Asia petrochemical shares tumble on global growth worries; oil extends losses

SINGAPORE (ICIS)–Asian petrochemical shares tumbled in early trade on Wednesday as regional bourses tracked Wall Street’s rout overnight following lackluster manufacturing data from both the US and China, with crude prices extending declines.

• Major US equity indexes suffer worst session since 5 August
• China August export orders decline for first time in eight months
• Crude benchmarks fall amid easing Libya supply concerns

At 03:20 GMT, Mitsui Chemicals was down close to 2% and Sumitomo Chemical tumbled by more than 3% in Tokyo, as the benchmark Nikkei 225 shed 3.83% to 37,405.59.

In Seoul, LG Chem fell by more than 2%, with South Korea’s KOSPI Index slumping 2.48%.

In Hong Kong, PetroChina was down more than 4% as the Hang Seng Index slipped 0.69%.

In Kuala Lumpur, PETRONAS Chemicals Group (PCG) slipped by 0.36% with the stock market index slipped 0.25%.

Major US equity indexes overnight posted their worst session since the global sell-off on 5 August this year, as financial markets evaluated economic data from the US and China.

The Dow Jones Industrial Average tumbled by 1.51%, the S&P 500 fell by 2.12%, and the Nasdaq Composite closed 3.26% lower.

US, CHINA DATA STOKE SLOWDOWN WORRIES 
In the US, the Institute for Supply Management (ISM) monthly survey of purchasing managers showed a reading of 47.2, below the 50 breakeven point for expansion of activity for the fifth straight month.

Separately, the final S&P Global US manufacturing PMI reading for August was at 47.9, down from 49.6 in July. The latest reading was the lowest since last December and signaled a second consecutive month of deteriorating manufacturing conditions.

Meanwhile, China released economic data on 31 August indicating a decline in export orders, the first such decrease in eight months.

China’s factories remained in contraction mode, with August official manufacturing PMI posting a reading of below 50 for the fourth consecutive month.

Additionally, data on 1 September showed that China’s new home prices increased at their slowest pace of the year during August.

The average price for new homes across 100 cities in the country edged up 0.11% from July, slowing from the 0.13% rise in June this year, according to data from property researcher China Index Academy.

OIL PRICES CONTINUE LOWER
Crude benchmarks continued lower on Wednesday after falling to their lowest this year in the previous session on signs of a deal to resolve a dispute that has stopped Libyan crude production and exports.

Libya’s move to appoint a new central bank governor signals progress in resolving recent challenges, but this development, coupled with the resumption of Libyan oil production and OPEC+’s planned output increase, could lead to an oversupply of oil, putting downward pressure on crude prices.

Focus article by Nurluqman Suratman

Thumbnail image: At Yantai Port in China on 2 September 2024. (Source: Costfoto/NurPhoto/Shutterstock)