[Alpha Biz=(Chicago) Reporter Kim Jisun] While the trade environment is expected to be difficult due to the global economic slowdown this year, secondary batteries, automobiles and ships are expected to maintain solid export performance. Semiconductors, an export powerhouse, are inevitable to see a drop in exports in the first half of the year due to falling prices, but exports are expected to rebound as demand recovers after the second half.
The Ministry of Trade, Industry and Energy set this year's export target at $685 billion, up 0.2 percent from a year earlier, through its announcement of a pan-government export expansion strategy.
In the semiconductor and information and communication technology (ICT) sectors, exports are worsening in the first half of the year due to falling product prices stemming from a sharp drop in demand for semiconductors. The government expects to recover demand for semiconductors and improve performance by increasing demand for high-capacity memory after the second half of this year.
Wireless communication has been on the rise since January this year thanks to increased demand for premium phones. It is predicted that the establishment of 5G communication networks in Japan and India and the expansion of demand for high-tech components will have a positive impact on wireless communication exports.
Automobiles are expected to export well on the back of solid demand. Automobiles continue to grow in exports due to increased demand for electric vehicles and waiting demand.
Exports of electric vehicles rose 61.6 percent in January this year from the same month last year. The government expects exports of auto parts to increase along with the expansion of production by finished car companies overseas. The contraction of consumption due to high interest rates and the reorganization of the supply chain due to the U.S. Inflation Reduction Act (IRA) are destabilizing factors.
Secondary batteries are also continuing to expand as global demand for electric vehicles increases. Global electric vehicle battery demand is expected to increase by 41% from 642GWh (Gigawatt City) last year to 907GWh this year. Exports are expected to increase as South Korea's battery production capacity expands and facility investment expands.
The ship sector will receive payments as it will deliver orders in earnest this year in 2021. Strong exports are expected to continue as demand for eco-friendly ships is also on the rise.
Petroleum products, chemicals, and steel are expected to continue their difficult exports due to falling unit prices. Petroleum products are expected to see their export prices fall 12.8% from $127.1 a barrel last year to $110.8 this year due to the economic slowdown. However, recovery of demand for aviation oil and a decrease in investment in global refining facilities are factors of opportunity.
Petrochemicals are also expected to continue to fall in unit prices due to oversupply from the U.S. and China. Petrochemical exports are expected to fall 15.8% from $1,473 per ton last year to $1,239 per ton this year. The recovery in demand due to the re-opening in China, the shutdown of facilities due to the cold wave in the U.S., and increased demand for eco-friendly products such as bioplastics are factors that can partially improve exports.
Steel is also analyzed to be oversupply as unit prices have fallen and emerging economies' ability to strengthen has expanded. In addition, exports are expected to decrease as the European Union (EU) Carbon Adjustment Border System (CBAM) has been piloted since October this year. The government expects high demand for electric steel plates for electric vehicle motors and steel pipes for energy.
Nuclear power plants, defense and bio are expected to emerge as promising export stocks. As each country increases defense costs due to the Russia-Ukraine War, defense exports are expected to increase and opportunities for nuclear power plant exports are expected to increase as energy security is strengthened.
Agricultural and fisheries foods are also expected to increase exports due to the spread of K-food. Premiums and processed foods are expected to drive export growth based on interest in healthy foods and simple meals that have spread since COVID-19. Cosmetics are also expected to expand due to the spread of K-beauty linked to the Korean Wave. The overall demand for products is expected to increase due to the easing of COVID-19 quarantine rules.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
