South Korea has experienced a decline in export prices, which fell by 0.6% in February compared to January, while import prices also decreased by 0.8%. This data, released by the Bank of Korea, highlights ongoing challenges in the country's trade dynamics. Year-on-year, export prices have increased by 6.3%, though this represents a slowing trend from an impressive 8.6% increase recorded in January.
On the other hand, import prices rose by 4.6%, following a 6.5% rise the previous month. In terms of volume, South Korea's export volume saw a growth of 2.8% year-on-year, complemented by an export value increase of 1.3%. Import volume also rose by 2.4%, yet the import value witnessed a slight decline of 0.2%.
This data reflects an essential indicator known as the net barter terms of trade index, which evaluates the relative pricing of exports compared to imports, showing improvement at 1.2% year-on-year. The manufacturing sector faced challenges, with manufacturing export prices declining by 0.5% month-over-month while still achieving a notable annual gain of 6.4%.
In contrast, agricultural, forestry, and marine product export prices experienced a modest dip of 0.4% for the month but rose by 2.6% year-on-year. Looking into imports, raw material import prices dropped by 2.3% compared to the previous month, although they recorded an annual rise of 1.8%. Intermediate goods prices showed a slight decrease of 0.2% from January, but they increased by 6.5% when compared to a year earlier.
These fluctuations in trade prices come amid pressure from the United States, as negotiations are ongoing regarding reciprocal tariffs affecting energy and shipbuilding sectors. The situation is further complicated by former President Trump’s 25% tariffs imposed on steel and aluminum imports. This has led significant domestic players such as POSCO and Hyundai Steel to explore the feasibility of establishing new manufacturing facilities in the U.S.
in a strategic move to ensure sustained market access..