February's First Daily Average Export Down 3.2%... Difficult to Guarantee 'Plus' (Comprehensive)

Lunar New Year Holiday Workdays Boost Exports by 69.4% YoY
Prolonged COVID-19 Uncertainty... "This Week Is Crucial"
Worrying Semiconductor Price Decline Adds Pressure
"If Chinese Factory Operations Disrupt, February Export Growth Is Uncertain"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Moon Chaeseok] Although the export amount in early February surged by 69.4% compared to last year due to movement during the Lunar New Year holiday, the average daily export amount actually decreased. The government stated that the export performance in February could vary depending on how long the novel coronavirus infection (Wuhan pneumonia) lasts, marking this week as a critical turning point.

According to the Korea Customs Service on the 11th, the export amount from February 1 to 10 (provisional customs clearance basis) was $10.7 billion, an increase of 69.4% ($4.38 billion) compared to the same period last year. The increase in export amount was mainly due to the increase in working days. From the 1st to the 10th, the total number of working days was seven, three more than the same period last year, which included the Lunar New Year holiday.

The average daily export amount was $1.53 billion, a 3.2% decrease from $1.58 billion during the same period last year. Although the export indicators from the 1st to the 10th do not necessarily lead to the end-of-month figures, the government's pledge that February exports would turn positive has lost its meaning. Considering that last month’s first export report of the new year showed an average daily export amount of $1.77 billion, a 5.3% increase compared to the previous year, raising expectations for recovery, the mood seems to have dampened.

Exports of major items including semiconductors increased compared to a year ago. Semiconductors led the export rebound with a 37.8% increase, and petroleum products (26.2%), passenger cars (114.5%), wireless communication devices (34.8%), and ships (138.6%) also increased. However, liquid crystal devices decreased by 39.5%. By country, most major countries saw increases: China (36%), the United States (68.1%), Vietnam (59.8%), the European Union (170.4%), Japan (28.9%), Hong Kong (130.1%), and the Middle East (63%).

However, in the case of semiconductors, it is too early to be reassured as prices are falling due to the impact of the novel coronavirus. According to market research firm DRAMeXchange, the spot price of PC DRAM (DDR4 8Gb standard) was $3.41 per unit the day before, down 1.15% from $3.48 on the 4th, which was the highest price this year. The Philadelphia Semiconductor Index also remained at 1892.80 based on the previous day's closing price, down 2.7% from the all-time high of 1945.37 recorded on the 23rd of last month.

An official from the Ministry of Trade, Industry and Energy said, "Spot prices are short-term (spot) measurement indicators, so they are not given much significance," adding, "The United States and the European Union (EU) are less affected by the novel coronavirus than China, and the Philadelphia Semiconductor Index recorded an all-time high last week, so we are monitoring the situation carefully."

Above all, the problem is that if the return of Chinese factory workers is delayed due to the novel coronavirus issue, a decline in exports cannot be avoided. In the worst case, even the government's pledge of a "positive February" may become difficult to guarantee. The Ministry of Trade, Industry and Energy is closely watching the impact of the suspension of wiring harness operations in China on domestic finished car factory production. The day before, it was announced that 37 out of about 40 wiring harness factories in China would resume operations.

An official from the ministry said, "Due to various variables such as factories resuming operations locally in China, factories extending suspensions, and factories that have announced resumption but whose workers have not all returned, it is currently difficult to quantify how much impact this has had on exports."

He added, "This week is the most important. If China only resumes factory operations, the possibility of exports turning positive this month is very high, but since there is also a possibility of disruptions, we are watching closely."

Meanwhile, imports from the 1st to the 10th of this month amounted to $12 billion, 24% ($2.32 billion) more than the same period last year. The year-on-year growth rates for machinery (48.7%), information and communication devices (22.3%), and passenger cars (108.4%) were high. Imports of crude oil (-13.3%), gas (-1.8%), and coal (-23.9%) decreased. By country, imports increased from the United States (82.8%), the EU (86.8%), Japan (42.9%), and Vietnam (37.5%).

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