KUALA LUMPUR (Oct 30): China's anti-dumping duty on import of ethanolamines which takes effect today will not have a significant impact on Petronas Chemicals Group Bhd's (PetChem) earnings, said MIDF Amanah Investment Bank Bhd Research.

Reuters reported yesterday that PetChem's subsidiary Petronas Chemicals Derivatives Sdn Bhd was mentioned as one of the companies that China's Ministry of Commerce plans to impose the tax on.

China made the announcement yesterday stating that it plans to impose anti-dumping tax on imports of chemical ethanolamine from companies based in the United States, Saudi Arabia, Malaysia and Thailand.

"We opine that the imposition of the anti-dumping duty has a negligible impact on PetChem's earnings as the chemical compound ethanolamines, although very niche, is also a very specific chemical that only a few companies has the expertise of producing. Therefore, we believe that the demand for such product would not wane," MIDF Research said in a note today.

It said despite the anti-dumping duties, demand for petrochemical products is expected to remain firm in the coming months.

"The demand will also receive a boost due to the US-China trade war and India's anticipated higher public spending ahead of its General Election next year which will boost demand for Polyvinyl chloride (PVC)," it said.

MIDF Research upgraded its call on PetChem's to a "buy" from "neutral" with a higher target price of RM10.23 per share.

It said the buy recommendation also reflects the premium that PetChem has over its peers in terms of a stable liquefied natural gas feedstock supply and preferential rates received from its parent company Petronas, which positions it at an advantage to benefit from the market in the current high crude oil price environment.

At 11.23am, PetChem gained 0.54% or 5 sen to RM9.36 with 389,100 shares done.