International oil prices have surged past $100 a barrel, raising concerns for industries sensitive to raw material and logistics costs, including petrochemicals, aviation, and finished goods. The semiconductor sector, a cornerstone of the national economy, may also be affected by prolonged volatility.
According to the petrochemical industry on September 7, the price of naphtha, a key raw material, skyrocketed from $608.60 per ton in February, before the U.S.-Iran conflict, to $1,063.14 in April, before dropping to $862 on September 4. This figure remains 42% higher than in February. The government has extended measures to manage supply and demand, including pre-approval for naphtha exports and a ban on hoarding, for an additional five months since August 27. However, the Ministry of Trade, Industry and Energy reports that there is no indication of a supply bottleneck similar to that seen in March and April due to diversified import sources.
The electronics and mobile sectors, along with related suppliers, are facing renewed pressure from rising logistics costs due to increased volatility in ocean freight rates. LG Electronics reported logistics expenses of 1.5273 trillion won in the first half of the year, a 7.4% increase from the same period last year. Samsung Electronics is also experiencing pressure on its operating profit margins due to rising transportation costs within its selling and administrative expenses. The prices of materials such as injection molding resins and synthetic rubber, which are byproducts of petrochemicals, are also fluctuating, adding uncertainty to cost calculations.
Even the semiconductor sector, a key export driver, is not entirely insulated. Currently, Samsung Electronics and SK Hynix are relatively unaffected by short-term fluctuations in oil prices and exchange rates, thanks to a global AI boom. However, concerns are growing that prolonged high oil prices could trigger inflation, potentially dampening demand for AI memory products.
As capital costs rise due to high oil prices, the pace of investment by global tech giants in AI servers and data centers may slow. If big tech companies face tighter budgets, the ongoing discussions about a potential semiconductor peak-out could resurface.
In the shipping industry, despite the burden of rising fuel costs, freight rates have surged significantly, offsetting some expenses. The Shanghai Container Freight Index (SCFI) rose approximately 141% from 1,489.19 on March 6 to 3,590.05 on September 4. Additionally, the decline in the won-dollar exchange rate has eased the burden of fuel costs denominated in dollars, supporting performance.
In the aviation sector, where fuel costs constitute a significant portion of operating expenses, the financial impact is becoming evident. The average price of Singapore jet fuel (MOPS), which is used to calculate international fuel surcharges for September, has surged 25.4% to 355.46 cents per gallon compared to the previous period. Consequently, the fuel surcharge for September has increased by seven levels to 21, up from 14 levels the previous month.
The challenge lies ahead. There is a time lag before the increase in oil prices is reflected in fuel surcharges, which could intensify short-term profitability pressures. Low-cost carriers (LCCs) are facing fierce price competition, making it difficult to immediately pass on rising costs to ticket prices, compounded by concerns over passenger demand declining due to surcharge increases.
An aviation industry insider stated, "With international oil prices threatening to breach the $100 per barrel mark again, we expect the burden of fuel costs to increase in the second half of the year. We are concerned that continued increases in fuel surcharges could negatively impact travel demand."
* This article has been translated by AI.
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