Singapore Aug petrochemical export fall narrows; China demand may rebound

SINGAPORE (ICIS)–Singapore’s petrochemical exports declined for the 12th month although the rate of contraction has narrowed to a single-digit level in August, possibly indicating that the worst may be over in view of upbeat China data.

The southeast Asian country’s petrochemical exports in August fell by 7.1% year on year to Singapore dollar (S$) 1.29bn ($949m), weighing on overall non-oil domestic exports (NODX) which have now contracted for the 11th straight month, official data showed on Monday.

NODX for the month fell by 20.1% year on year to S$14bn, following a 20.3% decline in July, according to Enterprise Singapore.

Source: Enterprise Singapore

Exports to nine of Singapore’s top 10 markets declined in August, with Indonesia as the only exception.

The largest contributors to the decline in NODX last month were the EU, US and China.

Non-electronics NODX, which includes pharmaceuticals and chemicals, fell by 19.9% year on year to S$11bn in August following an 18.5% contraction in July.

Singapore is a major petrochemicals manufacturer and exporter in southeast Asia. Its petrochemicals hub Jurong Island houses over 100 global chemical firms, including energy majors ExxonMobil and Shell.

EARLY SIGNS OF DEMAND REVIVAL FROM CHINA
Major economic data from China, Singapore’s largest export market, improved in August, pointing to early signs of a potential rebound in demand.

China’s industrial production in August inched up by 0.5% month on month on a seasonally adjusted basis, while fixed asset investment rose by 0.3% over the same period.

“Manufacturing output growth was robust for equipment and high-tech manufacturing,” Singapore-based OCBC Bank said in a note.

China’s raw materials manufacturing accelerated in August, which could signal the start of a new inventory cycle, the bank said.

“We have been talking about China’s destocking cycle for a while, and this is now beginning to reflect in the data,” OCBC said.

Major southeast Asian economies’ exports to China, including Singapore, are showing Showing “distinct signs” that they are close to their lowest points and may soon recover, according to Singapore-based DBS Group Research.

“The rebound is most evident for Vietnam, with its strong linkage to China through the electronics and machinery supply chain, but five other ASEAN countries are also showing some promise,” the firm said, referring to Singapore, Indonesia, Malaysia, Philippines, Thailand.

Singapore’s Ministry of Trade and Industry last month trimmed its 2023 growth forecast to 0.5% to 1.5% from 0.5% to 2.5% previously.

Focus article by Nurluqman Suratman

Thumbnail image: Singapore’s Tanjong Pagar Port with Sentosa Island in the background, on 2 July 2022. (By Joseph Nair/NurPhoto/Shutterstock)