We observe that recent increases in oil prices boosted petroleum and petrochemical exports in March, up 54.9% and 5.8%, respectively. However, the data showed that exports of gasoline, diesel, and kerosene fell in volume in the later part of March. The decline is mainly due to the implementation of export controls on 13 March.
Price effects worked favourably for now. However, since Korean exporters rely heavily on Middle Eastern products, we are more cautious about the export outlook for these sectors in the near term. The government has banned the exports of Naphtha and tightly controlled oil products since mid-March. The government is considering an emergency decree to manage key raw materials. We see a higher probability that short-term exports of oil and chemicals may be interrupted by these controls and supply disruptions.
Other than these two sectors, automobile exports rebounded 2.2%, following a 20.1% drop in February. Home appliances (-7.7%) and steel (-2.2%) also continued to drop, which seems more related to the US tariffs and weak global demand.
By export destination, exports to China and the US rose the most – by 64.2% and 47.1%, respectively. This was mostly driven by strong IT exports. Meanwhile, exports to the Middle East dropped 49.1% due to the ongoing war.