Exports surged in February but Ukraine conflict will hurt

Export cargo docked at the port in Busan in February. [YONHAP]

Korea’s exports continued their bullish rise despite tensions between Russia and the rest of the world and rising oil prices.

Exports in February grew 20.6 percent year-on-year to reach $53.9 billion, according to the Ministry of Trade, Industry and Energy on Tuesday.

It was the first time Korea's exports exceeded $50 billion for a February.

The previous record for the month was February 2012's $46.3 billion.

Korea's exports have risen for 16 straight months and grown by double digit rates for 12 starting last March.

Imports were also the largest for a February, increasing 25.1 percent to reach $53 billion. This increase owed a lot to rising international oil prices.

Thanks to more robust exports, Korea recorded a modest trade surplus in February, $840 million, for the first time in three month months.

Most key export categories including semiconductors, mobile telecommunication devices, steel, petrochemicals and oil products saw increases year-on-year.

Korea’s biggest export product, semiconductors, grew 24 percent year-on-year to reach $10.4 billion.

This was the first February in which semiconductor exports exceeded $10 billion.

Chip exports exceeded $10 billion for 10 straight months and have been growing for 20 months.

Computer exports increased 44.5 percent, displays 39.2 percent, steel 40 percent, petrochemicals 24.7 percent, refined oil 66.2 percent and biohealth goods 24.7 percent.
Although automobile exports grew 9.1 percent, automobile parts declined 1.1 percent due to shortages of vehicle semiconductors.
Exports to major markets -- including China, the U.S. and EU -- set new records for the month of February.

Exports to China grew 16 percent to $13 billion. Exports to the U.S. grew 20.9 percent to $7.7 billion and to the EU they grew 8.6 percent to $5.5 billion.

Exports to China have been growing for 16 straight months. To the U.S. and EU they have been increasing for 18.

Exports to Asean increased 38.4 percent; to Japan 12.7 percent; and to the Middle East 30.4 percent.

Even exports to the Commonwealth of Independent States (CIS), the 12 countries that used to form the Soviet Union including Russia and Ukraine, saw exports increase 45.6 percent.

Exports to Russia, which account for 73 percent of exports to the CIS region, have been growing for 14 straight months.

“Even with the situation in Ukraine worsening and uncertainties increasing, exports to Russia and Ukraine continue to grow in February,” said a trade ministry official.

But the invasion and sanctions on Russia are expected to hurt exports in March.

The Korean government on Monday announced it would restrict exports of strategic goods to Russia.

One of the industries expected to suffer is the automobile industry.

“Russia is one of Korea’s major markets for automobiles,” said a trade ministry official.

Last year, Korea exported $2.5 billion in automobiles to Russia, 25.5 percent of overall exports to the country.

Automobile parts account for around 15 percent of all exports to Russia.

Hyundai Motor, which has a plant in Saint-Petersburg, has the leading market share of all vehicles sold in Russia.

In 2014 when Russia illegally annexed Crimea and the West applied economic sanctions, Korea’s automobile exports to Russia dropped 62 percent.

Another industry that could be affected is shipbuilding.

Korea has contracts for seven ships with Russian buyers, including LNG vessels for 8 trillion won.

Rising international energy prices due to the Russia-Ukraine conflict are another major concern.

Last month, Korea's energy imports totaled $12.5 billion, a 50 percent increase compared to a year ago.

In February, the average price of Dubai crude, Korea's main import, was $94.10 per barrel, a 13 percent increase from January’s $83.47.

When compared to a year ago, the average Dubai crude price has increased 54 percent.

Russia is the second-biggest oil producer in the world after the U.S.

In terms of oil imports, Korea ranks fourth in the world after China, the U.S. and India.

According to a study by Hyundai Research Institute, once international oil prices exceed $100 per barrel, Korea’s consumer price grows an additional 1.1 percentage points.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]