Asia petrochemical shares, oil tumble as global virus cases exceed 10m

SINGAPORE (ICIS)–Asian petrochemical shares tumbled along with oil prices on Monday as confirmed coronavirus cases across the globe surpassed 10m, with the US as the worst-hit country.

Tensions between the US and China over the proposed national security law for Hong Kong are also weighing on investor sentiment.

At 03:05 GMT, Mitsui Chemicals was down by 1.92% in Tokyo, Lotte Chemical Corp fell by more than 3% in Seoul and Formosa Petrochemical Corp was 1.46% lower in Taipei.

Japan’s Nikkei 225 Index was down by 1.32%, South Korea’s KOSPI Composite Index fell by 1.21% and Singapore’s Straits Times Index slipped by 0.60%.

Company/Stock Exchange	% Change
Nikkei 225 (Tokyo)	-1.32%
Asahi Kasei Corp	-1.52%
JXTG Holdings, Inc	-0.86%
Mitsubishi Chemical Holdings Corp	-1.77%
Mitsui Chemicals, Inc	-1.82%
Hang Seng Index (Hong Kong)	-0.70%
Sinopec Shanghai Petrochemical	-0.53%
PetroChina	-1.15%
KOSPI Composite Index (Seoul)	-1.21%
OCI Company	-2.56%
SK Innovation	-1.04%
LG Chem	-1.40%
Lotte Chemical Corp	-3.20%
Hanwha Corp	-2.73%
TSEC weighted index (Taipei)	–0.81%
Formosa Petrochemical Corp	-1.46%
Nan Ya Plastics Corp	-1.24%
Formosa Chemicals & Fibre Corp	-0.40%
STI Index (Singapore)	-0.59%
Wilmar International	-1.92%
Olam International	-0.71%
FTSE Bursa Malaysia KLCI (Kuala Lumpur)	-0.50%
SSE Composite Index (Shanghai)	-0.58%
Jakarta Composite Index	-0.56%
PT. Chandra Asri Petrochemical Tbk	-1.16%
SET Index (Thailand)	0.34%
PTT Global Chemical	-0.55%
Indorama Ventures	-1.85%
IRPC	-0.76%
The Siam Cement	1.94%
Thai Oil	-1.16%

Oil prices fell on concerns over demand amid the unabated surge in coronavirus infections, with the global death toll now at more than half a million.

$/bbl (As of 03:20 GMT)	Last Price	% Change	Net Change	Close	High	Low
Aug Brent	40.24	-1.90%	-0.78	41.02	40.71	40.07
Aug US WTI	37.75	-1.92%	-0.74	38.49	38.19	37.58

The US has a quarter share of both the total number of confirmed cases, as well as deaths, according to latest data from Johns Hopkins University.

The novel coronavirus outbreak is believed to have started in China’s central city of Wuhan in late 2019 and has since spread globally.

On Sunday, confirmed infections in the US leapt by more than 40,000, bringing the total at more than 2.5m.

Oversupply worries also hound oil markets as crude production in the world’s biggest economy posted an increase, the first in 14 weeks, according to latest US Energy Information Administration (EIA) weekly supply estimates.

US crude output rose to 11m bbl/day in the week ended 19 June from 10.5m bbl/day in the previous week, indicating that prices are now healthy enough to encourage the return of marginal producers, Singapore’s OCBC Bank said in a note.

“The market appears to be balancing itself, with the high prices encouraging a supply comeback in the US,” it said.

Fresh coronavirus outbreaks are also reported in countries including New Zealand and Australia, prompting their governments to re-impose coronavirus restrictions, while India and Brazil are battling outbreaks of over 10,000 cases daily.

Equities and commodities investors are also keeping an eye on developments on the proposed national security law for Hong Kong.

China’s National People’s Congress Standing Committee has a scheduled meeting on 28-30 June, in which draft of the proposed law is expected to be passed ahead of Hong Kong SAR (Special Administrative Region) Establishment Day on 1 July.

China demanded on 27 June that the US government retract its decision to restrict visas on Chinese officials deemed responsible for undermining Hong Kong’s autonomy and freedoms.

Data released on Sunday showed a surprise rebound in China’s industrial profits in May, rising for the first time in six months.

China’s industrial profits for the month rose 6.0% year on year, reversing the 4.3% contraction in April, backed by higher profit at the refining, power, chemical and steel sectors.

Focus article by Nurluqman Suratman

Photo: US senator Charles Schumer calls on the Trump administration to extend the nation’s public health emergency declaration amid the pandemic.
28 June 2020 (Photo by Lev Radin/Pacific Press/Shutterstock)

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