New Year's First Export Report 5.3%↑... Semiconductor and Petrochemical Boom (Comprehensive)

KCS Announces Export-Import Status for Jan 1-10... Growth Start
Limited Impact from Middle East Situation... Optimism on US-China Trade Deal
Semiconductors Up 11.5%, Petrochemicals Up 30.6% "Industry Improvement"
Ministry of Trade: "Daily Average Export Value May Turn Positive in January"

Asia Economy DB / Yeongjongdo = Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] Thanks to strong exports in semiconductors and petrochemicals, the first export indicators of the new year started on an upward trend. This was influenced by the base effect from the export decline in January last year and the improvement in the semiconductor industry. The government expressed expectations that exports could rebound for the first time in 14 months if the impact of working days is excluded.

According to the Korea Customs Service on the 13th, the export amount from January 1 to 10 (provisional customs clearance basis) was $13.3 billion, an increase of 5.3% ($660 million) compared to the same period last year. Compared to the same period last month, it also rose by 3.7% ($470 million). The number of working days from January 1 to 10 was 7.5 days, the same as the same period last year. The average daily export amount was $1.77 billion, up 5.3% from the same period last year.

With the positive signal of an increase in average daily export amount in the first export report of the new year, expectations for an early improvement in exports are growing. In particular, semiconductor exports led the export rebound by increasing 11.5% compared to the same period a year ago. Recently, the decline in semiconductor prices has somewhat stabilized, and the increase in export volume was a key factor. An official from the Ministry of Trade, Industry and Energy said, "In December last year, the semiconductor industry showed signs of momentum revival as it gradually improved," adding, "This momentum appears to be continuing into this year."

Along with semiconductors, petroleum products (30.6%) and ships (0.1%) increased, while passenger cars (-4.6%), wireless communication devices (-4.8%), and auto parts (-9.6%) showed weakness. By country, exports increased to Vietnam (11.7%), Japan (6.0%), Hong Kong (26.5%), and the Middle East (45.3%), while exports to China (-3.5%), the United States (-12.0%), and the European Union (EU, -5.9%) decreased.

The positive export results at the start of the new year are also influenced by the base effect. In the same period from January 1 to 10 last year, semiconductor prices plummeted, resulting in the worst export performance. At that time, exports of semiconductors and petroleum products decreased by 27.2% and 26.5%, respectively, compared to the same period the previous year, and overall export performance fell by 7.5%.

The scheduled signing of the US-China Phase One trade agreement on the 15th of this month is expected to have a positive effect on our exports early in the year. Chinese Vice Premier Liu He will lead the Chinese delegation to Washington, USA, from the 13th to 15th to sign the US-China Phase One trade agreement. Once the US-China dispute is settled, effects such as recovery of investment sentiment in China and improvement in exports to China are anticipated.

[Image source=Reuters Yonhap News]

Uncertainty remains due to instability in the Middle East caused by the US-Iran conflict. However, so far, the impact of the Middle East situation on our exports has not been significant. An official from the Ministry of Trade, Industry and Energy stated, "Looking at the numbers, exports to the Middle East have increased this month, so the impact of the current Middle East situation is limited," but added, "We are closely monitoring the situation as a sharp rise in international oil prices could affect petrochemical products." Last year, exports to the Middle East amounted to $17.67 billion, accounting for 3.3% of total export volume.

The government has set a goal for exports to turn positive in the first quarter of this year. However, considering the number of working days, the timing of the export rebound is expected to be February rather than January. This month has 21.5 working days, 2.5 days fewer than last year (24 days), because the Lunar New Year holiday falls in January this year, unlike last year. An official from the Ministry of Trade, Industry and Energy forecasted, "Excluding the impact of working days, the average daily export amount in January could turn positive for the first time in 14 months." Our exports recorded negative growth for 13 consecutive months from December 2018 to December last year.

Meanwhile, imports from January 1 to 10 this month amounted to $15.4 billion, 5.7% ($830 million) more than the same period a year ago. The increase rates compared to the same period last year were high for crude oil (40.7%) and petroleum products (73.0%). Imports of machinery (-2.5%), coal (-36.5%), and passenger cars (-32.1%) decreased. Imports mainly increased from the Middle East (30.1%), the United States (26.1%), Australia (9.2%), and Vietnam (7.3%).

This content was produced with the assistance of AI translation services.