FocusS Korea petchem exports fall in April, to recover through ’12

30 May 2012 08:11  [Source: ICIS news]

By Nurluqman SuratmanSouth Korea’s overall exports rose in February

SINGAPORE (ICIS)--South Korea’s petrochemical exports fell by 4.9% year on year to $3.60bn (€2.88bn) in April 2012 because of weaker demand from China and Europe, but is expected to recover through the rest of this year, analysts said on Tuesday.

The export volumes of most major petrochemical products increased in April compared with the same period a year earlier, data from the Korea International Trade Association (KITA) showed. (please see table below)

However, petrochemical prices have “declined significantly recently” because of weakening demand from key markets and this weighed on the overall value of exports in April, said Sang Min Park, an analyst at Seoul-based Shinhan Investment, without elaborating further.

South Korea’s exports of ethylene rose by 50% year on year to 64,335 tonnes in April 2012, while the country’s exports of propylene increased by nearly threefold to 88,818 tonnes, according to the data from KITA.

Overseas shipments of low density polyethylene (LDPE) rose by 27% year on year to 21,045 tonnes while exports of linear low density polyethylene (LLDPE) fell by 11.1% to 35,423 tonnes, the data showed.

South Korea’s exports of benzene fell by 28% year on year to 99,450 tonnes in April this year, while overseas shipments of vinyl acetate monomer (VAM) dropped by 25% to 7,312 tonnes, according to KITA.

The fall in the shipments of petrochemical and petroleum products was largely due to the economic situation in China,” said Lee Sung-Kwon, senior vice president and chief economist at Seoul-based Shinhan Investment.

“We’ve seen quite negative growth in these sectors in the first four months of this year because of sluggish demand in China and also Europe,” he added.

However, the country’s chemical and oil exports are expected to recover gradually because of the economic stimulus measures that the Chinese government has put in place to boost domestic consumption, according to Lee.

“Chinese domestic demand should revive gradually, so Korean exports are expected to improve gradually through to the end of this year,” he said, adding that an improved economic outlook in the US will also boost overseas shipments.

South Korea’s total exports to the US grew by 5.6% year on year in April, according to the Ministry of Knowledge Economy (MKE) in an earlier statement.

South Korea’s current account surplus fell to $1.78bn in April from a revised $2.97bn in March, as key exports fell, according to the Bank of Korea on Wednesday.

On a year-on-year basis, the surplus was up by 39%, it said.

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

The country’s overall exports fell by 4.7% year on year to $46.3bn in April, while imports declined by 0.2% to $44.1bn, according to the MKE.

This resulted in a trade balance surplus of $2.2bn, down from the $2.3bn surplus in the previous month and almost half the $4.3bn surplus seen in April 2011, it said.

Overseas shipments to key market China, which accounted for 22.4% of South Korea’s total exports, grew at a modest pace of 1.7% in April from the same period a year earlier, according to available MKE data for the first 20 days of the month.

Its exports to the EU, meanwhile, fell by 16.7% year on year over the same period. The EU has 9.1% share in South Korea’s overall shipments, it said.

In the near term, South Korea’s export competitiveness is expected to remain intact because of a “cheap won” but exports are forecast to remain slow in absolute terms because of weak global demand, especially from China and Europe, according to Singapore-based DBS Group Research.

“As the global financial market jitters recently emerged in May, exports and domestic demand will likely both deteriorate ahead. We expect a 1.0% year-on-year contraction in exports in May,” it added.

For the full year of 2012, South Korea’s overall exports is expected to grow by 4.1% year on year, compared with the 19% growth seen in 2011, but is expected to recover to about 12% in 2013 on the back of a recovery in demand from China and Europe, Lee of Shinhan Investment said.

“We expect the euro financial crisis to moderate next year so even though the problems that exist now should exist in 2013, the depth of the issues should decrease next year,” he added.

EXPORTS (in metric tonnes)

PRODUCT

April  '12

April '11

YoY Difference

% Change YoY

Ethylene

64,335

42,950

21,385

49.79

Benzene

99,450

137,712

38,262

27.78

Polypropylene

74,268

67,434

6,834

10.13

Polyethylene

88,818

66,347

22,471

33.87

LLDPE

35,423

39,850

4,427

11.11

LDPE

21,045

16,569

4,476

27.01

HDPE

88,818

66,347

22,471

33.87

Toluene

80,591

74,716

5,875

7.86

Propylene

84,437

28,304

56,133

198.32

Butadiene Rubber

27,744

23,718

4,026

16.97

Buta-1,3-diene and isoprene

20,059

16,585

3,474

20.95

Styrene

85,365

63,567

21,798

34.29

Paraxylene

171,525

159,622

11,903

7.46

PET

84,635

69,680

14,955

21.46

Mixed Xylene Isomers

25,062

46,040

20,978

45.56

PTA

269,381

270,996

1,615

0.60

MMA

1,624

4,648

3,024

65.06

PMMA

11,149

8,185

2,964

36.21

Orthoxylene

14,049

9,996

4,053

40.55

Expansible polystyrene

13,524

10,940

2,584

23.62

Acrylonitrile

19,977

17,002

2,975

17.50

Polycarbonate

33,821

27,748

6,073

21.89

Ethyl Acetate

1,213

702

511

72.79

Vinyl Acetate Monomer

7,312

9,783

2,471

25.26

Paraffin Wax (slack wax and scale wax)

879

927

48

5.18

P-wax with less than 0.75%

4

78

74

94.87

PVC (not mixed with other substances)

58,304

47,416

10,888

22.96

PVC (non-plasticised)

180

83

97

116.87

PVC (plasticised)

2,482

2,303

179

7.77

PVC (In aqueous dispersion)

72

7

65

928.57

Source: KITA

($1 = €0.80)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Nurluqman Suratman



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