Wednesday, August 21, 2013

[KMTI] 2013 Outlook : Mild but Steady Recovery Looming

Production.. 5.1% Rise Seen to 6.75 Trillion Won
Owing to domestic facility investment expansion and increased exports to major markets, including the United States and China, as well as emerging markets, production in 2013 is projected at 6.75 trillion won, up 5.1% from 2012.
Domestic facility investment expansion, expected to reach 5.3% in 2013, economic stimulus effects following the launch of new governments in China, USA, etc. and growth in emerging markets, including India, Turkey and Brazil, are factors projected to contribute to the growth of Korea's machine tool exports and production.
Facility investment, although external uncertainties are limiting improvement in investment sentiment, is expected to increase 5.3% from 0% growth in 2012, implying a 'low in the 1st half and high in the 2nd half' growth phenomenon at 2.2% and 10.8%, respectively.
By business type, while facility investment continues to expand in non-IT sectors like automobiles and machinery, mobile equipment-related facility investment may increase again, so machine tool demand is expected to pick up in 2013.
In contrast, since a low 3% level of domestic economic growth is projected for 2013, coupled with weaker domestic demand for development of new vehicles, the machine tool industry is expected to register only single-digit growth.
According to a questionnaire survey regarding the 2013 business outlook conducted by KOMMA in December last year on a total 31 member companies, most of the respondents established sales growth targets at about 9.1% (-2.8% in 1st half and 24.8% in 2nd half). Among them, manufacturers of complete machines set sales growth goals at about 8.8% (-0.6% in 1st half and 24.3% in 2nd half).

Exports.. Seen to top US$2.75 Billion With 8.3% Rise
Machine tool exports in 2013 are forecasted to realize US$2.75 billion, up 8.3% year-on-year, owing to continuous growth of exports to the nation's largest export markets, China and the USA, and through reinforcement of marketing strategies for emerging markets, including BRICs and Southeast Asia.
However, fierce competition with major exporters, such as Japan, Germany and Taiwan, and rapid growth of Chinese companies combined with weakening of export competitiveness caused by unfavorable foreign exchange rates and low global economic growth are likely to serve as factors that limit export expansion.

Imports.. Near Double-Digit Increase Expected
Machine tool imports in 2013 are expected to increase 9.7% year-on-year to US$1.69 billion due to the base effect of import results in 2012, facility investment growth, foreign exchange rate appreciation and other factors.
Affected by low domestic economic growth and limited demand for development of new vehicles, significant import growth is unlikely. However, imports of Japanese machine tools may increase due to mitigation of the strong yen currency.
Under such conditions, overseas companies in Germany, Switzerland and Italy are expected to utilize the Korea-EU FTA more actively with a focus on comparatively high-end products and process-intensive-type models, including complex and automation-related machine tools.

Consumption.. Projected to Rise 7.2% to 5.6 Trillion Won
As production, exports and imports are all projected to post single-digit growth, machine tool consumption in 2013 is expected to increase 7.2% year-on-year to about 5.6 trillion won. Although consumption will grow for the first time in two years, the rate is likely to be in the single digits.

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