Singapore May petrochemical exports rise 6.5%, NODX slips 0.1%

SINGAPORE (ICIS)–Singapore’s petrochemical exports rose by 6.5% year on year to Singapore dollar (S$) 1.18 billion in May, while overall non-oil domestic exports (NODX) dipped, official data showed on Tuesday.

The country’s NODX slipped by 0.1% year on year to S$14.3 billion in May, extending the 9.6% decline in April, Enterprise Singapore data showed.

Singapore’s NODX highlights differing economic trends between advanced economies and China, Jester Koh, associate economist at Singapore-based UOB Global Economics & Markets Research, said in a note on Tuesday.

“Singapore’s NODX by key markets somewhat reflects the asynchronous growth path between advanced economies (namely the US and Eurozone) versus China,” he said.

“NODX to China remained resilient… which is consistent with the stronger than expected Q1 2024 GDP although we remain circumspect on the outlook given the weaker than expected industrial production and fixed asset investment data in May while both new and used home prices continued to contract,” he said.

NODX to the US and EU experienced significant declines in May, likely due to the impact of higher interest rates on investment and consumer spending, Koh noted.

Singapore’s non-electronic NODX, which includes pharmaceuticals and petrochemicals, fell by 6.0% year on year to S$10.6 billion in May following the 12.6% contraction in April.

Singapore’s non-electronic NODX to its top 10 markets were mixed in May, with shipments to China slumping by 24.3%.

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

The continued growth in petrochemical shipments abroad tracked the improvement in the country’s overall factory activity in May.

The purchasing managers’ index (PMI) edged up to 50.6, a 0.1 point gain from the previous month, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on 3 June. This was the ninth straight month that it remained in expansionary territory.

A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction.

The improvements in the new orders (May: 52.0, April: 51.7), new export orders (May: 51.3, April: 51.0) and output (May: 50.9, April: 50.6) sub-indices suggest that underlying end-demand fundamentals remain intact, UOB’s Koh said.

“The anticipated easing of financial conditions towards the latter half of the year as central banks in major advanced economies begin to reduce policy rates could provide some tailwinds to global investment and consumption activity,” he added.

Meanwhile, supplier delivery times likely rose in May after vessels were diverted around the Cape of Good Hope, away from the Red Sea, to avoid ongoing conflicts, according to Koh.

This rerouting led to an increase in nautical miles and longer sailing times as corroborated by the decline in the supplier deliveries subindices for May, he said.

The overall supplier deliveries PMI sub-index slipped to 50.3 in May from April’s 50.4.

“The recent port congestion in Singapore may have been further exacerbated by the announced increase in import tariffs by the US to target Chinese exports in strategic sectors such as semiconductors, EVs, batteries and solar cells as exporters scramble to ship goods to the US ahead of the 1 Aug 2024 implementation timeline for some export categories,” Koh added.

Separately, Singapore’s port authorities are still dealing with an oil spill that occurred after a dredger collided with Singapore-flagged bunker vessel Marine Honour at the Pasir Panjang Terminal on 14 June.

In its latest update on 17 June, the Maritime Port Authority (MPA) of Singapore said that oil recovery assets have been deployed today to skim and collect the remaining oil spillage off the water surface to minimise further spread of the oil.

Port operations have not been affected by the incident, according to the MPA.

Focus article by Nurluqman Suratman