US tops Korea’s overseas construction orders in 2023

South Korea bagged more than $30 billion in overseas construction orders last year for the fourth consecutive year, mainly driven by a rise in orders from the US seeking to woo electric vehicle and battery makers to the country and revived plant demand in the Middle East.

According to Korea’s Ministry of Land, Infrastructure and Transport and the International Constructors Association of Korea on Monday, 321 Korean construction and engineering companies won $33.3 billion worth of orders from 95 countries in 2023.

The total fell short of the country’s $35 billion order target but surpassed $30 billion for the fourth year in a row.

The figure was also $2.3 billion higher than the previous year’s order value.

Korea’s total overseas construction orders contracted to $30.6 billion in 2021 from $35.1 billion in 2020 but rebounded in 2022 and 2023 for two years straight.

The main drivers of the pickup were revived demand for plant construction in the Middle East and US efforts to lure manufacturing companies – especially EV and battery makers – to build their plants there to reinvigorate the American manufacturing sector.

US TOPS KOREA’S OVERSEAS CONSTRUCTION ORDERS

The US became the top country to commission Korean builders last year, with an order value of $10 billion accounting for 30% of Asia’s fourth-largest country’s total overseas construction orders.

This was the first time the US has ever ranked No. 1 in the order tally since 1965 when Korea started compiling related data.

The results were largely credited to the world’s biggest economy’s efforts to realign the global supply chain centered around it. 

To access the US government’s EV subsidies under its Inflation Reduction Act (IRA), Korean companies have rushed to build their EV and battery-making plants in the country, resulting in a rise in Korean builders’ construction orders in the country.

Such active advance into the US is expected to help Korean engineering companies expand their presence in developed markets, including the US, which has remained largely inaccessible to Korean builders due to the high entry barriers, according to the Korean Land Ministry.

REVIVED PLANT DEMAND

Korea’s second biggest construction market was Saudi Arabia with a 28.5% share, followed by Taiwan with 4.5%.

Hyundai Engineering & Construction Co. (Hyundai E&C) in June of last year won a $5 billion order, the so-called Amiral project, from Saudi Arabia’s state oil company Aramco to build a petrochemical plant in the Middle Eastern country’s eastern provincial city of Jubail.

It is the largest order a Korean company has ever received from Riyadh for plant construction. 

The Korean builder also signed a $2.4 billion deal with Hyundai Engineering Co. and Aramco to construct a gas processing plant in the Arab kingdom’s Jafurah gas field during Korean President Yoon Suk Yeol’s state visit to Saudi Arabia in October.

Thanks to the mega deals, the Middle East accounted for the largest 34.4%, or $11.4 billion, of Korea’s total overseas construction orders by region last year.

North America and the Pacific region took the second biggest 31.0%, followed by Asia’s 20.4%.

Plant construction accounted for 47.4%, or $15.8 billion worth, of Korea’s total overseas construction orders last year, followed by building orders with 36.5% and infrastructure construction with 4.7%.

Write to Han-Shin Park at phs@hankyung.com

Sookyung Seo edited this article.