S Korean petchems boost exports to offset low local demand

19 February 2009 05:07  [Source: ICIS news]

By Terence Teo

SINGAPORE (ICIS news)--Some of South Korea’s petrochemical producers have been boosting exports just to generate sales amid a heavy slump in domestic demand, industry analysts and sources said on Thursday.

The sharp depreciation of the won due to the country's mounting economic problems helped make prices of its petrochemical exports more competitive, providing some support to exports although external demand is also weak, they said.

Based on January data from the Korean International Trade Association (KITA), there was a significant year-on-year growth in shipments of some of petrochemical products, including toluene and polyvinyl chloride (PVC).

“The surge in exports is due to the push among South Korean producers to increase their export volumes to make up for the shrinkage in domestic sales,” one industry source said.

Exports of toluene soared 143% to 71,873 tonnes last month from the corresponding period last year, while propylene shipments climbed 66% to 49,241 tonnes. The country also sold 93% more PVC abroad totaling 67,013 tonnes in January compared to the same period a year earlier, according to KITA.

“The recent depreciation of the Korean won has attracted China (as customer) with its (Korea's) better price in petrochemical products,” said analyst Im Jee Soo from brokerage Goodmorning Shinhan Securities.

But demand for downstream styrenics in the key Chinese market had been soft. South Korea’s export of styrene monomer (SM) to China fell 21% year-on-year to 90,705 tonnes.

On a month-on-month basis, South Korea's exports of most of these petrochemical products fell as external demand was also depressed, which will likely continue for the rest of the year as the global economic recession deepens.

The South Korean economy is expected to shrink for the first time in more than a decade in 2009 as its western trading partners - the US and Europe - are mired with their own economic problems.

“The Korean government is currently working on bringing the domestic construction segment back to shape, as part of their strategy to boost local demands,” Im said.

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By: Terence Teo
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