SINGAPORE (ICIS)--Shares of major petrochemical companies in Asia were mixed on Friday afternoon amid concerns that an outright trade war between the world’s two biggest economies has begun.
China’s Ministry of Commerce said the US has just launched the “largest trade war in economic history”, when the latter’s tariffs on $34bn worth of Chinese goods took effect at midday, noting that China will be forced to retaliate.
At 05:15 GMT, South Korea’s Lotte Chemical was up by 0.76%, while LG Chem rose by 0.78% as the key Korea Stock Exchange KOSPI Index rose by 0.92% to 2,278.31.
In Hong Kong, Chinese state-owned refining and chemicals giant Sinopec Shanghai Petrochemicals was 1.07% lower, while PetroChina was up by 0.70%.
In Taiwan, Formosa Petrochemical Corp (FPCC) was 2.52% lower, while Nan Ya Plastics was down by 1.02%.
In southeast Asia, PETRONAS Chemicals Group (PCG) slipped by 0.24% in Malaysia, while oleochemicals producer Olam International was down by 0.47% in Singapore.
In Japan, Asahi Kasei was up 1.29% and Mitsubishi Chemical up 2.20% as the Nikkei 225 benchmark was up by 1.29% at 21,823.89.
The US move was in violation of the World Trade Organisation (WTO) rules, the Chinese ministry said in a statement.
“China promised not to shoot the first shot, but in order to safeguard the core interests of the state and the interests of the masses, it had to be forced to make the necessary counter attack,” the MOC said.
“We will inform the WTO in a timely manner about the relevant circumstances and work together with other countries to safeguard free trade and multilateral institutions,” it said.
The US tariffs on the initial $34bn Chinese goods were implemented from 00:01 Washington time (04:01 GMT) on Friday. US President Donald Trump said late on Thursday that another round of US tariffs on additional $16bn worth of Chinese goods are expected to go into effect in two weeks.
Further tariffs could be imposed on up to $500bn more Chinese goods in subsequent rounds, Reuters reported, quoting Trump.
“You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300,” Trump was quoted as saying to reporters aboard Air Force One on Thursday.
In mid-June, Trump had said that the US is looking at imposing tariffs on additional $200bn worth of Chinese goods, which would cover a huge swath of chemical and petrochemical products.
Based on the minutes meeting released by the US Federal Bank’s Federal Open Market Committee (FOMC) early in the week week, “many district contacts expressed concern about trade policy with some indicating that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy”.
“Participants noted that uncertainty and risks associated with trade policy has intensified and were concerned that these could have adverse impact on business sentiments and investment spending,” the committee noted.
Additional reporting by Pearl Bantillo and Fanny Zhang
Picture: Shipping freighters at sunset. (Source: Design Pics Inc/REX/Shutterstock)