Broker recommends switching from refinery stocks to petrochemicals, picking IVL and PTTGC

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Bualuang Securities reported that the average Dubai price last week fell 11.84 US dollars per barrel week-on-week to 113.06 US dollars per barrel, driven by expectations for negotiations to end the US-Iran war and by rising supply after Saudi Arabia restored the East-West pipeline. Meanwhile, Singapore refining margins recovered 3.17 US dollars per barrel week-on-week but remained negative at -1.44 US dollars per barrel. The highlight this week was a sharp rebound in petrochemical price spreads across every product tracked: Ethylene rose 34 US dollars per tonne to 278 US dollars per tonne, Propylene gained 19 to 283 US dollars per tonne, HDPE gained 94 to 423 US dollars per tonne, and PP gained 164 to 523 US dollars per tonne, a recovery more pronounced than in the energy group this week. On coal, the NEX price rose 1 percent week-on-week to 143.92 US dollars per tonne. Dry bulk freight rates improved, with the BDI up 2 percent week-on-week to 3,432 points and the Supramax index, a key indicator for PSL and TTA, up 2 percent to 1,779 points, while the World Container Index fell 1 percent week-on-week to 4,468 points. Given that refinery share prices have already priced in a high level of refining margins, the recommendation remains to switch from refinery stocks into petrochemicals, choosing IVL and PTTGC. The Red Sea blockade also continues to support freight rates and opens short-term trading opportunities in shipping stocks. The brokerage maintains an equal weight on the energy group, an overweight on petrochemicals, and an underweight on shipping.

Impact on assets 4

Critical Materials & Supply Chain▲ · 1 stocks
Indorama Ventures PCL
IVL
▲ PositiveDemandrelevance

Brokerage recommends switching into petrochemicals and picks IVL, citing sharply rebounding petrochemical price spreads (ethylene, propylene, HDPE, PP).

Materials▲ · 1 stocks
Industrials▲ · 1 stocks
Precious Shipping Public Company Limited
PSL
▲ PositiveDemandrelevance

Dry bulk freight rates improved with the Supramax index up 2% and the Red Sea blockade continuing to support freight rates, benefiting shipping stocks.

Energy Transition & Power Demand▲ · 1 stocks
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