S Korea petrochemical exports snap 18-month fall; Nov PMI at 50.0
SINGAPORE (ICIS)–South Korea’s petrochemical exports posted a 5.9% year-on-year increase to $3.8bn in November, ending 18 months of contraction, while overall shipments abroad grew for the second straight month as factory activity returned to expansion mode.
- Overall exports up 7.8%; electric vehicles exports surge 69.4%
- Exports to China still down
- November manufacturing PMI rises to 50.0
Higher petrochemical shipments were backed by improved demand from the US, ASEAN and India despite lower product prices as oil markets weakened, the Ministry of Trade, Industry and Energy (MOTIE) said on 1 December.
South Korea’s overall exports grew for the second consecutive month, with the 7.8% increase in November the highest recorded since July 2022, thanks to a turnaround in semiconductor shipments.
November exports stood at $55.8bn, while imports declined by 11.6% to $52.0bn, resulting in a trade surplus for the sixth consecutive month at $3.8bn.
Semiconductor exports in November jumped by 12.9% year on year to $9.5bn, ending 15 months of decline as memory chip prices spiked, it said.
South Korea has the second-biggest share of the global semiconductor market at about 18% in 2022.
“As new smartphone model releases and AI server products are anticipated to boost demand and enhance supply conditions, exports are forecast to continue to improve,” MOTIE said.
Automobile exports also posted a double-digit growth in November at 21.5% to $6.5bn, rising for the 17th straight month, partly on strong US demand for eco-friendly vehicles.
Electric vehicle exports surged 69.4% year on year to $1.6bn, accounting for more than a fifth of total automobile shipments.
The automotive industry is a major global consumer of petrochemicals, which account for more than a third of raw material costs of an average vehicle.
South Korea’s overall exports to six out of nine major destinations posted growths in November, led by the US, which recorded a 24.7% year-on-year increase to $11.0bn, according to MOTIE.
To India, exports rose by 10.8% to $1.5bn, while shipments to Japan advanced 11.5% to $2.6bn.
Shipments to the EU rose by 3.7% to $5.5bn, while those to the ASEAN and Latin America grew by 8.7% to $9.8bn, and 7.7% to $2.0bn, respectively.
However, exports to China – South Korea’s biggest market – continued to contract, dipping 0.2% to $11.4bn, but the overall value remained above $10bn for the fourth straight month, MOTIE said.
China, which is the world’s second-biggest economy, has been slowing down amid weakness in external demand and a domestic property crisis.
South Korea’s shipments to the Middle East, meanwhile, declined 7.4% to $1.4bn.
FACTORY OUTPUT ENDS 16-MONTH
Manufacturing activity in one of Asia’s highly industrialised economies finally returned to expansion mode in November after 16 months of contraction.
Its purchasing managers’ index (PMI) inched up to 50.0 from 49.8 in the previous month, based on a survey of manufacturers by financial services intelligence provider S&P Global.
“Output levels broadly stabilized in November, accompanied by the softest reduction in total new orders since July 2022,” it said.
New orders declined for the 17th month, but the rate of contraction has eased.
“A number of firms mentioned that demand conditions remained muted amid subdued client confidence and weakness in both the domestic and global economies,” S&P Global said.
Manufacturing firms in the country, however, “signalled the weakest degree of optimism for five months amid concerns over sustained economic weakness,” it said.
“The rise in employment levels was often attributed to the filling of existing vacancies. Meanwhile, buying activity was partly raised in order to protect against delivery delays and further price rises,” S&P Global economist Usamah Bhatti said.
“As such, manufacturers signalled another marked rise in cost burdens amid high raw material prices as well as unfavourable exchange rate trends. As a result, firms raised output charges at the strongest pace since the start of the year,” Bhatti added.
Global economic growth is expected to slow down in 2024 amid prevailing high interest rates, elevated inflation and with crude prices staying firm amid output cuts by OPEC and its allies (OPEC+).
South Korea posted a third-quarter annualized GDP growth of 1.4%, the fastest so far in the year.
Focus article by Pearl Bantillo
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