S Korea posts first current account deficit in nearly two years

28 February 2012 04:55  [Source: ICIS news]

Busan port in South KoreaBy Nurluqman Suratman

SINGAPORE (ICIS)--South Korea posted a current account deficit of $770m (€578m) in January this year, as exports – including shipments of petrochemicals – fell in the wake of the eurozone debt crisis, the country’s central bank said on Tuesday.

The deficit is the first shortfall recorded since February 2010, compared with a revised surplus of $2.8bn in December last year and a surplus of $1.51bn in January 2011, the Bank of Korea said in a statement.

The current account measures an economy’s trade in goods, services, tourism and investment with the rest of the world.

South Korea’s exports, which make up about 50% of its economy, fell by 6% year on year to $41.5bn in January this year as shipments to the eurozone declined by 39.7% in the first 20 days of the month, according to data from the country’s Ministry of Knowledge Economy (MKE).

Total imports rose by 3.6% year on year to $43.5bn in January this year, as the rising demand for coal and crude oil pushed inbound shipments of raw materials up by 12.9%, the MKE said.

The trade deficit of $2.0bn in January compares with a surplus of $2.5bn in the same month a year earlier, according to the MKE.

The country’s overall exports in January was hampered by the reduction of working days because of the Lunar New Year holiday as well as weaker demand from the eurozone, said Lee Sung-Kwon, senior vice president and chief economist at Seoul-based Shinhan Investment.

“Exports to Asia, especially China, compensated for the decline in exports to the European market,” Lee said.

The strengthening demand for oil products in Asia, especially China, and the rise in crude oil prices also buoyed the growth in exports in January, he said.

South Korea’s exports of petrochemicals dropped by 3% to $3.4bn in the first 20 days of January, while shipments of petroleum products rose by 39.5% to $4.4bn, according to Lee.

The export volumes of ethylene rose by 47% year on year to 79,694 tonnes in January, while shipments of propylene increased by 54% to 87,080 tonnes, according to data from the Korea International Trade Association (KITA). (please see table below)

Overseas shipments of benzene rose by 8% to 79,694 tonnes, while exports of toluene increased by 97,257 tonnes, according to the data from KITA.

Looking ahead, the country’s exports to emerging economies as well the US will likely outweigh the decline in shipments to the eurozone, Lee said.

“The good growth of exports to the US is likely to continue this year because of better economic prospects,” he added.

Exports to the US, which make up 9.8% of all exports in January this year, rose by 23.3% year on year.

“Despite the recent improvement in the global economy, it is premature to expect manufacturers in [South] Korea to ramp up production,” said Singpaore-based DBS Group Research.

“This is because the recovery in external demand is only moderate rather than strong, the inventory overhang in the key electronics sector still needs to be digested and input costs have been pushed up again recently due to the surge in international oil prices,” it added.

($1 = €0.75)

EXPORTS (in metric tonnes)

 

 

 

 

PRODUCT

January  '12

January '11

YoY Difference

% Change YoY

Naphtha

0

268,411

NA

NA

Ethylene

79,694

54,397

25,297

46.50

Benzene

124,904

115,745

9,159

7.91

Polypropylene

79,060

63,360

15,700

24.78

Polyethylene

90,837

97,192

6,355

6.54

LLDPE

33,556

47,510

13,954

29.37

LDPE

26,877

18,178

8,699

47.85

HDPE

90,837

97,192

6,355

6.54

Toluene

97,257

80,095

17,162

21.43

Propylene

87,080

56,526

30,554

54.05

Butadiene Rubber

31,126

22,350

8,776

39.27

Buta-1,3-diene and isoprene

20,633

19,275

1,358

7.05

Styrene

112,838

95,887

16,951

17.68

Paraxylene

161,870

85,124

76,746

90.16

PET

70,353

65,252

5,101

7.82

Mixed Xylene Isomers

42,236

68,202

25,966

38.07

PTA

299,078

306,242

7,164

2.34

MMA

3,092

277

2,815

1,016.25

PMMA

8,837

7,734

1,103

14.26

Orthoxylene

11,507

10,452

1,055

10.09

Expansible polystyrene

11,588

10,345

1,243

12.02

Acrylonitrile

20,747

11,786

8,961

76.03

Polycarbonate

33,110

30,453

2,657

8.72

Ethyl Acetate

1,514

896

618

68.97

Vinyl Acetate Monomer

6,262

7,031

769

10.94

Paraffin Wax (slack wax and scale wax)

487

775

288

37.16

P-wax with less than 0.75%

82

133

51

38.35

PVC (not mixed with other substances)

48,982

51,264

2,282

4.45

PVC (non-plasticised)

28

117

89

76.07

PVC (plasticised)

1,785

1,980

195

9.85

PVC (In aqueous dispersion)

23

8

15

 

With additional reporting by Samuel Wong


By: Nurluqman Suratman



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