KUALA LUMPUR: The ongoing trade talks between the US and China have weighed on oil market sentiment and inevitably hurt petrochemical prices in the process, Affin Hwang Capital said.

The research house expects Petronas Chemicals Bhd’s (PetChem) upcoming fourth quarter results to be weaker sequentially, albeit still in line with its forecasts.

This was due to weaker product prices. Polyethylene, MEG and benzene prices had all retraced in the range of 10-20 per cent and methanol by about 15 per cent, quarter-on-quarter.

Affin Hwang said the price of urea, meanwhile, has held up pretty well in PetChem’s favour, supported by the strengthening in the US dollar-ringgit by two per cent quarter-on-quarter.

The research house went on to cut PetChem’s earnings per share forecast for the financial year 2019-2020 by 10-11 per cent.

This was to reflect the weaker price trend in the first quarter of the year, which will likely persist into the second quarter before a recovery in the second half of 2019.

“We reaffirm our ‘buy’ call on PetChem but with a lower target price of RM9.20,’ Affin Hwang said in a report today.

It noted that PetChem’s share price had settled 16 per cent since hitting a high of RM10.20 last November, and had largely priced in the negative news of low product prices in the near term.

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