The Republic of Korea’s Ministry of Trade, Industry and Energy (MOTIE) announced on August 1 that Korea’s exports in July declined 16.5 percent year-on-year to USD 50.3 billion and imports fell 25.4 percent to $48.7 billion, resulting in a trade surplus of $1.6 billion.
July exports were negatively impacted by the slowdown of the semiconductor industry, petrochemicals and petroleum products’ unit price falls from oil price falls, and the high base effect from last year’s July exports hitting the highest ever for July with $60.2 billion.
Imports for July shrank as a result of declining import of crude oil (down 46 percent), gas (down 51 percent), coal (down 46 percent) and energy (down 47 percent).
By item, exports of automobiles and general machinery rose for the 13th and fourth consecutive month, respectively. Semiconductors, petrochemicals and petroleum products decreased in shipments, owing to sluggish global demand and drops in the oil and unit price.
Semiconductor exports fell (down 33.6 percent) as memory chip exports plunged 41.7 percent along with falling DRAM and NAND prices. The high base effect from last year’s all-time high July exports ($11.2 billion) also offset this month’s chip exports growth.
Display exports declined 4.6 percent amid shrinking domestic LCD production and the delay in mobile OLED demand recovery.
Computers (down 33.4 percent) saw exports continue to drop as demand for personal computers and laptops kept contracting and unit price of solid-state drives (SSDs) fell.
Shipbuilding orders dropped 30.9 percent as a consequence from the high base effect from last July’s large order ($1.0 billion), but exports are forecast to make a gradual rebound when orders won in 2021 are included.
Automobiles (up 15.0 percent) achieved growth for the 13th consecutive month as high value-added cars like eco-friendly vehicles and SUVs enjoy robust demand across North America and Europe.
Petroleum products (down 42.3 percent) dipped sharply in contrast with last year’s all-time high July exports as oil price falls lowered petroleum product prices.
Steel exports (down 10.2 percent) increased in terms of export volume (up 2.9 percent from July 1-25), but unit price halls from last year’s high prices hurt exports to major destinations like the ASEAN, U.S. and EU region.
By region, exports to the U.S. and EU saw exports of automobiles and general machinery surge, but the huge price falls of semiconductors and petroleum products, as well as last year’s highest ever July exports, injured overall exports.
Despite the drop in exports due to semiconductors and petroleum products, exports to the U.S. slid 8.1 percent but still surpassed $9.0 billion for the fifth consecutive month on the backs of high demand for cars and machinery.
The EU (down 8.4 percent) showed strong demand for automobiles, but prolonged slowdown in consumption and production from the interest rate hike decreased exports.
As for the Middle East (down 3.0 percent), cars and machinery saw rising demand as infrastructure investment and demand for Korean automobiles expanded, but low unit prices resulted in reduction of steel and petrochemical exports.
Shipments to China (down 25.1 percent) dropped from decreased export of steel and wireless communication devices, owing to delayed recovery of China’s industrial production rate and falling unit prices of major export items like semiconductors and petrochemicals.
In spite of the increase in shipments of wireless communication parts, exports to the ASEAN region (down 22.8 percent) decreased due to the slowdown of the semiconductor industry and oil price falls.