Asia petrochemical shares, oil prices fall on fears of second virus wave

Author: Nurluqman Suratman

2020/06/15

SINGAPORE (ICIS)--Asian petrochemical shares were mostly lower while oil prices declined on Monday over renewed fears of a second coronavirus wave in view of recent spikes in new cases in the US and China.

At 02:50 GMT, LG Chem was down by more than 2% in Seoul, Sinopec Shanghai Petrochemical slipped by 0.50% in Hong Kong, while Asahi Kasei Corp was up 0.43% in Tokyo.

Japan's Nikkei 225 Index fell by 0.47%, Hong Kong's Hang Seng Index was 0.41% lower and Singapore's Straits Times Index was down by 1.30%.

Company/Stock Exchange % Change
Nikkei 225 (Tokyo) -0.57%
Asahi Kasei Corp 0.43%
JXTG Holdings, Inc 0.25%
Mitsubishi Chemical Holdings Corp 2.28%
Mitsui Chemicals, Inc 2.14%
Hang Seng Index (Hong Kong) -0.41%
Sinopec Shanghai Petrochemical -0.50%
PetroChina 0.00%
KOSPI Composite Index (Seoul) -0.25%
OCI Company 0.26%
SK Innovation -0.87%
LG Chem -2.16%
Lotte Chemical Corp -3.12%
Hanwha Corp -1.42%
TSEC weighted index (Taipei) 0.28%
Formosa Petrochemical Corp 0.11%
Nan Ya Plastics Corp 0.00%
Formosa Chemicals & Fibre Corp 0.00%
STI Index (Singapore) -1.29%
Wilmar International -0.13%
Olam International 0.69%
FTSE Bursa Malaysia KLCI (Kuala Lumpur) -1.04%
SSE Composite Index (Shanghai) 0.03%
Jakarta Composite Index 0.72%
PT. Chandra Asri Petrochemical Tbk -0.74%
SET Index (Thailand) -1.02%
PTT Global Chemical -2.67%
Indorama Ventures -1.71%
IRPC -2.82%
The Siam Cement -1.65%
Thai Oil -3.26%

In Malaysia, PETRONAS Chemicals Group, which has a joint venture mega refinery and petrochemical project in Johor with Saudi Aramco, was down 5.97% on Monday.

Oil giant Saudi Aramco on Sunday bought 2.1bn shares of SABIC based on four transactions executed on the Saudi bourse, completing its acquisition of a 70% stake in the listed petrochemical major, according to media reports.

SABIC's acquisition is in line with Saudi Aramco’s long-term strategy to drive growth through an enhanced downstream portfolio by increasing global participated refining capacity from 4.9m to 8-10m bbl/day by 2030, of which 2m-3m bbl/day will be converted into petrochemical products.

Investor sentiment in Asia is weighed heavily by rising virus cases in the world's two biggest economies.

"US COVID-19 [coronavirus disease] remains on the radar as infection cases topped 2m … while many states like Texas, Arizona, Florida, North Carolina, are experiencing rising COVID-19 infection increasing ICU [intensive care unit] utilization [at hospitals], even as the states are undertaking plans to reopen their economies," Singapore-based UOB Global Economics & Markets Research said.

Global cases of the coronavirus are approaching 8m, with India's cases surpassing 300,000 on Sunday, according to latest World Health Organization (WHO) data.

China on 13 June imposed lockdowns in parts of Beijing following evidence of a new virus cluster at one of its districts.

The Beijing outbreak has spread to the neighbouring northeastern province of Liaoning, with at least least 10 cities, including Harbin and Dalian, urging residents not to travel to the capital, according to media reports.

On 12 June, most US-listed shares of chemical companies recovered a portion of their losses following a large sell-off the previous day.

Risk appetite took a dip last week after US Federal Reserve’s less-than-optimistic outlook for an economic recovery and a jump in US coronavirus cases.

Investors are also keeping an eye on tensions between South Korea and North Korea.

Kim Yo Jong, the sister of North Korean dictator Kim Jung Un, on 13 June said that Pyongyang will take “action” against Seoul in retaliation for the anti-Pyongyang leaflets that were sent over the North-South Korean border.

Oil prices extended the losses on Monday as a second wave of virus infections in the US could threaten any demand recovery.

$/bbl (As of 03:04 GMT) Last Price % Change Net Change Close High Low
August Brent 37.84 -2.30% -0.89 38.73 38.8 37.56
July US WTI 35.07 -3.28% -1.19 36.26 36.12 34.78

OPEC+’s Joint Technical Committee is scheduled to hold an online meeting on 17 June, in which a panel of experts will advise on output cuts following the one-month extension of record curbs through July.

Focus article by Nurluqman Suratman

Photo: China is reporting its highest daily total of coronavirus cases in two months after the capital's biggest wholesale food market was shut down following a resurgence in local infections. 14 June 2020 (Photo by Andy Wong/AP/Shutterstock)

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

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