Black Sea Emergency! A Turkish oil tanker attacked, causing a massive explosion! Oil prices surge, Asia-Pacific markets collectively adjust

Asia-Pacific stock markets collectively adjusted, and international oil prices rose.

On the 26th, A-shares plunged across the board in the afternoon, with the Shanghai Composite Index dropping over 1% again to fall below 3900 points, and the Sci-Tech Innovation Board Index down nearly 2%; Hong Kong stocks also fell sharply, with the Hang Seng Index dipping over 2% during the session, and the Hang Seng Tech Index down over 3%.

Specifically, the main indices of A-shares fluctuated downward during the session and accelerated their plunge in the afternoon. By the close, the Shanghai Composite Index fell 1.09% to 3889.08 points, the Shenzhen Component Index fell 1.41%, the ChiNext Index fell 1.34%, and the Sci-Tech Innovation Board Index fell 1.83%. The total transaction volume in the three markets of Shanghai, Shenzhen, and Beijing reached about 1.96 trillion yuan, a decrease of about 236 billion yuan compared to the previous day. Nearly 4500 stocks in the A-share market closed in the red.

In Hong Kong stocks, by the close, the Hang Seng Index fell 1.89% to 24856.43 points, and the Hang Seng Tech Index fell 3.28% to 4761.54 points. In individual stocks, Kuaishou fell nearly 14%, Pop Mart fell over 10%, China Life, Hua Hong Semiconductor, and SMIC fell over 6%, Alibaba fell over 4%, and Meituan fell nearly 4%.

Today, the Japanese and South Korean stock markets also collectively declined, with the Nikkei 225 Index at one point dropping over 1%. By the close, the Nikkei 225 Index fell 0.27%, and the KOSPI fell 3.22%. Summary data shows that since the outbreak of the conflict in Iran, global investors have withdrawn about $52 billion from emerging market stocks in Asia (excluding China), marking the largest monthly capital outflow on record. Oil-importing economies such as India and South Korea led the sell-off, as soaring crude oil prices heightened inflation and growth concerns. Analysts at Morgan Stanley pointed out that Asia’s vulnerability to energy costs, coupled with a strong dollar and profit-taking in tech stocks, exacerbated the stock market downturn.

Meanwhile, international oil prices rose again today, with ICE Brent crude rebounding to above $100 per barrel at one point, currently reported at $99.66 per barrel, while WTI crude also climbed back above $90 per barrel.

According to CCTV news, in the early hours of March 26 local time, a Turkish oil tanker named “ALTURA” was reportedly attacked by a drone in the Black Sea, 15 miles from the Istanbul Strait. It is understood that the tanker was carrying 140,000 tons of crude oil from Russia to Turkey at the time. The attack triggered a violent explosion, damaging the ship’s bridge and other upper structures, causing flooding in the engine room. After receiving an emergency distress signal from the tanker, the Turkish Coast Guard has dispatched coast guard ships and comprehensive emergency rescue vessels to the scene for disposal. It is reported that there were 27 Turkish crew members on board, and there are currently no reports of casualties.

Raw Material Stocks Surge

Raw material stocks surged during the session, and by the close, Menova hit the daily limit for a third consecutive time, while Sitai Li and Haisen Pharmaceutical also hit the limit, and Hongyuan Pharmaceutical rose about 8%.

In news, on Wednesday local time, global chemical giant BASF announced that due to rising costs caused by the Israel-Palestine conflict, the company would increase prices for more products.

BASF announced it would raise prices for its basic amine product line in Europe, with increases of up to 30%, and some products may see even higher increases. This price adjustment measure takes effect immediately and may be implemented within the existing contract terms.

It is reported that the price increase involves products including: ethanolamine, ethyleneamine, isopropanolamine, methylamine, N,N-dimethylaminoethanol, 3-(dimethylamino)propylamine, dimethylformamide, propylamine, and ethylamine. These products are essential raw materials that serve as general intermediates and are key materials in the industrial formulations of the electronics, agricultural chemicals, and pharmaceutical industries.

Guojin Securities pointed out that due to the continuous rise in international oil prices and high overseas energy costs, various chemical products have generally seen significant price increases, with solvent products, which are difficult to stockpile, seeing sustained high market quotes, making them one of the most elastic categories in this round of chemical price increases, also directly driving up costs in downstream industries such as pharmaceutical intermediates and raw materials. Affected by the rising costs of upstream raw materials, downstream raw material products may face a price increase opportunity. From the supply side, since the raw material pharmaceutical industry concentrated on expanding production from 2020 to 2022, supply pressure is expected to remain, and prices are likely to be transmitted slowly. From the demand side, downstream clients have been destocking since April 2023, and current inventory levels have remained low for a prolonged period. Raw material prices have been running at low levels for an extended time, and with low inventory levels among clients, once prices rise, it is expected to have good sustainability, and future attention can be given to the profit elasticity brought by price increases.

Lithium Battery Concept Emerges

The lithium battery concept saw active trading during the session, and by the close, Haike New Energy surged over 16%, hitting the daily limit at one point; Zhongrui Co. rose over 10%, Rongjie Co. hit the daily limit for a third consecutive time, and Shida Shenghua, Dashengda, and others all hit the daily limit.

In news, Zimbabwe’s ban on lithium exports has now lasted nearly a month, with no news of lifting the ban, and the duration may exceed previous market expectations. Market participants had previously anticipated that the impact of Zimbabwe’s export policy adjustments would last about a month.

Data shows that Zimbabwe occupies an important position in the global lithium resource supply. Relevant data indicates that by 2025, Zimbabwe’s lithium resource production will account for approximately 10% of the world’s total lithium production. Almost all lithium ore and lithium concentrate from Zimbabwe is exported to China. In 2025, China’s total lithium spodumene imports will be 6.209 million tons, of which 1.191 million tons of lithium concentrate will be imported from Zimbabwe, accounting for 19.2%, equivalent to about 110,000 tons of lithium carbonate equivalent.

Institutions indicate that Zimbabwe is one of China’s important sources of lithium ore imports. This export ban aligns with its value retention strategy, but the current policy of immediately switching to banning all lithium ore exports while only allowing lithium sulfate exports does not match the local production reality. It is expected that this export ban will not last long, and once the resource wastage and illegal smuggling issues are addressed, and local companies with mining rights and processing plants complete new process approvals, normal lithium ore exports will resume. Under the backdrop of strong demand and low inventory, disruptions in supply will be magnified. Currently, lithium carbonate prices face certain selling pressure near previous highs, and if the ban lasts longer than expected or other supply disruptions occur, prices may break through 200,000 yuan/ton.

Huaneng Liaoning Energy’s Late Trading Activity

Huaneng Liaoning Energy (600396) hit the daily limit again during the session, achieving a nine-day limit, but plummeted in the last trading minutes, closing up 6.47%, with a total transaction volume of 3.09 billion yuan.

The company warned on the evening of the 24th that the recent volatility in its stock price has seriously deviated from market trends and has significantly diverged from the company’s fundamentals. The stock price has cumulatively risen by 95.36% over ten trading days from March 11 to March 24, with a substantial short-term rise that has seriously diverged from the Shanghai Composite Index and the industry index for the power and heat production and supply sector.

After verification, the company’s production and operational activities are normal. The company mainly engages in thermal power generation, with a thermal power installed capacity accounting for 82.56%. There have been no significant changes in daily operations. The market environment and industry policies have not undergone significant adjustments, and there have not been large fluctuations in production costs and sales; the internal production and operational order remains normal.

Proofread by: Liao Shengchao