FocusSouth Korea petrochemical exports seen declining in July

22 July 2010 06:21  [Source: ICIS news]

By Nurluqman Suratman

SINGAPORE (ICIS news)--South Korea's petrochemical exports are expected to decline in July after growing by 24.1% year on year to $2.87bn (€2.24bn) in June as the won stabilises after sharp falls against the US dollar last month, analysts said on Thursday.

The currency tumbled 7.4% in the three months through June, on concerns that Europe’s debt crisis would hurt the global recovery, analysts said, giving a boost to exports.

“Almost all exports, including petrochemicals, were affected by the weakness in the Won in June and that boosted export profits,” said Lee Sung-kwon, chief economist at brokerage house Shinhan Investment Corp in Seoul.

“Despite rising concerns from the eurozone and China’s tightening of its monetary policy and a slowdown in the US economy we managed to make a visible increase in exports in June,” he added.

However, annual growth of petrochemical exports was expected to slow down from the middle of 2010 as overseas sales for the same period in 2009 had recovered from the height of the economic global crisis, analysts said.

“As compared to June we have being seeing some stability in the Won in July. In addition to the base affect operating in June, our estimation is a month on month decrease of 5.1% in July for overall exports,” Lee from Shinhan Investment Corp said.

Overall exports growth was also expected to slow down to 27% year on year in July, he added.

Petrochemical export volumes in June fell 11.9% year on year to 1.76m tonnes, but increased 8% from May, according to data from the Korean International Trade Association. (please see table below)

Volumes of toluene sent abroad jumped 63% in June as compared to the year-ago period, while exports of ethyl acetate grew 60%, the data showed.

Exports of ethylene rose 33% year on year, while orthoxylene shipments grew 49%.

Overseas shipments of oil products from refining activities, meanwhile, grew 28% year on year to $2.66bn, according to Lee.

Overall exports from South Korea climbed 32.4% year on year to $42.65bn in June, as global demand for locally-made semiconductors and vehicles increased, he added.

“Producers were also trying to boost exports in June, more so than in April or in May, to boost the half-year figures in their reports,” Lee said.

The country’s finance ministry said late in June that the South Korean economy would see 25% growth in exports this year, higher than the earlier forecast of a 13% gain.

South Korea’s export growth was “impressive” and demonstrates the country’s resilience to the debt crisis in Europe, said Park Sang Hyun, an economist at brokerage house HI Investment & Securities.

($1 = €0.78 / $1 = W1,207)

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By: Nurluqman Suratman

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