31/05/2012 - oecd.org 9 source: thailand automotive institute, federation of thailand industry and...

31/05/2012

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Thailand economic and steel industry development

To

OECD STEEL COMMITTEE MEETING

By

Iron and Steel Institute of Thailand (ISIT)

MAY, 2012

CONTENTS

ISIT introduction

Thailand steel industry snapshot

Key drivers to Thailand steel market in medium term

Steel industry and AEC

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Ministry of Industry

Office of the Board of Investment Office of the Minister

Permanent Secretary Industrial Economics Sector

Office of IndustrialEconomicsOffice of the

Permanent SecretaryOffice of the CaneAnd Sugar Board

Industrial Promotion Sector

Department of Industrial Works

Independent Bodies1. Thai – German Institute 2. Thailand Productivity Institute3. Thailand Textile Institute 4. National Food Institute5. Iron and Steel Institute of Thailand6. Thailand Automotive Institute 7. Electrical and Electronics Institute8. Management System Certification Institute9. Institute for Small and Medium Enterprises Development

• Industrial Estate Authority of Thailand

• Office of Small and Medium Enterprises Promotion

Department of Primary Industries and Mines

Thai Industrial Standards Institute

Department of Industrial Promotion

Production Control and Inspection Sector

Iron and Steel Institute of Thailand, a network of the


2

Mission and Vision

Vision Mission

“

“

ISIT aims to

develop Thai iron and

steel industry to be

internationally

competitive and

effectively drive the

development of

strategic industry.

1. Encourage industrial

competitiveness

2. Co-operate and support

government’s policy

3. Develop iron and steel

industrial database

4. Encourage the co-ordination

and co-operation among

involving stakeholders

5. Create value-added services

for iron and steel industry

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2001 2002 2003 2004 2005 2006 2007 2008

Defending

201 Measure

Issuing Thai

Safeguard Measure

Issuing Anti-

Dumping

Measure of HR, CR, and CRSS

Adjusting

Harmonize

Code 10

Digits

Training

Custom Officers

Steel Industry

Transformation plan Intelligence

Unit

Launching the

project of steel

industry’s

energy development Launching the

project of steel

industry’s

efficiency and

productivity development

Launching the

project of

downstream

industry’s efficiency

and productivity development

Technology Platform

Upgrading

Testing Center

Introduction

of Integrating

Training Course

Encouragement

of Integrated

Steel Project

for High Quality Steel

Defending

EU

Safeguard Measure

ISIT past major activities

2009 2010

Structural

Steel

Consultation Center

Leading Indicator

Technical Service

Expand scope

of testing to

non-Metal and Environment

Feasibility

Study of

Sustainable

Integrated Iron

and Steel

Industry

Development

in Thailand

4

2011 2012

Neural

Network

for Steel

Price Forecast

Guidelines

Set up for

Thailand

Steel

Industry

Under

ASEAN

Economic Community

Master Plan to

Energy

Management

for Steel

Industry in next 20 years

5

ISIT’s collaboration network

ISIT

JISF NEDO

Worldsteel

AACHEN

CISA TSIIA

KOSA

SEAISI

VSA

MISIF

PISI IISIA

Federation of Thai Industries


Ministry of Finance

Ministry of Science

Ministry of Commerce

Steel companies

Steel fabricators

Part makers

Universities Research Institutes

AISC CISRI

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CONTENTS

ISIT introduction




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Thailand steel industry development started from re-rolling business

Traders / Stockists

Rebar – old mill

Long – mini mills

Flat– rolling mills

Flat – mini mills

Downstream - Flat

Downstream - Flat

Cold-

formed

section

& pipe

Rolling mills

Mini mills

1960s 1950s

1996 1992

1995

1960s

Capacity

- Semi – Long: 5.8 million tpy

- Semi – Flat: 3.0 million tpy

- Rolled products: Long: 8.5 million tpy

- Rolled products: Flat: 12.9 million tpy 7

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… that limit local production to serve overall demand

3,837

13,877

10,758

14,647

1,814

5,161 5,565

3,646 4,238

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Apparent Steel Demand ('000 Tonnes) Crude Steel Production ('000 Tonnes)

Apparent steel demand compares to crude steel production (‘000 Tonnes)

Thailand imported all raw material, semis and finished products at 14.96 million tonnes in 2011

High grade steel products are imported from Japan, South Korea, Taiwan, EU and US at 6.59 million

tonnes in 2011 (45% of overall steel demand)

Intensive competition from Chinese steel products as import rose from 0.65 million tonnes in 2009 to

1.9 million tonnes in 2011

Thailand exported steel products at 0.73 million tonnes, 53% of total export go to ASEAN

Source: Iron and Steel Institute of Thailand

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Overall steel market has increased on average 7.3% per year

during last 11 years

Thailand apparent steel use (‘000 Tonnes)

CAGR 11/00 (%)

4.3 %

7.9%

7.3%

-1.1 %


7,4837,074

8,087

8,967

1,559 1,388

8,031

3,837

5,960

6,762

7,607

10,049

10,967

12,661

13,876

12,15412,716

13,581

10,758

14,01214,653

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Production Import Export Apparent steel use

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10

Construction is major steel consuming sector

Demand per capita = 217 Kg.

Ratio Long product : Flat product = 33 : 67

Demand breakdown

- Construction 54%

- Automotive 16%

- Machinery & Industrial 13%

- Appliance 12%

- Packaging 5%


Thai economy is expected to grow in the range of 5.5 - 6.5%

in 2012

Source: Office of the National Economic and Social Development Board

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Thailand apparent steel use projection in 2012 (‘000 Tonnes)

Steel demand in 2012 is expected to expand by 6.1% to 15.55 million tonnes

10,758

14,012

14,65315,207

2009 2010 2011 2012E

15,887 15,547

Assumption

Construction sector expands by 1%-3%

Automotive sector expands by 20%-39%

Appliance sector expands by 5%-7%

Machinery sector expands by 3%-5%

Canned food sector expands by 2%-4%


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CONTENTS

ISIT introduction




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Opportunity in Thailand construction market

Infrastructure development

Residential and

commercial building

Industrial factory

Mass transit development

Irrigation development

New condominium and housing along subway and

skytrain lines

New investment from appliances and machinery

sectors

Factory relocation from Japan

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Source: Oxford Economics and ISIT analysis

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Construction: Total Construction: Building Construction: Civil engineering

Thailand capital formation in construction outlook index

5.8%

4.8% 5.2%

CAGR 15/10 (%)

Hope Thailand infrastructure development will perform well during next five years

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Source: Thailand Automotive Institute, Federation of Thailand Industry and Somboon Advance Technology PLC.

Path for Thailand automotive industry

2010 2011 2012 2013 2014 2015

Auto output

(Million units)

Auto capacity

(Million units)

Milestone

1.6 1.5 2.1 2.3 2.5 2.7

Nissan-

March

Ford- Fiesta

Honda-

Brio

Eco car-

Mitsu, Suzuki

GM: Pickup

export

Ford: More

export

Eco car-

Toyota

AEC-

Free

labor

move

Total

export:

1.3

million

units

16

2.2 2.7 3.0

Source: Somboon Advance Technology

New model in 2012 and beyond

Path for Thailand automotive industry

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Farm machinery and petrochemical business are potential sectors under industrial

Sub-sector 2009/2008 (%)

2012/2009 (% per year)

2015/2012 (% per year)

2015/2009 (% per year)

Sugar & Ethanol

Food processing

Power plant

Farm machine

Chemical & petrochemical plant

Paper

4.4 5.7 5.7 4.7

3.6 5.8 5.1 4.5

1.7 2.7 1.9 1.8

20.3 13.1 8.8 8.7

5.6 9.0 10.6 8.3

0 1.7 2.0 1.6

Source: ISIT survey on Market Analysis and Forecast of Thailand Stainless Steel, 2010

Projection of business growth 2009 - 2015

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New major investments come from local and abroad

2010

Millcon Steel Industries invested THB 2.9bn ($87.6m) on a melting shop to support its

long products rolling operations with capacity 500,000 tonnes per year

2011

JFE Steel Corporation established JFE Steel Galvanizing (Thailand) Ltd to produce high

end hot-dip galvanized steel sheet with capacity 400,000 tonnes per year to serve

automakers steel demand

2012

Nippon Steel Corp invested $300 million to build a steel galvanising production line in

Thailand named Nippon Steel Galvanizing (Thailand) Co., Ltd. This mill will supply hot-

dip galvanized and galvannealed steel sheets for automotive

Tycoons Worldwide Group (Thailand) has announced that the company is going to

invest about TWD 1.672 billion to build the electric furnace in its Thailand mill. The

designed annual capacity of this new billet production line will be 500,000 tonnes per

year

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CONTENTS

ISIT introduction




20

1967 1997

Milestones of ASEAN

1984 1995 1999 2003 2007

40th Anniversary of ASEAN Cebu The Philippines

MYANMAR BRUNEI DARUSSALAM

2015

ASEAN Community

AFTA

1992

Bangkok Declaration

LAOS

INDONESIA

MALAYSIA

PHILIPPINES

SINGAPORE

THAILAND

VIETNAM

CAMBODIA

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Declaration of ASEAN Concord II

Bali Indonesia

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AEC Single Market and Production base

To create a stable, prosperous

and highly competitive ASEAN economic region

Freer flow of capital

Free flow of goods

services, investment, and skilled labor

characteristic

objective

Overview of the ASEAN Economic Community

Characteristics of ASEAN steel industry

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Fragmented production facilities

Lack of ironmaking

Scrap base steelmaking limits capability

to produce high grade steel products

Net import of semi-finished product,

especially slab

Net import of long and flat products,

especially high grade products

Rising intra-competition among

producers in region

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Implications to the ASEAN steel industry

Steel trade center/network

ASEAN Joint Venture Firm

ASEAN Holding Firm

Private sector roles

Rule of Origin (ROO)

Mutual Recognition Agreement

Trade Facilitation

New investment in high grade steel product

Preparation for new trade regulations

Government roles

Cooperation with private sector and government to create solid and fast action

Data center in trade statistics, trade regulations, and insightful market information

Steel association/institute can play roles in


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THANK YOU

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