South Korean shipbuilders and carmakers are set to report improved earnings this year on rising demand for high-end ships and SUVs, a major business lobby said Monday.
Shipbuilders will benefit from rising demand for liquefied natural gas carriers and environment-friendly ships due to the International Maritime Organization’s stricter emissions regulations. Carmakers are also expected to report an improved profitability on a weak won and robust sales of SUV models, according to the Federation of Korean Industries (FKI).
But steelmakers and semiconductors won’t likely report any meaningful rebound in business results due to rising costs and a slump in demand, it added.
“The country’s mainstay manufacturing industries face a worsening business environment due to an escalating trade war between the United States and China, and rising labor costs,” said FKI Secretary General Bae Sang-kun.
The business lobby said steelmakers are likely to suffer higher raw material prices following the collapse of Brazilian mining giant Vale SA’s mine waste dam in January.
They seem to be unable to pass most of the price hikes onto customers, the FKI said, adding high inventories remain woes for chipmakers.
The petrochemicals industry still faces uncertainties as the U.S. increases the production of shale gas and the trade war continues between the U.S. and China, it added.