South Korean construction companies saw their overseas orders more than double in September compared to the previous month, driven by a rebound in large-scale projects in the Middle East. However, the cumulative orders for the year remain at only half of last year's total. The uncertainty surrounding project bids due to the ongoing Middle East conflict complicates the goal of achieving the annual target of $50 billion.
According to the Overseas Construction Association on October 14, the cumulative overseas construction orders by the end of the third quarter stood at $20.66 billion, a 50.0% decrease from $41.33 billion during the same period last year. However, the orders in September reached approximately $5.92 billion, marking a 107.7% increase from the previous month’s $2.85 billion. About 63% of the total orders for the third quarter, which amounted to $9.38 billion, were concentrated in September.
The decline in cumulative orders is partly attributed to the base effect from last year's significant contract for the Dukovany nuclear power plant project in the Czech Republic. Excluding the $18.72 billion from that contract, the orders from January to September last year totaled $22.61 billion, narrowing the gap with this year's figures to about 8.6%.
Despite this base effect, industry experts remain cautious about a recovery in orders. The ongoing conflict between the U.S. and Iran has delayed investment decisions by major contracting countries, impacting large-scale plant and infrastructure projects.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, stated, "The impact of the Middle East war is significant on this year's overseas construction orders. Most projects assigned to overseas construction companies are large-scale, and if countries deem it difficult to push forward immediately, they may postpone bids, which has affected this year's order decline."
Nevertheless, the September order performance showed improvement, particularly in large projects in the Middle East. The cumulative orders in the region increased from $2.31 billion at the end of August to $5.91 billion by the end of September, a rise of about $3.6 billion in just one month. A notable example is Samsung E&C's contract with Saudi Arabia's Sabic Agri-Nutrients for the design, procurement, and construction (EPC) of the 'SAN-7' fertilizer production facility, valued at $3.46 billion, surpassing the total orders in the Middle East for the first eight months of the year.
The quarterly order performance also shows a decreasing trend in the rate of decline. In the first quarter, orders totaled $2.04 billion, down 75.2% year-on-year, while the second quarter saw $9.24 billion (-59.5%), and the third quarter recorded $9.38 billion (-9.1%).
However, the cumulative orders through the third quarter only reached 41.3% of the government's annual target of $50 billion. To meet this goal, an additional $29.34 billion in orders must be secured in the remaining three months. Given that the September rebound heavily relied on a single large project, sustained recovery will require further follow-up orders.
The researcher added, "As long as the war between the U.S. and Iran continues, it will be difficult for overseas construction orders to recover. It is also challenging to predict when the war will end, making it hard to forecast the timing of any recovery in orders. However, once the conflict concludes and major facilities begin operating normally, there will likely be a demand for the restoration of damaged facilities, which could lead to an increase in new construction project bids during the post-war recovery process."
According to the Overseas Construction Association on October 14, the cumulative overseas construction orders by the end of the third quarter stood at $20.66 billion, a 50.0% decrease from $41.33 billion during the same period last year. However, the orders in September reached approximately $5.92 billion, marking a 107.7% increase from the previous month’s $2.85 billion. About 63% of the total orders for the third quarter, which amounted to $9.38 billion, were concentrated in September.
The decline in cumulative orders is partly attributed to the base effect from last year's significant contract for the Dukovany nuclear power plant project in the Czech Republic. Excluding the $18.72 billion from that contract, the orders from January to September last year totaled $22.61 billion, narrowing the gap with this year's figures to about 8.6%.
Despite this base effect, industry experts remain cautious about a recovery in orders. The ongoing conflict between the U.S. and Iran has delayed investment decisions by major contracting countries, impacting large-scale plant and infrastructure projects.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, stated, "The impact of the Middle East war is significant on this year's overseas construction orders. Most projects assigned to overseas construction companies are large-scale, and if countries deem it difficult to push forward immediately, they may postpone bids, which has affected this year's order decline."
Nevertheless, the September order performance showed improvement, particularly in large projects in the Middle East. The cumulative orders in the region increased from $2.31 billion at the end of August to $5.91 billion by the end of September, a rise of about $3.6 billion in just one month. A notable example is Samsung E&C's contract with Saudi Arabia's Sabic Agri-Nutrients for the design, procurement, and construction (EPC) of the 'SAN-7' fertilizer production facility, valued at $3.46 billion, surpassing the total orders in the Middle East for the first eight months of the year.
The quarterly order performance also shows a decreasing trend in the rate of decline. In the first quarter, orders totaled $2.04 billion, down 75.2% year-on-year, while the second quarter saw $9.24 billion (-59.5%), and the third quarter recorded $9.38 billion (-9.1%).
However, the cumulative orders through the third quarter only reached 41.3% of the government's annual target of $50 billion. To meet this goal, an additional $29.34 billion in orders must be secured in the remaining three months. Given that the September rebound heavily relied on a single large project, sustained recovery will require further follow-up orders.
The researcher added, "As long as the war between the U.S. and Iran continues, it will be difficult for overseas construction orders to recover. It is also challenging to predict when the war will end, making it hard to forecast the timing of any recovery in orders. However, once the conflict concludes and major facilities begin operating normally, there will likely be a demand for the restoration of damaged facilities, which could lead to an increase in new construction project bids during the post-war recovery process."
* This article has been translated by AI.
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