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05-Jun-2014
1
The Philippine Iron & Steel
Industy
Mr. Reynaldo D. Lignes
Iron & Steel Sectoral Champion
Board of Investments
05 June 2014
OECD, Paris France
Presentation Outline
I. Introduction
II. Key Economic Trends in 2013
III. Iron & Steel Industry Performance
IV. Economic and Steel outlook in 2014
V. Salient Features of the Industry Roadmap and Industry Support Measures
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2
Introduction
3
THE PHILIPPINE BOARD OF INVESTMENTS Your Window to Infinite Opportunities in the Philippines.
The Board of Investments (BOI), as the national investment promotion
agency of the government, reflects the country’s keen interest in keeping
its doors open to investors – both foreign and domestic.
BOI’s efforts are based on the government’s set goals of encouraging more
economic activities that will take the country to a higher level of global
competitiveness, and opening more opportunities that will generate more
gainful employment for the people.
The BOI also handles industry development that includes Iron and Steel
and many other industries.
4
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3
•Due diligence assistance • Information support
• Visit program development & investment briefing
• Business matching
•Business registration facilitation • Networking with IPUs and other government
agencies on pre-operational business
requirements
• Fast tracking with registration procedures
• Assistance with local government requirements
•Aftercare service • Presence of government network to quickly
respond to concerns
• Regular supervision & monitoring .
THE PHILIPPINE BOARD OF INVESTMENTS
5
Philippines: Key Economic Trends in 2013
6
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4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
GDP
Stable and Resilient Economic Growth
GDP (2012) 6.8%
GDP (2013) 7.2%
Headline Inflation (2012) 3.2%
Headline Inflation (2013) 3.0%
Source: National Statistical Coordination Board & National Statistics Office
TOTAL BOI & PEZA APPROVED INVESTMENTS
(in US$ Billion)
Steady Investment Flows
10.4%
2013 TOP SECTORS (% of Total Investments)
1. Electricity, Gas, Steam & Air Conditioning
2. Real Estate Activities
3. Manufacturing
4. Transportation & Storage
5. Accommodation & Food Service Activities
2013 TOP SOURCES (% of Total Foreign Investments)
1. British Virgin Islands
2. U.S.A.
3. Japan
4. Netherlands
5. Singapore
US$ 15.17B US$ 15.92B
US$ 17.48B
US$ 5.05B
US$ 6.69B
Total Investments Foreign Investments
US$ 6.31B
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5
Philippine Iron & Steel Industry
Performance
9
The Philippine Iron & Steel Industry Structure
10
Electric Furnace
Steel Making Scrap
Bars (Deformed/Plain)
Shapes/Section
Construction
Manufacturing
Machineries Ingots Billets
Rolling
Construction
Fabrication
LONG PRODUCTS
Imported Wire Rods
Nails
Wires
Fasteners
HR Plates
Hot Rolled Coils
Pipes/Tubes
Construction/Fabrication
Stockist/Hardware
Imported Slabs Hot Rolling
Shipbuilding
Pipes
Imported Hot Rolled Prod FLAT PRODUCTS
Imported HRC
Cold Rolling
Cold Rolled Coils
Tin Mill Blackplate
Imported CRC/TMBP
Fabrication
Galvanizing GI/PPGI Sheets
Construction/Fabrication
Appliance
Stockist/Hardware
Tinning Line
Imported Tinplate
Can Making Food Cans
Containers
Imported Billets
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11
Apparent steel consumption reached 6.58 million MT in 2013, growing by 9.2% compared to 6.03 million MT in 2012.
.
2.5 2.5
3.4
4.54.2
3.03.3
3.03.3
3.73.5
3.1 3.1 3.13.4 3.3
3.5
4.1
5.3
6.0
6.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
millio
n m
etr
ic to
ns
Apparent Steel Consumption ((1993-2013) In Million Metric Tons
12
Key Developments in 2013
STEEL DEMAND
• Continuing growth of real estate developments
• Reconstruction of typhoon and earthquake affected areas
• Increased government infrastructure spending
STEEL SUPPLY
• Significant rise of imports for billets, wire rods, rebars, pipes and tubes
• Significant rise of local production for rebars, pipes and tubes
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13
Comparative Steel Demand
81%
9%
5%4%
1%
2013 2012
Construction
Light &
Heavy
Fabrication
Ship building Packaging
Others
Light &
Heavy
Fabrication
Construction
Packaging Others
14
In Metric Tons Yr-Yr
2013 2012 Change
CRUDE STEEL PRODUCTION 1,307,849 1,259,627 3.8%
FINISHED STEEL PRODUCTION 4,169,969 3,216,265 30%
FINISHED STEEL IMPORT 3,675,527 3,383,117 8.6%
FINISHED STEEL EXPORT 100,000 -
APPARENT STEEL CONSUMPTION Adjusted for double counting
6,588,473 6,036,116 9.2%
Summary of Key Steel Statistics
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15
In Metric Tons Yr-Yr
2013 2012 Change
BILLETS
Production 1,307,849 1,259,627 3.8%
Import 1,681,666 1,285,733 31%
Export - -
Apparent Consumption 2,989,515 2,545,360 17%
SLABS
Production - -
Import -
Export - -
Apparent Consumption - -
Apparent Consumption:
SEMI-FINISHED STEEL
16
Apparent Steel Consumption:
In Metric Tons Yr-Yr
2013 2012 Change
LONG PRODUCTS
Production1&2 3,019,969 2,653,000 14%
Import 1,321,826 763,971 73%
Export - -
Apparent Consumption 4,341,795 3,416,971 27%
FLAT PRODUCTS
Production1 0 0 -
Import 2,346,678 2,619,145 (10%)
Export 100,000 0
Apparent Consumption 2,246,678 2,619,145 (10%)
Total Long & Flat Products 6,588,473 6,036,116 9.2%
Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources
1 Covers hot rolled products only in order to avoid double counting
2 Excludes bar products converted from wire rods
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17
In Metric Tons Yr-Yr
2013 2012 Change
LONG PRODUCTS 3,239,969 2,853,000 14%
Bars1 2,744,065 2,392,000 15%
Shapes and Sections1 275,904 261,000 6%
Wires 220,000 220,000 0%
FLAT PRODUCTS 680,000 563,265 21%
Hot Rolled Coils - -
Cold Rolled Coils - -
GI/Pre-painted/Zn-Al Coated Sheets 380,000 464,265 (18%)
Pipes and Tubes 300,000 99,000 200%
Source: Industry Sources
Breakdown of Finished Steel Production in MT (2013 vs. 2012)
1 Includes bar products converted from wire rods
18
Breakdown of Finished Steel Imports in MT (2013 vs. 2012)
In Metric Tons Yr-Yr
2013 2012 Change
Long Products 1,327,707 776,297 71%
Wire Rods 647,712 336,923 92%
Bars 250,511 93,822 167%
Shapes and Sections 304,024 270,311 12%
Sheet Piles 51,234 32,297 59%
Wires 65,667 25,481 158%
Rails 2,678 2,578 4%
Others (Alloy & Stainless Steels) 5,881 14,885 (60%)
Flat Products 2,409,852 2,555,449 (6%)
Plates 510,759 559,474 (9%)
Hot Rolled Coils/Sheets 505,391 528,451 (4%)
Cold Rolled Coils/Sheets 372,537 488,762 (24%)
GI Sheets/ Pre-painted/Zn-Al 551,981 530,953 4%
Tinplates/TFS* 216,332 222,196 (3%)
Pipes and Tubes 165,599 129,511 28%
Others (Alloy & Stainless Steels) 87,253 96,102 (9%)
Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources
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19
In Metric Tons Yr-Yr 2013 2012 Change
Bars / Sections - -
Wires - -
Hot Rolled Coils/Sheets - -
Cold Rolled Coils/Sheets - -
GI Sheets/ Pre-painted/Zn-Al - -
Pipes and Tubes 100,000 -
TOTAL 100,000 -
Source: National Statistics Office and Industry Sources
Breakdown of Finished Steel Exports in MT (2013 vs. 2012)
Philippines: Economic and Steel outlook in
2014
20
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21
Government forecast is for GDP to grow 6.6% in 2014
However, there are downside risks arising from:
1. Power shortage
2. Political distractions due to corruption
The challenge to the Philippines:
1. Good governance
2. Continue infrastructure development
3. Increase FDIs.
Philippine Economic Outlook for 2014
22
Steel demand to benefit from:
• Implementation of big-ticket government infrastructure
• Reconstruction of typhoon and earthquake affected areas
• Housing backlog and re-development of urban centers
The steel supply situation in 2014:
• Increased local production of rebars, shapes and sections
• Increased importation of billets, CRC and coated steel products (GI, Zn-Al & PPGI)
Steel Outlook for 2014
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Salient Features of the Philippine
Iron & Steel Industry Roadmap
23
Vision, Goals & Targets
• By 2030, the Philippine Iron & Steel industry sees itself as a globally competitive provider of quality steel products for domestic users
• ASC of 20 Million MT by 2030, translating to 130 kg per capita (from 50 kg per capita in 2013)
• 70% Local Production share of Finished Goods by 2030 (from 50% in 2013)
• Secured and competitively-priced raw material requirements for steel-making by 2015
Vision
Goals
Targets
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Industry Profile/Situationer
BOI-registered Investments amounting to Php 42.3 Billion as of 2013
Every new investment of P100 million leads to ...
• a higher domestic output of Php 260 million
• an additional HH income of Php 24 million
• And additional 117 new regular jobs
* Based on raw data from (a) 2009 Annual Survey of Philippine Business and Industry; and (b) Center for Research & Communication (UA&P) estimates of updated Input-Output tables for 2008
Industry Profile/Situationer
PRODUCT/ SERVICE
COVERAGE
Flat Steel Products: Hot rolled coils/sheets/plates, & cold rolled coil/sheets, tinplate, galvanized & pre-painted galvanized steel, pipes and tubes Long Steel Products: Billets, deformed & plain bars, small shapes & sections
MAJOR PLAYERS
Flat Steel Products: AC Steel, Chuayuco, Galvaphil, Goodyear Pipe, IPI, Mayer, Puyat Steel, Philmetal, Sonic, Super, Union Galva Long Steel Products: Capasco/Cameco, Capitol, Lunar Steel Group, Elegant Steel, Pag-asa Steelworks, Inc., Steel Asia Mfg. Corp., Stronghold , SKK, Treasure Steel Works Inactive Global Steel Philippines (SPV-AMC), Steel Corp, Sacramento Steel
INDUSTRY ASSOCIATION/S
Philippine Galvanizers and Coaters Association ( Flat Downstream Coated Products) Philippine Iron & Steel Institute (Flat & Long Products, Suppliers & Traders) Philippine Steelmaker’s Association (Long Products)
LINKAGES
Upstream: Sintered Iron Ore (Philippine Sinter Corporation) Potentially: Mining sector Downstream: Construction (Public & Private), Fabrication, Shipbuilding, Automotive, Can-making
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Geographical Location (Flats)
Super Industrial Pipe, IPI Cainta
Sacramento Steel (Inactive) Phividec, CDO
Global Steel (Inactive) Iligan City
Puyat, Steelcorp, Batangas
Tower, Goodyear Pipe, Mayer, NCR
AC Steel, Galvaphil, Cebu Chuayuco, Sonic, Philmetal, Union Galva, Cavite
Geographical Location (Longs)
Capasco/Cameco, Cainta, Taguig & Novaliches
Elegant Steel Phividec, CDO
Treasure Steel, Iligan City
Stronghold, SKK, Pampanga
Steel Asia Mfg. Corp., Bulacan, Batangas
Pag-asa Steelworks, Inc., NCR
Steel Asia Mfg. Corp, Cebu
Steel Asia Mfg. Corp., Bulacan, Batangas
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Supply Chain Gaps • Flat sector
• Basic iron making
Key Constraints • High cost of power
• Technical smuggling
• Outdated facilities
• Tariff distortions
Policy Response/Support Measures Incentives to encourage iron making facilities and flat
products mfg
Incentives to modernize and rehabilitate facilities
Strictly enforce customs laws and technical regulations
Discourage export of iron ore and scrap iron
Support R&D for product development
Review tariffs to remove distortions
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Current Initiatives
Commissioning of the comprehensive feasibility study on the ISM project, to start before 2015.
Support “key enabler” action items for horizontal issues in common with other sectors such as infrastructure, power, transport, smuggling, etc.
Prepare the domestic steel industry for the 2015 ASEAN market integration.
I. Preferred Activities
Regular List:
Agriculture/ Agri-business and Fishery
Creative Industries/Knowledge-Based
Services
Shipbuilding
Mass Housing
Iron and Steel Energy
Infrastructure
Research and Development
Green Projects
Motor Vehicles
Strategic Projects
Hospital /Medical Services
Disaster Prevention, Mitigation and Recovery
Projects
II. Export Activities
III. Mandatory List
Manufacture of export products
Services exports
Activities in support of exporters
IV. ARMM List
Investment Priorities Plan 2013
32
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33
Thank You
Contact Details
Reynaldo D. Lignes
Iron & Steel Champion
Industrial Policy Service
Board of Investments
896-9288