Overseas plant orders plunge 33.5% in Q3

Overseas plant building orders won by Korean companies slid 33.5 percent to $8.7 billion in the third quarter from a year earlier, mainly due to delayed orders from the Middle East, the world’s largest plant construction market, the Ministry of Knowledge Economy said on Tuesday.

“The global economic slowdown forced some plant building projects in the Middle East to be delayed,” Joo Hyun-dong, an official from the ministry said.

Affected by worsening third-quarter performance, accumulated overseas orders for the first nine months this year also dropped 9.7 percent from the same period last year to $37.4 billion.

By sector, orders for construction on desalinization and power generation facilities, which usually make up about 20 percent of the total, fell the most. They posted a 45 percent drop to $6.8 billion in the January-September period from the same period last year.

Despite the sharp fall in plant orders in the third quarter, the ministry, however, stayed positive for the industry’s short- and mid-term outlook.

“We expect that the nation’s plant industry will manage to achieve its annual target of $65 billion by the end of this year,” Joo said. “The overseas plant industry will continue to grow in the longer term as well, boosted by rising demand not only in the Middle East but also in the emerging markets of South America and Asia.”

The ministry projected that demand for plant construction in the Middle East is expected to expand to $285 billion by 2016 from 2012, led by six member countries of the Gulf Cooperation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.

Emerging markets are expected to launch more plant building orders in the future, regardless of the global economic conditions. To maximize opportunities in emerging markets, the Korean government has sought package deals when it signs industrial partnerships with less developed markets. Under the deal, the two parties help each other in varied industries, ranging from plant construction, technology transfer and natural resource extraction.

By Seo Jee-yeon (jyseo@hearldcorp.com)