South Korean constructors are expected to record the lowest overseas order volume in a decade this year due to the weak demand and their rivals’ competitive pricing.

According to International Contractors Association of Korea (ICAK) on Wednesday, Korean builders have clinched orders worth $22.6 billion so far this year, down 3 percent from a year earlier. The order volume is projected to fall to a record low this year again after reaching a 10-year low in 2016 with orders worth $28.19 billion.

The outlook for this year was bright at the beginning of the year as Daelim Industrial Co. and Hyundai Engineering Co. won projects worth $1.9 billion and $3.3 billion respectively from Iran after the lift of international economic sanctions on the Islamic country.

But the pipeline did not continue. The order volume in the Middle East has reached $10.5 billion so far this year, slightly up from a year-ago period but more than 30 percent lower than previous years.

An official from the construction industry said that Korean builders expected a rush of orders from Iran after the much-awaited sanctions relief but were disappointed by the slow progress in lifting of the sanctions and improvement in U.S.-Iran relations.

Korean constructors would be able to add about $30 billion to their order book for this year as Daewoo Engineering & Construction Co. is expected to sign $863 million worth deal with India to build a bridge, and separately, Daewoo E&C and Samsung Engineering Co. would soon ink a contract worth $1.2 billion each with Oman to construct an oil refining facility.

Korean builders have been facing a double whammy of sluggish orders from the Middle Eastern countries and low-cost competitors from Europe and China. An official from ICAK said Korean firms are losing out to rivals from Spain, Italy and France who submit 20 percent to 30 percent lower tenders in the international construction bids. He added that Korean builders cannot afford to cut their prices as they suffered from huge losses due to the low-cost contracting over the past few years.

By Son Dong-woo

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