[KMTI ➇] Korea's General '14 Machinery Exports

Korea's General '14 Machinery Exports 
Seen to Cross the US$50 Bil. Level

Korea's exports of general machinery in 2013 were estimated at US$47.6 billion, generating a trade surplus of US$13.2 billion for the sector, according to the Korea Association of Machinery Industry (KOAMI).

The association put forward the optimistic projection that exports of general machinery would increase 8.7% year-on-year and post US$51.6 billion in 2014.

First of all, facility investment is expected to expand, led by largescale plants, with the flow of the domestic economic conditions improving. The projection that overseas demand for machinery may rise to a certain extent also is a favorable factor. Of particular note, the move of manufacturers in the U.S., and other advanced countries toward 'Reshoring' - relocating their overseas production facilities back to their own countries - is expected to drive export growth.

It is noteworthy that, recently, newly emerging countries, including China and ASEAN countries, are increasing imports of machinery. However, the fact that the price competitiveness of Korean machinery is declining compared with Japanese products due to the weaker Japanese yen continuing since 2013 and a persisting slowdown of the Middle East economy may serve as negative factors for Korea's exports.

[KMTS ➅] Korea Automobile Production & Exports in 2013

Korean Car Export Amount Hits New Peak at US$48.7 Bil.

The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) has announced that based on the preliminary estimates, production of cars decreased by 0.9%, and exports and domestic sales decreased by 2.7% and 0.3%, respectively, in 2013.

The production volume was 4,521,638 units in 2013, a year-on-year decrease of 0.9% and a second consecutive year of declining production, due to major manufacturers’ closing on weekends and partial strikes, which have caused a production loss of 200,000 units, coupled with poor sales.

The export volume for 2013 was 3,086,394 units, a year-on-year decrease of 2.7%, and recorded a decline for the first time in four years since 2009 due to the high won and low yen trend, expanded global uncertainties and supply problems of major manufacturers. Nevertheless, the export amount of finished cars (based on MTI 741) reached a record-high level of USD 48.7 billion with a year-on-year increase of 3.1%, thanks to growth in the market share of large passenger vehicles and RVs.

By region, exports of Korean cars were robust in the US market, which has shown a stable economic recovery, and grew in the EU and in Asia, reflecting the economic growth. However, exports declined in Latin America and Eastern Europe due to expanding local production. In China, which accounts for half of all exports to Asia, exports grew by 13.2%, prompted by growing demand caused by the urbanization of inland regions.

By vehicle type, light vehicles with high fuel efficiency thrived due to global economic uncertainties, while large vehicles grew thanks to an improvement in the brand image of Korean cars. SUVs and CDVs have also recorded growth as global demand has grown. Mid-sized and small-sized vehicles decreased as Japanese manufacturers recovered their competitiveness and adopted an aggressive sales promotion strategy, making the most of the low yen.

2013 domestic sales was 1,537,590 units, showing a slight year-on-year decrease of 0.3% and a second consecutive year of decline, due to delays in the economic recovery and advance demands in the 4th quarter of 2012 prompted by individual consumption tax cuts. Despite the launch of popular new SUVs and CDVs, the growing demand for light commercial vehicles and active marketing from the industry, mid-sized, light and small-sized vehicles have seen a decline due to the overall market demand decline and the aging of key models.

Sales of imported cars was 156,497 units with year-on-year growth of 19.6% as diverse new vehicles with a focus on the below-2,000cc class were launched and demand among consumers in their 20s and 30s grew. Over 10,000 units were sold monthly throughout the year.

Meanwhile, the domestic automobile market increased production by 4.3%, exports by 4.5% and domestic sales by △6.9% in December 2013, compared to the same month in the previous year.

[KMTI ➄] Korea's exports and imports of parts & materials in 2013

Korea's Parts & Materials Trade Tops US$428.6 Bil. in 2013

Korea's exports and imports of parts & materials in 2013 increased 3.8% year-on-year to US$263.1 billion and 1.9% year-on-year to US$165.5 billion, respectively.

Of particular note, the export value of the parts and materials industry in 2013 was the highest in history, accounting for 47% of the nation's total industrial export amount (US$559.7 billion). Furthermore, the industry's trade surplus reached US$976 billion, more than double the combined trade surplus of all industries (US$44.1 billion).

By business type, whereas parts & materials export growth in 2013 was led by electronic parts (up 57% year-on-year), electrical machinery parts (up 9%), chemical compounds & products (up 15%) and nonmetallic minerals (up 7%), export declines were witnessed in primary metals (-25%), general machinery parts (-17%) and assembly metal products (-8%) compared with 2012.

In terms of region, the trade balance in 2013 improved over 2012 with emerging markets, Latin America (up 16%), Southeast Asia (up 30%), etc., including China (up 38%).

In 2013, China, Korea's biggest trade partner, became the largest export destination for the parts & materials field with exports of US$91.5 billion. It was analyzed that closer trade relations would be required in the future as trade surpluses continued centering on high value-added business types, such as electronic parts and chemical products.

Korea's parts & materials trade balance with Japan recorded a deficit of US$20.5 billion (exports: US$13.9 billion, imports: US$34.4 billion) in 2013, sustaining the trade imbalance. However, the trade deficit scale in parts & materials declined for the third consecutive year and the import dependence level on Japanese products in the field also recorded a historic low of 20.8% in 2013.

The improvement in Korea's parts & materials trade deficit with Japan owed to the strengthened competitiveness of Korean parts & materials industry, a slowdown in import volume by demand industries like shipbuilding and automobiles and diversification of import sources.

In 2014, Korea's parts & materials industry is expected to realize US$275 billion in exports and US$173.8 billion in imports amid a mild growth trend of the global economy following the recovery of advanced economies.

[KMTI ➃] Korean Machine Tool Exports in 2013

Korean Machine Tool Exports Plunge 13.4% in 2013

Korean machine tool exports in 2013 fell 13.4% year-on-year to US$2.21 billion. This is attributed to comparatively large declines in the Asian market, including China and India, as well as in the Latin American market, including Brazil, due to the growth slowdown of the global economy.

Exports to the United States in 2013 were sound compared with other regions, with the monthly export total exceeding US$200 million continuously through the second quarter, but weakened after entering the third quarter.

In the case of exports to Europe, uncertainties continued due to the European economic crisis. In the second half, however, exports to parts of the region, Germany, Italy, Russia, etc., grew, showing improvement.

In terms of exports by item, exports of both NC lathes and machining centers in 2013 decreased year-on-year, but exports of presses grew with automobile-related exports expanding to China, India, etc. Meanwhile, exports of boring machines, grinding machines, milling machines and general purpose lathes all recorded double-digit declines compared with 2012.