S Korea Nov petrochemical exports fall 27%; Q4 GDP to contract on truckers’ strike

SINGAPORE (ICIS)–South Korea’s petrochemical exports in November fell by 26.5% year on year to $3.55bn due to weaker overall demand from primary market China and amid logistics disruptions late in the month caused by the nationwide truckers’ strike.

• Economic toll grows as unionized truckers’ strike enters eighth day
• Overall November exports fall 14%; imports down 2.7%
• Final Q3 GDP growth at 3.1% on year; 0.3% on quarter

The strike by unionized truckers in South Korea is now on its eighth day with adverse repercussions across industries, including petrochemicals – threatening the country’s growth prospects.

Based on government estimates, the economic cost of the strike is Korean won (W) 300bn ($230m) on a daily basis.

South Korea’s total exports in November stood at $51.9bn, down by 14% year on year, deeper than the 5.7% decline recorded in the previous month and the steepest decline since May 2020, data from the Ministry of Trade, Industry and Energy (MOTIE) showed.

November shipments of semiconductors – South Korea’s biggest export item – fell by 29.8% year on year, while those of steel were down by 10.6%.

Total shipments to China in November slumped by 25.5% year on year, marking their sixth straight month of decline, while those to southeast Asia were down by 13.9%.

Out of South Korea’s 15 major export sectors, only four – namely, automobiles, automobile parts, secondary batteries and petroleum products – posted growths by value in November, official data showed.

Overall imports for the month, meanwhile, fell by a more moderate 2.7% year on year to $58.9bn, resulting in a trade deficit of around $7bn, MOTIE said.

TRUCKERS’ STRIKE WEIGHS ON ECONOMY
South Korea posted a 3.1% annualized GDP growth in the third quarter, the Bank of Korea (BoK) said on Thursday, unchanged from the preliminary estimate released in October.

On a seasonally adjusted quarter-on-quarter basis, Asia’s fourth-biggest economy posted a 0.3% increase, a slowdown from 0.7% pace of expansion in April-June 2022, marking the slowest quarterly growth since the third quarter of 2021.

“Today’s weak outcomes support our view that GDP in the current [fourth] quarter will contract, and that the ongoing trucker strike will put more strain on economic activity, at least in the current quarter,” Dutch banking and financial services firm ING said in a note on Thursday.

Economic activity in South Korea fell sharply in October with growth momentum slowing and the reopening effects on services fading, said Jeong Woo Park, an analyst at Japan’s Nomura Global Markets Research.

South Korea’s October industrial production fell by 1.1% year on year, steeper than the revised 0.7% contraction in the precious month, as production of automobiles, machinery equipment and semiconductors declined, official data showed on 30 November.

Given slowing services consumption and the intensifying downturn in the manufacturing sector, the economy is likely to contract in the fourth quarter, Park said.

A second round of negotiations between the government and the unionised truckers fell through on 30 November, a day after the government issued an executive order forcing some of them to return to work noting that a number of construction projects ground to a halt.

The truckers have defied the return-to-work order, with neither the government nor the strike organizer setting a date for the third round of talks.

Around 7,000 people across 16 regions joined the strike on 30 November, according to South Korea’s transport ministry.

This is the second time this year that the Cargo Truckers Solidarity Union (CTSU), which is affiliated with the Korean Confederation of Trade Unions, launched a nationwide protest, calling for the extension of the “Safe Trucking Freight Rate” policy beyond December this year.

The eight-day strike in June ended after the South Korean government acceded to trucker demands to extend the safe rates system for three years.

The CSTU are now calling for the government to make the system permanent and expand its coverage including those in the oil and chemicals sectors.

Focus article by Nurluqman Suratman

($1 = W1,304)

Thumbnail image: Containers stacked up at a quay in Busan, South Korea on 30 November 2022 – the seventh day of a nationwide strike by unionized truckers, heavily crippling the country’s supply chains. (Source: YONHAP/EPA-EFE/Shutterstock)

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