Country Manager at Allianz Trade in South Korea

Q: Hi Andy, South Korea is a major player in the chemicals sector in Asia Pacific. How do you see the development of the sector over the past few years?

A: The chemicals sector saw a rebound and posted a significant growth in 2021 (+24% y/y) driven by robust growth in the basic chemicals and fertilisers markets after a lacklustre 2020 (-12% y/y), which was primarily due to a nation-wide recession caused by the Covid-19 outbreak. This decent development, even against the unfavourable circumstances such as Covid-19 and strong competition from China, proves that the chemicals sector is indeed one of the biggest and most resilient sectors in South Korea.

Q: How do you think the Covid-19 pandemic has impacted the supply chain?

A: Compared with other industries, Covid-19 seems to have only limited impact on the sector’s supply chain in South Korea. However, in the mid- to long-term perspective, this could still pose a threat to the overall demand in the downstream industry.

Q: What is the outlook of the South Korean chemicals sector in 2022-23?

A: With basic chemicals and fertilisers making up the core of the market (72% of overall sales), this sector grew significantly by +33% in 2021 which posted the strongest recovery among all chemicals sectors. However, in view of decreasing volume and increasing prices, we expect the chemicals sector as a whole to grow by 6% in value in 2022 against -1% in volume. We do expect the volume to bounce back in 2023. 

Q: Are you seeing any delayed or non-payment in this sector?

A: Currently, we do not see a particular surge in delayed or non-payment cases and severity within the chemicals sector. In fact, it is one of the most promising sectors in terms of payment behaviour, evidently backed by a stable growth outlook. Particularly for the major sector of basic chemicals and fertilisers, our economists estimated an average growth of +6% between 2022 and 2025. However, in saying that, for businesses looking to increase sales to new customers and geographies, the inherent risk of delayed and non-payment remains.

Q: How do you suggest your customers to manage their payment risks under the current challenging international environment?

A: Under the current unstable macroeconomic environment due to the war in Ukraine and rising interest rates, we have seen more chemicals companies looking to secure their growth and risk management through the use of trade credit insurance. We provide best-in-class risk underwriting expertise in the industry, enabling us to look deep into our customers’ business and financial health and provide invaluable credit insights. Of course, our customers’ first-hand experience with their buyers would certainly add value to our risk assessment process as well. We look forward to growing our customers’ businesses together.

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Chemicals Sector 2022 Outlook
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