.

Japan’s Nikkei 225 Index fell by 1.05%, Hong Kong’s Hang Seng Index slipped by 0.41% and Singapore’s Straits Times Index was 1.86% lower.

Company/Stock Exchange	% Change
Nikkei 225 (Tokyo)	-1.05%
Asahi Kasei Corp	-3.59%
JXTG Holdings, Inc	-2.49%
Mitsubishi Chemical Holdings Corp	-2.15%
Mitsui Chemicals, Inc	-2.42%
Hang Seng Index (Hong Kong)	-0.46%
Sinopec Shanghai Petrochemical	-0.95%
PetroChina	-2.47%
KOSPI Composite Index (Seoul)	-0.05%
OCI Company	-1.55%
SK Innovation	-2.81%
LG Chem	5.11%
Lotte Chemical Corp	-1.33%
Hanwha Corp	-5.55%
TSEC weighted index (Taipei)	0.05%
Formosa Petrochemical Corp	-1.66%
Nan Ya Plastics Corp	-0.59%
Formosa Chemicals & Fibre Corp	-0.78%
STI Index (Singapore)	-1.86%
Wilmar International	-1.24%
Olam International	0.00%
FTSE Bursa Malaysia KLCI (Kuala Lumpur)	0.06%
SSE Composite Index (Shanghai)	-0.17%
Jakarta Composite Index	-0.18%
PT. Chandra Asri Petrochemical Tbk	-0.72%
SET Index (Thailand)	0.74%
PTT Global Chemical	0.51%
Indorama Ventures	-1.63%
IRPC	0.70%
The Siam Cement	1.36%
Thai Oil	1.61%

Overnight, most US-listed shares of chemical companies followed by ICIS fell after the US Federal Reserve projected the US economy will shrink by 6.5% in 2020 before posting a 5% growth next year.

The Fed made no policy changes, as expected, and pledged to continue its asset purchases aimed at stabilising a US economy that has been ravaged by the coronavirus pandemic.

Risk sentiment was further weighed down by a report from the Organisation for Economic Co-operation and Development (OECD) which forecasts a 7.6% slump in global GDP if a second coronavirus outbreak takes hold by the end of the year.

OECD’s warning follows the World Bank’s assessment that the global recession will be almost three times as steep as that in 2009, and the deepest since the Second World War.

“The recent optimism surrounding reopening of the global economy had
waned; in fact the OECD warned that a second Covid-19 [coronavirus disease] wave would deal a severe blow to the expected economic recovery in 2021,” Malaysia’s HongLeong Bank said in a note.

Oil prices were under pressure on Thursday after weekly data from the US Energy Information Administration showed an unexpected rise in oil inventories, reviving worries of a persistent glut due to weak demand.

$/bbl (As of 03:07 GMT)	Last Price	% Change	Net Change	Close	High	Low
August Brent	40.69	-2.49%	-1.04	41.73	41.01	40.62
July US WTI	38.48	-2.83%	-1.12	39.6	39.09	38.42

US crude inventories rose unexpectedly by 5.7m barrels in the week to 5 June to a record 538.1m barrels.

Concerns about a second wave of coronavirus cases hampering oil demand also weighed on sentiment as states across the US re-opens.

The novel coronavirus outbreak started late last year in China and has since spread globally.

The global tally of confirmed cases has topped 7.1m with more than 400,000 deaths, according to latest data from the World Health Organization (WHO).

Focus article by Nurluqman Suratman

Photo: Street scene in Japan after the lifting of the country’s state of emergency amid the coronavirus pandemic. 2 June 2020 (By Stanislav Kogiku/SOPA Images/Shutterstock)

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