Asian chemical markets need to be vigilant
At the time when China's new crown pneumonia has been gradually controlled, the epidemic situation of new crown pneumonia in other Asian countries and regions has spread. As of February 20, Beijing time, 728 cases of new coronary pneumonia have been confirmed in Japan, excluding 94 local cases of "Diamond Princess", 104 cases in South Korea and 85 cases in Singapore. These numbers are significantly higher than last week. In addition, given the early stages of the epidemic, it is difficult for health authorities in various countries to accurately detect cases, and the actual situation may be even less optimistic. The World Health Organization (WHO) also said that although the total number of infections outside China is currently very low, this situation may not last long.
If Japan, South Korea and Singapore, three relatively developed countries in Asia, the outbreak of the new crown pneumonia outbreak, it will pose a great challenge to the chemical market in Asia and even the world.
First of all, Japan, South Korea and Singapore are all strong chemical producers, and Singapore is the world's third largest refining center. If the outbreak affects chemical production, it will have a significant impact on the general chemical market in Asia alone, and it will be a disaster for the specialty chemical market. For example, in Japan last year, Japan restricted its exports of three types of high-end electronic materials, which caused a heavy blow to the Korean semiconductor industry, which fully illustrates Japan's industrial chain advantages in high-end materials. If the Japanese chemical industry encounters a crisis due to the epidemic, important downstream industries of specialty chemicals, such as the semiconductor industry, aircraft manufacturing, and automobile industry, will have a significant impact or even be paralyzed.
Secondly, Japan, South Korea and Singapore are all important chemical consumer countries. If the epidemic causes market consumption to shrink, chemical companies in the three countries will definitely have a hard time. In 2019, due to global economic uncertainty and shrinking international market prices, chemical companies in Japan and South Korea generally saw a decline in net profit. As these chemical companies plan to improve their situation in 2020, the epidemic of new crown pneumonia directly caused a further downturn in the international chemical product market. Since the outbreak of China, the market price of ethylene in Northeast Asia has dropped from US $ 835 / ton on January 21 to US $ 705 / ton on February 20 (both CFR). For Japanese and South Korean chemical companies that are suffering from shrinking chemical prices, the current situation is worse. If the local market shrinks again, it will no longer be a worse situation that can be described as worse.
Finally, Singapore is an important trading hub for petrochemical products in Asia and the world, as well as a gathering place for chemical market information and services. If the outbreak in Singapore would cause extremely significant losses to the chemical trade and services throughout Asia, the business activities of enterprises would face even more severe challenges.