Canada Wood Today | The Canada Wood Group

Korean Economy, Construction, Lumber Shipments

Tai Jeong

By Tai Jeong

Technical Director, Canada Wood Korea

June 8, 2015

IMG_1800South Korea posted a trade surplus for the 39th month in a row in April of 2015 by reaching US$8.5 billion, up marginally from US$ 8.4 billion in March as imports dropped at a faster pace than exports.

Slump in major countries such as the US, China, European Union countries and Japan is weighing on South Korean economy.  Exports dropped 8% on-year to $46.2 billion in April, while imports nosedived 17.8% to $37.7 billion.  The drop in exports was attributed to a cut in global oil prices, which, in turn, has significantly reduced the price of petroleum and petrochemical products, South Korea’s key export items.  The country’s overall imports of raw materials, including energy, plunged over 25% while imports of capital and consumer goods, on the other hand, gained 2.1% and 4.7% on year in April.

South Korea’s consumer prices edged up 0.4% on-year in April fueling worries of deflation and mainly due to a drop in international crude prices that impacted refined petroleum products, as well as utilities.

South Korea’s jobless rate dipped to 3.9% in April from a month earlier as more people were hired in the manufacturing and service sectors. The data showed that manufacturing added 167,000 jobs in April with health care and social services contributing 83,000, along with 63,000 for the construction sector.  The monthly income of South Korean households increased 2.6% on-year in the first quarter thanks to more employment and increased wages.

The real value of the South Korean won against other key currencies hit an over seven-year high in April in a negative development for the country’s exports.

The won traded at an average of 1,088.7 against the U.S. dollar in April, strengthening 2.1% from 1,112.6 in the previous month.  The exchange rate for Canadian Dollar averaged at 880.57 won in April, 2015, dropped 7.30 % from 949.94 in April, 2014 and slightly down by 0.24% from 882.70 in one month earlier.

Construction

South Korea’s housing starts in year-to-date March of 2015 increased 13.6% to 21,051 buildings from a year earlier 18,528 buildings owing to the continuous government measures to revamp the country’s property market and the increased demand from end-users on new housings rather than existing rental housings.  Housing permits in the same period also increased 6.4% to 22,492 buildings from a year earlier 21,140 buildings.

The number of wood building permits and wood building starts in year-to-date March of 2015 remarkably increased 21.5% to 3,278 buildings and 23.2% to 2,635 buildings respectively compared with those in 2014.

Wood Building 2010 2011 2012 2013 2014 Jan.-Mar. Jan.- Mar. (%)
2014 YTD 2015 YTD
Number of Permits 10,922 11,686 11,826 11,710 13,062 2,697 3,278 21.5
Number of Starts 9,585 10,037 10,369 10,339 11,493 2,138 2,635 23.2

Source: Ministry of Land, Infrastructure and Transport (as a percent compared to previous year same month and period)

Housing prices in South Korea seem to be on a sustained recovery path reflecting growing demand for home purchases amid eased lending circumstances developed by the government eased lending regulations, particularly on mortgage loans and increased “jeonse” price rising 1.1% on-month in April and 3.19% from the end of last year. Jeonse is a local property lease system in which tenants pay their landlord a large deposit instead of monthly rent. It usually involves a two-year contract.

The number of home transactions in South Korea reached 111,689 in March, up 24.4% from a year earlier.

Lumber Shipments

BC softwood lumber export volume to South Korea for the first three months in 2015 dramatically increased 62.5% to 62,527 cubic meters as compared to 38,479 cubic meters for the same period in 2014.  The increase was largely attributed to remarkable increase in WFC housing starts and compensation of less purchase in February caused by the three-day traditional Lunar New Year’s Day break that fell in February this year.

Export value in year-to-date March also increased 79% to CAD$18.355 million as compared to CAD$10.263 million in the same period in 2014, owing to the increased volume and the strengthened Korean won against Canadian dollar.

Click Graph to Enlarge

korea lumber shipments