International Oil Prices Rebound, June Export and Import Prices Rise for Second Consecutive Month

Bank of Korea 'June 2020 Export and Import Price Index'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] As international oil prices, which had plummeted due to the impact of the novel coronavirus infection (COVID-19), rebounded, export and import prices in June rose across the board. This marks the second consecutive month of month-on-month increases.

According to the export-import price index statistics released by the Bank of Korea on the 15th, last month's export price index was 94.75, up 0.3% from the previous month. This is the second consecutive month of month-on-month increases. However, compared to the same month last year, it fell 6.0%, continuing a decline for 13 consecutive months.

With the rebound in oil prices, coal and petroleum products (25.7%) and chemical products (0.2%) rose, causing the prices of manufactured goods to increase by 0.3%.

Looking at major items that fluctuated month-on-month, diesel (30.4%), gasoline (36.7%), and ethylene (39.6%) increased. On the other hand, flash memory fell 4.9%, and DRAM also dropped 1.5%.

Kang Hwan-gu, head of the price statistics team at the Bank of Korea, explained, "As the won-dollar exchange rate declined, export prices for computers, electronic and optical equipment fell," adding, "In the case of semiconductor export prices, they fell based on contract prices, and with the added effect of the exchange rate decline, they dropped 2.2% in won terms." The won-dollar exchange rate, which was 1,228.67 won in May, fell 1.5% to 1,210.01 won last month.

He continued, "Compared to the same month last year, the negative margin is narrowing, so we judge that the semiconductor market itself is showing signs of recovery," but he also forecasted, "However, whether semiconductor prices will show a significant recovery in the second half of the year similar to the first half will depend on the future containment of COVID-19."

Import prices also rose for the second consecutive month, recording 101.33, up 2.5% from the previous month. Due to the rise in international oil prices, intermediate goods, centered on coal and petroleum products (27.0%), increased 0.9% month-on-month. Raw materials rose 9.9%, with mining products up 11.9%.

Looking at major imported items, naphtha (37.6%) and bunker C oil (25.8%) mainly increased. However, import prices fell 7.3% compared to the same month last year, marking a decline for five consecutive months.

International oil prices, which had sharply fallen due to decreased crude oil demand and storage facility shortages caused by the COVID-19 crisis, are rebounding faster than expected. Previously, in the international crude oil market, Dubai crude prices rose 33.9% month-on-month from an average of $30.47 per barrel in May to $40.80 in June.

Team leader Kang said, "We believe that the rise in import prices will have a similar impact on domestic consumer prices with a time lag," but added, "However, consumer prices are also greatly influenced by domestic demand and service prices."