Canada Wood Today | The Canada Wood Group

Korean Economy, Construction & Lumber Shipments

Tai Jeong

By Tai Jeong

Technical Director, Canada Wood Korea

August 13, 2015

Economic Update:

South Korea lowered its 2015 economic growth outlook to 3.1%, citing slumping exports and the negative impact of the Middle East Respiratory Syndrome (MERS) outbreak.Killing 32 people since May 20, the outbreak of MERS has hurt consumption and the service sector as many people have been staying at home to avoid any risk of being infected with the disease.In the first five months of 2015, South Korea’s cumulative exports reached US$222.1 billion, down 5.7% from a year earlier, while imports came to US$185.6 billion, representing a 16% drop.

South Korea’s trade surplus in the first five months of 2015 stood at US$ 36.5 billion as imports dropped at a faster pace than exports.Amid escalating concerns that the outbreak of MERS will seriously hurt consumption and economic growth as consumers avoid public venues and foreigners cancel travel plans on fears of catching the illness, South Korean consumer sentiment hits over 2-year low on this MERS scare.South Korea’s consumer prices edged up 0.5% on-year in May from a year earlier and jobless rate stood at 3.8% in May, down from 3.9% in April as more people hired in the manufacturing and service sectors.

The exchange rate for Canadian Dollar averaged at 897.27 won in May, 2015, dropped 4.72 % from 941.72 in May, 2014 and up by 1.90% from 880.57 in one month earlier.

Housing Construction

Korean Housing Starts Summary and Market Condition:

South Korea’s housing starts in year-to-date April of 2015 increased 13.6% to 33,064 buildings from a year earlier 29,102 buildings owing to the continuous government measures to revamp the country’s property market and the increased demand from end-users on new housings.  Housing permits in the same period also increased 10.1% to 35,505 buildings from a year earlier 32,252 buildings.

The number of wood building permits and wood building starts in year-to-date April of 2015 continuously increased 17.6% to 4,865 buildings and 13.1% to 4,045 buildings respectively compared with those in 2014

Wood Building 2010 2011 2012 2013 2014 Jan.-Apr. Jan.- Apr. (%)
2014 YTD 2015 YTD
Number of Permits 10,922 11,686 11,826 11,710 13,062 4,138 4,865 17.6
Number of Starts 9,585 10,037 10,369 10,339 11,493 3,576 4,045 13.1

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

Helped by the South Korean government’s stimulus efforts for deregulation and tax benefits and record-low bank interest rates, the market value of all apartments in South Korea grew more than 2% over the past six months.

The value of 7,066,644 apartments across the country totaled around 2,072 trillion won (US$1.9 trillion) as of June, up 2.4% from 2,022 trillion won six months earlier, according to data by a real estate information provider.  Earlier in June, the Bank of Korea cut its benchmark interest rate to an all-time low of 1.5% in a bid to prop up the sputtering economy.

Lumber Shipments

BC softwood lumber export volume to South Korea for the first four months in 2015 dramatically increased 55.5% to 93,626 cubic meters as compared to 60,220 cubic meters for the same period in 2014.  The increase compared with the same period last year was largely attributed to remarkable increase in WFC housing starts and reflection of unexpected export drop caused by Vancouver port strike happened in March 2014.

Export value in year-to-date April also increased 62.1% to CAD$25.834 million as compared to CAD$15.937 million in the same period in 2014, owing to the increased volume and the strengthened Korean won against Canadian dollar.

BC Softwood Lumber Exports to South Korea

2013/2015 Cumulative

Cumulative Volume (Cubic Metres)

  Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
Total 2013 11,931 28,768 56,824 80,774 108,221 129,374 160,397 179,051 199,755 210,472 223,550 237,801
Total 2014 11,866 37,418 38,479 60,220 108,145 141,014 164,118 191,037 206,966 223,279 236,435 252,422
Total 2015 15,335 31,610 62,527 93,626                

Cumulative Value (Thousands of Dollars)

  Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
Total 2013 2,696 6,701 14,311 20,269 27,548 33,171 40,630 45,131 50,022 52,575 55,348 59,438
Total 2014 2,980 10,047 10,263 15,937 28,728 37,363 43,379 49,837 53,671 58,213 62,159 67,217
Total 2015 4,864 10,309 18,355 25,834