(C) Reuters. FILE PHOTO: A truck drives between shipping containers at a container terminal at Incheon port in Incheon
By Cynthia Kim and Joori Roh
SEOUL (Reuters) – South Korea’s exports to China slumped in the first 20 days of February and overall sales per working day tumbled, as a coronavirus outbreak disrupted global supply chains and threatened to put a choke hold on Asia’s fourth-largest economy.
Exports to China, where the epidemic originated, shrank 3.7% from the same period a year earlier, customs data showed on Friday, portending worse to come over the next few months.
“Per-day exports to China probably was far worse” in seasonally adjusted terms, a Korea Customs Service official said after the data was released.
The outbound shipments are being seen as a bellwether for world trade because South Korea is the first major exporting economy to release such data since the start of the epidemic.
Overseas sales in the first 20 days of February rose 12.4%. Standard Charted Korea economist Park Chong-hoon said the figure was flattered by there being three more working days in the period than last year due to the shifting Lunar New Year holiday.
Average exports-per working day contracted 9.3%, however, following a 3.2% fall seen for the first 10 days of February, as demand took a knock from the spreading coronavirus.
“We should really focus on average exports per working day,” said Park. “The outbreak of the virus significantly pulled down shipments out of Korea, and it will only worsen in the coming months.”
While shipments to China as well as Singapore contracted, exports soared 24.2% to the United States and 19.8% to Vietnam, as South Korean goods became substitutes for those made in China, analysts said.
A breakdown of the trade data showed overseas sales of memory chips and car components jumped 15.4% and 40.6% respectively. Exports of vessels, however, tumbled 29%.
SURGE IN NEW CASES
South Korea reported its first death from the virus and a surge in new cases on Thursday, spurring concerns about the virus spreading outside China.
Analysts expect the outbreak to hurt global growth, with South Korean manufacturers expecting delivery bottlenecks, production disruption and a downturn in consumer spending.
President Moon Jae-in on Friday said measures to head off the impact of the coronavirus will be announced by the end of this month as the economy is an “emergency” situation.
The Seoul city government banned rallies and closed Shinchenji church services – which suffered a spike in coronavirus cases – as Korea reported another 52 confirmed cases, taking the national total to 156.
“This kind of surge in new cases poses a huge risk for Korean manufacturers. For example if there is an infected case among those working in the chip sector, that will lead to shuttering of factories,” said Meritz Securities economist Lee Seung-hoon.
South Korean chipmaker SK Hynix Inc (KS:000660), the world’s second-biggest maker of memory chips after compatriot Samsung Electronics Co Ltd (KS:005930), on Thursday said 800 employees had quarantined themselves after a trainee had close contact with a virus patient in the city of Daegu, the epicenter of an outbreak in South Korea.
Meanwhile, Hyundai Motor Co (KS:005380) said it plans to gradually increase local production due to a lack of parts from its China-based suppliers.
In Japan, factory activity suffered its steepest contraction in seven years in February, offering the clearest evidence yet of the epidemic’s effects on Asia’s trade-reliant economies.
South Korea’s February exports to China shrink as virus hits supply chains