South Korean builders may exceed a $40 billion overseas order target for roads and refineries this year as oil prices recover and governments increase spending from stimulus packages to revive their economies.
Orders for industrial and infrastructure projects abroad in the second half may exceed $30 billion, compared with $13.1 billion in the January to June period, the Ministry of Land, Transport and Maritime Affairs said today. Contracts may exceed the full-year target as oil-producing nations resume bids for refineries, the ministry said.
Higher oil prices are encouraging companies globally to resume construction projects that were put on hold because of the credit crisis last year. Overseas orders may total more than $16 billion in July and August, the ministry said.
“Companies, especially in the Middle East, have restarted bids for construction projects because it may cost them more if they wait too long as raw material prices are recovering,” said Kim Suk Joon, an analyst at SK Securities Co. in Seoul. “We are definitely going to see more orders in the second half.”
Construction contracts from the Middle East may more than double to $17 billion in the second half from the first, while those Asia will probably more than triple to $13 billion, the ministry said.
“Orders are expected to increase in Asia in the second half as governments are expected to spend money to stimulate the economy,” the ministry said in a statement, without giving year-earlier numbers.
South Korean builders have announced orders won in Saudi Arabia, the United Arab Emirates and Algeria worth about $9.34 billion so far this month.
Source: Bloomberg