KUALA LUMPUR, April 27 ― CGS-CIMB Research has reiterated its “overweight” call on the Malaysian petrochemical sector, with “add” calls for Petronas Chemicals Group Bhd (PCG) and Lotte Chemical Titan Holding Bhd (LCT).
In a research note today, the stockbroker said potential catalysts for the local petrochemical sector include stronger results for PCG and LCT, where the financial year 2021 core net profit forecasts were 33 per cent and 55 per cent above consensus, respectively.
“Asian polymer prices have moderated in April but remain very high overall. Spreads versus naphtha remain high due to naphtha price weakness,” it added.
CGS-CIMB said Asian exports of polymers to the US have increased, but with congestion at the ports of Los Angeles/Long Beach, arrival takes between 30 and 45 days.
In contrast to the high/rising prices seen in the US and Europe, Asian polyethylene (PE) and polypropylene (PP) prices were 4.0 per cent to 7.0 per cent weaker in April compared to March due to the passing of the peak season in China, and the reluctance of converters to buy polymers at high prices in excess of their immediate requirements.
“Asian exporters have not been able to take full advantage of the polymer shortages in the US and Europe due to the shortage of container boxes and high container freight rates.
“And due to the nature of the polymer markets in the US and Europe, which are largely based on contractual supplies from vetted sellers that are deeply invested in the local logistics,” said CGS-CIMB Research.
At 11.22am, PCG’s shares were flat at RM7.91 with 89,700 shares traded, while LCT rose 93 sen to RM2.84 with 3.66 million shares changed hands. ― Bernama
