By Choi Sung-jin
Korean builders' overseas construction orders this year may fail to hit their initial goal of $50 billion, let alone reach the $60 billion recorded last year, an industry group said.
The International Contractors' Association of Korea said construction orders from overseas totaled $44.6 billion as of Thursday, down 26 percent from $60.6 billion a year ago. Given there are only two weeks before the New Year, the annual total will not exceed $50 billion, it said.
"As there are no large-scale projects now being discussed, the order receipts are estimated to stop at around $45 billion," an official said.
Industry watchers attributed the sluggish orders to falls in international oil prices, which worked to squeeze fiscal conditions in Middle East producers, forcing them to cancel or put off oil and gas plants. That dealt a critical blow to Korean builders, who have relied on the Middle East market and industrial plant construction.
Orders from Middle East countries have almost halved to $15.5 billion from $31.3 billion last year. Those for plants also plummeted 45 percent, from $46.5 billion to $25.5 billion. The prolonged oil-price weakness is making it difficult for Korean builders to work out even next year's business plans, they said, adding that next year's order receipts will somewhat recover but not exceed $52 billion.
"The Middle East markets will likely remain listless, reeling from low oil prices and fiscal deficits of some governments, but may rebound in the second-half year when Iranian markets open," said Lee Sun-il, a researcher at Daishin Securities. "On the other hand, Asian markets will expand rapidly thanks to the launch of the Asian Infrastructure Investment Bank."
Other analysts said whether Korean builders win the bid for the $12-billion railway project linking Singapore and Kuala Lumpur in the first half of 2016 will have a big effect on order receipts next year.
Korean builders' overseas construction orders this year may fail to hit their initial goal of $50 billion, let alone reach the $60 billion recorded last year, an industry group said.
The International Contractors' Association of Korea said construction orders from overseas totaled $44.6 billion as of Thursday, down 26 percent from $60.6 billion a year ago. Given there are only two weeks before the New Year, the annual total will not exceed $50 billion, it said.
"As there are no large-scale projects now being discussed, the order receipts are estimated to stop at around $45 billion," an official said.
Industry watchers attributed the sluggish orders to falls in international oil prices, which worked to squeeze fiscal conditions in Middle East producers, forcing them to cancel or put off oil and gas plants. That dealt a critical blow to Korean builders, who have relied on the Middle East market and industrial plant construction.
Orders from Middle East countries have almost halved to $15.5 billion from $31.3 billion last year. Those for plants also plummeted 45 percent, from $46.5 billion to $25.5 billion. The prolonged oil-price weakness is making it difficult for Korean builders to work out even next year's business plans, they said, adding that next year's order receipts will somewhat recover but not exceed $52 billion.
"The Middle East markets will likely remain listless, reeling from low oil prices and fiscal deficits of some governments, but may rebound in the second-half year when Iranian markets open," said Lee Sun-il, a researcher at Daishin Securities. "On the other hand, Asian markets will expand rapidly thanks to the launch of the Asian Infrastructure Investment Bank."
Other analysts said whether Korean builders win the bid for the $12-billion railway project linking Singapore and Kuala Lumpur in the first half of 2016 will have a big effect on order receipts next year.
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