PH’s steel industry turns 80% import dependent
Despite a booming domestic steel consumption, the Philippine steel industry has been relying on imports as the industry has not yet recovered from the financial crisis of 2008 that had wiped out the country’s production of flat products.
Roberto Cola, chairman of the Southeast Asia Institute of Iron and Steel (SEAISI), in a speech at the recently-concluded 2015 SEAISI Conference & Exhibition in Manila even noted that because of the difficult Philippine steel sector situation, the local industry had to pass its opportunity to co-host the yearly SEASI for three years. This year’s SEASI hosting was the first for the Philippines in 9 years. Cola is also president of the Philippine Iron and Steel Institute (PISI), a member of SEASI.
“The restructuring and consolidation of the domestic steel industry had wiped out the Philippines flat products production base of hot rolled coils and plates, cold rolled coils and sheets and tinplates,” admitted Cola.
In addition, the number of long products steel manufacturers was also reduced by more than 50 percent.
This is despite the Philippines apparent steel consumption which registered double digit growth in the last 3 years, he said.
According to Cola, domestic steel supply was supported through importation of semi-finished and finished steel products.
“In crude steel terms, the Philippines imports around 80 percent of its steel requirement,” said Cola, who is also manager for industry affairs of Steel Asia Manufacturing Corp., the country’s largest steel company.
In the region, the ASEAN 6 countries composed of Indonesia, Malaysia, Philippines, Thailand, Singapore and Vietnam, registered a 6.3 percent growth in apparent steel consumption, from 63 million metric tons in 2013 to 67 million metric tons in 2014.
A big portion of the 2014 demand was filled by a net importation of around 40 million metric tons.
In the area of crude steel, the ASEAN 6 imported around 60 percent of its steel requirements in 2014. Looking forward, the ASEAN 6 apparent steel consumption is projected to grow by 5 to 6 percent in the next 3 years and will hit 80 million metric tons in 2017.
Among the six ASEAN countries, Cola said that Indonesia, Philippines and Vietnam are projected to register significant increase because of their relatively fast-growing economies. These countries still have lower combined steel consumption of only about a third of the world average of 225 kilogram per capita.
Although still at a low base, Myanmar, Cambodia and Laos are also forecasted to have significant growth in steel consumption in the next 3 years.
This growing demand in ASEAN presents a
challenge for the region to finally establish a viable integrated steel industry.
At present, Cola described the ASEAN steel industry as being stuck in mid-stream steel manufacturing.
“Although there are already iron and steelmaking facilities that have been constructed in the region, ASEAN still lacks enough upstream capability to produce slabs, blooms and billets of the required quantity and quality to manufacture higher value goods for application in downstream construction, automotive, appliance, shipbuilding and electrical industries,” said Cola.
According to Cola, ASEAN steel manufacturers are basically producing similar low end steel products and are facing stiff competition from other countries, especially China.
Because of this, most ASEAN countries have initiated various forms of trade measures to protect their industries. These measures have also resulted in trade actions being taken against other ASEAN countries creating further obstacles to intra-ASEAN steel trade.
In the long term, however, Cola has urged regional steel industries to collaborate and to leverage the strength of the steel industry in each country to further develop the steel markets in the region.
Cola has urged for further regional steel industries collaboration through SEASI, which was established 44 years ago to promote the development of the iron and steel industry in the region. (BCM)