Pockets of opportunity for regional chemical producers

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There are still pockets of opportunity for regional chemical producers such as Petronas Chemicals despite the ongoing US-China trade war, analysts opine.

KUCHING: There are still pockets of opportunity for regional chemical producers such as Petronas Chemicals Group Bhd (Petronas Chemicals) despite the ongoing US-China trade war, analysts opine.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) acknowledged that the ongoing trade war between US-China in general will have a negative impact globally especially on demand in the longer term should the trade war prolongs.

“However, we opine that pockets of opportunity remain in the midst of the trade war for regional chemical producers such as Petronas Chemicals,” MIDF Research said in a corporate update on the group.

“In terms of demand, we have observed that chemicals export from Malaysia to the rest of the world in monetary value remains relatively strong and similar to that of 2017 and 2018 – in some months, exports were also higher than that of 2017 which was pre-trade war.

“This is despite the softer year-over-year growth in the chemicals export compared to 2018 which signals that the demand for chemicals remains largely intact despite the geopolitical tensions.

“To date, chemicals remain the third largest Malaysian export at six per cent of total exports.”

The research arm also opined that the recently imposed 10 per cent tariff on Chinese goods could potentially lead to the following impact on petrochemical products: increase in product pricing for a broad range of chemical products and providing opportunities for Petronas Chemicals to produce new chemical products for the Chinese market due to the group’s wide range of petrochemical products.