South Korean Economy, Housing & Lumber Shipments
Owing to increased construction investment and exports, South Korea’s economy grew at a fast pace in the first quarter of 2017 showing a 0.9% GDP increase from the previous quarter. Both construction and facility investments grew 5.3% and 4.3% respectively in the first quarter from the previous quarter.Gross domestic income rose 2.3% in the first quarter of 2017 from the previous quarter, compared with a 0.8% expansion three months earlier.
On a steady recovery in exports, South Korea posted a trade surplus for 63 straight months in April since February 2012 showing a surplus of US$13 billion with 24.1% on-year increase in exports to US$51 billion and 17.3% on-year increase in imports to US$38 billion.South Korea’s consumer prices increase 1.9% in April, slowing down from the previous month’s 2.2% rise amid high-flying oil prices. Unemployment rate hit a 17-year high at 4.2% in April, up 0.3 percentage point from the same month last year.
The exchange rate for Canadian Dollar averaged at 844.08 won in April, 2017, down by 5.52% from 893.35 in April, 2016 and also slightly down by 0.44 % from 847.85 in one month earlier.
South Korea’s housing starts in number of buildings for the first three months of 2017 decreased 2.7% to 23,574 buildings from a year earlier 24,224 buildings while that in number of units significantly decreased 15% to 100,124 units from a year earlier 117,742 units.
Housing permits in number of buildings for the same period of 2017 also decreased 0.6% to 27,825 buildings from a year earlier 28,005 buildings while that in number of units significantly decreased 13.4% to 141,100 units from a year earlier 163,009 units amid ongoing government intervention to limit the supply of new homes, especially new apartments in Seoul, as a way of limiting the rise in household debts.
Though the overall residential construction sector struggles, the number of wood building permits for the first three months of 2017 increased 4.7% to 3,808 buildings from a year earlier. However, the number of wood building starts for the same period slightly decreased 1.1% to 3,172 buildings.
Both total floor areas of wood building permits and starts for the same period in 2017 increased 12.5% and 5.8% to 368,703 m2 and 303,770 m2 respectively from a year earlier.
BC softwood lumber export volume to South Korea for the first three months of 2017 decreased 14.2% to 68,876 cubic meters as compared to 80,311 cubic meters for the same period of 2016.
Export value for the same period also decreased 9.9% to CAD$18.264 million as compared to CAD$20.285 million for the same period in 2016.
BC Softwood Lumber Exports to South Korea
According to the data from Korea Forest Service, Chile continued to be ranked as the number one lumber export country for the first three months of 2017 with a 44.1% increase to 162,680 m3 followed by Russia with a 16.4% decrease to 91,480 m3 and Canada with a 26.4% decrease to 39,850 m3.
Germany ranked as the 4th largest lumber export country with a remarkable 104.5% increase to 37,850 m3 followed by New Zealand with a 24.9 decrease to 25,870 m3 and Finland with a 64.9% increase to 21,540 m3.
Amid historically low levels of lumber prices in European countries, European mills continue to gain lumber market share in South Korea, especially as they increase their volume of kiln-dried and higher-grade lumber. These factors pose a growing threat to Canadian lumber export to South Korea.