The Philippines will play host to the 2015 SEAISI Conference and Exhibition. This year's event, with the theme "Creating and Delivering Value in ASEAN Steel Industry", will be held at Sofitel Philippine Plaza Manila from 25 to 28 May 2015.
It is timely that this signature event of SEAISI returns to the Philippines, after an absence of nine years. The last time the event was held in the Philippines was in 2006, in the city of Cebu.
The Philippine economy has seen solid growth in the past few years, making the country one of the fastest-growing economies in the world. In 2012, the economy grew by 6.8% followed by a 7.2% expansion the year after. Although the annual growth rate slowed down to 6.1% in 2014, the economy still outperformed most countries in the world. In fact, the 2014 economic performance makes the Philippines the second fastest-growing Asian country, behind China.
Most analysts are upbeat on the Philippines' growth prospect and the general consensus is that the country will be able to sustain an annual growth rate of 6% or better in the near term. The World Bank expects the Philippine economy to expand by 6.5% in 2015 and 2016.
The iron and steel industry in the Philippines has accordingly benefitted from the stellar performance of the country's economy over the past few years. The acceleration in the implementation of infrastructure projects under the government's public-private partnership (PPP) scheme has also led to a surge in demand for steel products in the country.
Prior to 2011, Philippines' annual apparent steel consumption was hovering near or below the 4 million tonnes mark. The breakthrough came in 2011 when steel consumption surged 28% year-on-year to 5.1 million tonnes. Since then, steel demand in the country has consistently registered doubledigit growth rates. Philippines' apparent steel consumption grew 18% year-on-year to 6 million tonnes in 2012 and further expanded by 12% year-on-year to 6.7 million tonnes in 2013.
In contrast to many countries in ASEAN which saw lacklustre growth in their domestic steel production due to the intense competition from cheap imports, Philippines' domestic production of finished steel jumped 14% year-on-year, from 2.65 million tonnes in 2012 to 3.02 million tonnes in 2013. Total import of steel products, including semis, also surged by a similar percentage, from 4.6 million tonnes in 2012 to 5.4 million tonnes in 2013.
The current steel production capacity in the Philippines is lagging behind its domestic steel demand, particularly in the case of semis and flat steel products. With a per capita steel consumption of 68 kg in 2013, compared with the global average of 225 kg, there is ample room for substantial growth in steel consumption in the Philippines.
Thus it is not surprising that the country is witnessing an increase in investment in its steel sector. However, the investments are basically domestic driven. The most significant player is Steel Asia Manufacturing Corporation which currently operates six plants in the Philippines, with a total production capacity of 2 million tonnes of rebar per annum. The company is presenting embarking on two new projects, one a 1.2 million tonnes capacity mini-mill in Bulacan, Luzon to produce rebar and the other an 800,000 tonnes per year rebar rolling mill in Cebu, Visayas.
With the rapid pace of development in the Philippines' steel sector, it may not be long before foreign steel producers also start to explore investment potential in the country, if they are not already doing so.
Back to the Conference, I am pleased to announce that we will be having three prominent keynote speakers on the opening day of the event. They are Mr. T V Narendran, Managing Director of Tata Steel (India and South East Asia), Mr. Steve Hamer, Chief Executive of Arrium Steel and Dr. Edwin Basson, Director General of World Steel Association.
As in the past, an interesting and informative programme is being lined up for the most eagerly awaited steel event of the year in this region. I will provide more details in the future issues of this newsletter.
TAN AH YONG