South Korea’s petrochemicals exports fell slightly last year, marking the first fall in five years since 2009, mainly due to a drop in demand in their biggest export destination, China, data showed Wednesday.
Exports of petrochemicals produced by South Korean firms declined 0.3 percent to $48.2 billion in 2014, with outbound shipment of petrochemicals to China dropping 6.2 percent to $22 billion, according to data by the Korea Petrochemical Industry Association.
The proportion of South Korea’s petrochemicals exports to China to the total fell 45.7 percent from 48.6 percent, the data showed.
The KPIA blamed the fall in the country’s petrochemicals exports on a decreased demand for South Korea’s petrochemical products in China stemming from a slowdown in the Chinese economy and the country’s increased self-supply of petrochemicals.
The combined production of three major petrochemicals — resin, fiber and rubber — decreased 2.6 percent to 21.27 million tons in 2014, down 2.6 percent from a year ago, while their exports declined 2.1 percent to 11.78 million tons.
Outbound shipments of the three petrochemicals to China plunged 17.2 percent on-year to 5.74 million tons last year, with the value of exports to China dropping 13.6 percent to US$9.6 billion, the KPIA said.
South Korean petrochemical firms had benefited from China’s rapid economic growth over the past decade, but they are facing growing challenges from emerging Chinese rivals and the slipping economic momentum in the world’s second-largest economy.
China’s 7.4 percent economic growth last year marked the slowest in decades, and many economists expect the growth to slow further this year as Beijing officials are making cautious efforts to prevent its economy from making a hard landing.
Experts say the Korean petrochemical industry should counter the slump by shifting their focus to a new growth engine to tap into the rapidly maturing market.
“The Chinese petrochemical industry will speed up local productions to deal with weaker manufacturing in the wake of the new normal of lower growth,” Park Jang-hyun, a researcher at the KPIA, said. “South Korean firms should carry out restructuring in areas competing with Chinese rivals to avert supply glut, and develop advanced products to adjust to the changing industry structure in China.”
Source: Yonhap
