South Korea’s exports totaled US$39.56 billion last month, down 11.1 percent from a year ago, the Ministry of Trade, Industry and Energy announced on March 1.
For reference, exports fell 1.3 percent and 5.8 percent year on year in December 2018 and January 2019, respectively. This is the first time since July 2016 that South Korea’s exports fell for three months in a row.
South Korea’s semiconductor exports reached US$6,773 million with a year-on-year decline of 24.8 percent last month. This has to do with the continuous decline in chip price that started last year, which can be attributed to a delay in global IT giants’ investment in data centers. The average contract price of 8 Gb DDR4 chips dropped from US$9.3 to US$5.9 between February 2018 and last month. Likewise, the price of 128 Gb NAND flash chips fell 25.2 percent to US$5.
The export unit price of petroleum products fell, too. Although international oil prices rose, the export unit price could not rise due to an increase in supply from the United States. South Korea’s petroleum product exports added up to US$2,855 million last month, down 14 percent from a year ago. Its petrochemical exports fell 14.3 percent to US$3,487 million as well. Its ship, wireless communications equipment and display exports decreased by 46.5 percent, 15.3 percent and 11 percent, respectively.
On the other hand, Korea’s automobile exports rose 2.7 percent to US$2,882 million. General machinery and steel exports increased by 2.7 percent and 1.3 percent, respectively. Exports from South Korea to China dropped for the fourth consecutive month, with a decline of 17.4 percent, due to the ongoing slowdown of the Chinese economy.
The ministry explained that the back-to-back decline in exports is nothing to worry about. “The average daily exports increased from US$1.93 billion to US$2.08 billion from January to February and new major export items showed an improvement in export performance,” it said. The items include bio-health products (up 24.5 percent), secondary batteries (up 10.7 percent), OLEDs (up 7.9 percent), electric vehicles (up 92.4 percent), cosmetics (up 21.5 percent), agrifood and seafood (up 2.9 percent), and plastic products (up 5.7 percent).
South Korea’s trade surplus totaled US$3.1 billion and the country remained in the black for the 85th consecutive month. For reference, its average monthly trade surplus was US$5.9 billion in 2018. South Korea’s imports added up to US$36.47 billion last month, down 12.6 percent from a year ago.
In the meantime, the Korea Development Institute estimated last month that South Korea’s exports would increase 2.2 percent this year, lowering its own estimate by 1.9 percentage points in four months. An increasing number of experts say that its annual exports may fall in three years this year with its exports falling more and more rapidly.
Semiconductor exports and exports to China are the key to recovery. The former, which account for 20 percent of South Korea’s total exports, dropped 24.8 percent last month. The latter, which represent 27 percent of the total, fell 17.4 percent during the same period. According to World Semiconductor Trade Statistics (WSTS), the global memory chip market is likely to show a negative growth of 0.3 percent this year to US$164.5 billion. The International Monetary Fund (IMF) recently adjusted its Chinese economic growth forecast for this year from 6.4 percent to 6.2 percent.