Die & Mold Industry’s Exports in Fourth Quarter Barely Hover Above “USD 500 Million”

KODMIC newsletter  May 1, 2022 (No. 697)

Exports amount to USD 516.32 million, down 10.6% year-on-year

In the first quarter of 2022, die & mold exports shrunk by more than 10% from the first quarter of 2021.  Concerns over the prolonging sluggish performance in the die & mold industry that began to be observed from the previous year is becoming a reality.

Based on KODMIC’s analysis of the die & mold export performance in the first quarter of this year based on the HS Code (international industry classification standard), exports amounted to USD 516.32 million which is down 10.6% from USD 580 million in the first quarter of 2021.

It is safe to assume that the industry’s weak performance was predicated. On top of the lingering effects of the global pandemic, other unfavorable factors such as Russia’s invasion of Ukraine in late February and China’s containment policy to prevent the spread of COVID-19 are making it all the more challenging for the industry to regain its momentum.

Changes have also been observed among Korea’s top-five die & mold exporting countries. In the first quarter of this year, China was bumped down to the seventh largest exporter (as opposed to being the fifth largest export in the first quarter of last year) while the US displayed a sharp growth to become Korea’s fifth largest die and mold exporter.

Meanwhile, according to a recent data announced by the Ministry of SMEs and Startups, domestic SMEs posted USD 30.4 billion in exports, easily surpassing USD 26.6 billion in the first quarter of 2021 despite the difficulties within the die & mold industry.  Nine items excluding cosmetic products recorded growth year-on-year, primarily led by pharmaceuticals and other machinery.

All die & mold products experienced weak performance

Recorded “double-digit drop” except for press mold

In the first quarter of 2022, die & mold exports amounted to USD 516.32 million and imports amounted to USD 54.68 million.  During the same period, trade balance stood at USD 461.64 million with surplus amount failing to reach USD 500 million.

Weak performance in the first quarter was seen across all items, except for press mold, displaying a double-digit decline.

Plastic mold that accounts for the largest portion recorded USD 275.99 million, down 15.5% year-on-year from USD 26.43 million.

Die casting mold was also not immune to posting a double-digit drop.  Exports totaled USD 213 million in 2022, falling 12.9% year-on-year from USD 24.46 million.

Other die & mold product exports stood at USD 28.6 million, down 11.2% year-on-year from USD 32.2 million.

Although press mold products saw a huge drop in the first quarter of 2021, it relatively did well by being the only item to record a single-digit decline amounting to USD 190.43 million in the first quarter of 2022.

Die & mold exports – Strong performance by Japan vs. weak performance by US

Examining the die & mold export trends in the first quarter of major countries, stark decline was observed among Asian nations such as Japan, Vietnam and India whereas the US appears to have re-entered the top-five as opposed to the first quarter of 2021.  No significant changes were observed for Mexico whose growth remained at 1%.

By country, Japan is still No. 1 despite having recorded a 3% decline year-on-year amounting to USD 814.88 million. The second runner is Mexico that posted USD 820 million, up 1% year-on-year.

The US ranked third by posting USD 511.69 million, up nearly 30% year-on-year, despite the global recession.

Meanwhile, Vietnam and India recorded USD 495.75 million (down 25.9% year-on-year) and USD 396.74 million (down 17.5% year-on-year), respectively.

In China’s case, which was fourth in place in the first quarter of the previous year with exports amounting to USD 428.15 million, displayed a 39.8% decline year-on-year totaling USD 266.26 million, resulting in being squeezed out as the top-five exporting countries.

Anticipate positives, such as post-pandemic era, incoming government led by President Yoon Seok-Yeol, and resolution of the Russia-Ukraine crisis

Weak performance in die & mold exports in the first quarter of this year was inevitable due to various factors at home and abroad.  However, many uncertainties that strangled exports in the first quarter began showing signs of uplifting, which leads to anticipation for a rebound in die & mold exports in the next quarter.

The most anticipated positive is the entry into the post-pandemic era, such as the softening of social distancing measures upon the spread of the COVID-19 slowing down.  While it is too early to break out the champagne and declare the “end” of COVID-19, expectations over returning back to normal in the post-pandemic era are to drive the recovery momentum within the die & mold industry.

Furthermore, if more countries around the globe begin to welcome the post-pandemic era, the stagnant global supply network is also likely to open again.

Another positive factor is the economic policies to be implemented by the incoming government which is set for inauguration on May 10.  Thus far, President Yoon had voiced criticism over a number of issues involving the manufacturing industry, including the die & mold industry, such as the 52-work week scheme, the introduction of the Serious Accidents Punishment Act, and minimum wage, and the incoming government’s labor policies are anticipated to work in favor for the die & mold industry.

Moreover, the continuing Ukraine war may likely come to an end as both Russia and Ukraine are undergoing negotiations.  However, more time may be needed for the risk brought on by the Ukraine war to entirely subside.

The die & mold industry also needs to take a proactive approach to fully utilize such tailwinds.  The sophistication of manufacturing processes need to continue on in the post-pandemic era to efficiently manage buyers and actively attract new customers.

KODMIC plans to provide multi-faceted support to member companies in order for the die & mold industry to overcome current challenges and for Korea to maintain its status as the top dog in the die & mold industry.

[Source : KODMIC newsletter  May 1, 2022 (No. 697)]