A recovery is being made in overseas orders to Korean builders. Amid a recovery of the global economy, orders from the Middle East and Asia shot up early this year.
Korean contractors' overseas orders have reached US$6.979 billion by February this year, up 143 percent from US$2.876 biillion in the same period last year, according to the International Contractors Association of Korea. The number of orders received slid to 112, down by four from last year, but the amount of orders increased thanks to large-scale projects.
In fact, in January of this year, Samsung Engineering signaled a recovery in orders, winning orders from Saudi Arabia (an ethylene glycol production facility) and Thailand (an olefin project) for US$686.27 million and US$627.10 million, respectively. Hyundai E&C won the second phase work of the Tuas Terminal project in Singapore last month. The second phase is to reclaim land and build a wharf for US$386.1 million. Last month, Daewoo E&C landed the Phase I project for THT Apartment in Vietnam for US$111.14 million.
By region, Korean builders chalked up big growth in orders from the Middle East and Asia. Orders from Asia increased by US$1.998 billion (140.3 percent) to US$3.481 billion this year from US$1.418 billion last year while orders from the Middle East by US$1.624 billion (143.7 percent) to US$2.755 billion from US1.130 billion. In terms of simple growth, orders from the Pacific and North America surged 4,055 percent from US$4.60 million last year to US$109.14 million this year, and those from Latin America 325.9 percent from US$114.19 million to US$601.31 million.
Orders from Asia were the largest at US$3.408 billion, followed by those from the Middle East at US$2.751 billion. Orders from both regions accounted for 88.2 percent.
Nevertheless, there are two major opinions. One is that it is premature to be optimistic about the overseas construction market and the other is that it is highly likely that a recovery will be made in overseas construction orders to Korean contractors this year.
"MENA (Middle East and North Africa) projects pursued by Korean EPC companies are estimated at US$28.3 billion," said researcher Lee Kwang-soo of Mirae Asset Daewoo. "The figure is 1.9 times larger than last year's US$14.6 billion in orders from the Middle East." By nations, Saudi Arabia’s projects will total US$8.8 billion, Algeria's US$5.7 billion, Kuwait's US$4 billion, and the UAE's US$3.5 billion.
“A continuing increase in Middle Eastern orders is putting projects postponed due to rising oil prices back on track," researcher Lee said. “A rise in orders from the Middle East is expected to contribute to an increase in overseas orders to Korean EPC companies with a relatively high market share in the Middle East."