Presentation is loading. Please wait.

Presentation is loading. Please wait.

19 November 2011 19 November 2011 AEC and Thai Steel Industry 0.

Similar presentations


Presentation on theme: "19 November 2011 19 November 2011 AEC and Thai Steel Industry 0."— Presentation transcript:

1 19 November November 2011 AEC and Thai Steel Industry 0

2 Contents Current Steel Industry Situation Consequences from the ASEAN Economic Community Implications on Thailand and recommendation Implications to the ASEAN Steel Industry 1

3 The apparent steel use has increased on average 7.6 percent per year. It has a strong positive correlation with the economic growth 2 Thailand apparent steel use (000 Tonnes) CAGR 10/00 (%) 7.6 % 5.3 % 7.6 % -0.1 % Economic recovery & growth Construction boom Economic slowdown Construction contracted Manufacturing growth Economic growth Construction recovery Manufacturing boom Economic contracted Source: Iron and Steel Institute of Thailand

4 Shortage of the supply. The local production is only 30 percent of the demand. Relying on import 3 Source: Iron and Steel Institute of Thailand Thailand crude steel production and steel demand (000 Tonnes)

5 4 Thailand Steel Industry Structure Ironmaking Steelmaking Finishing & Coating End Users Scrap recycle Hot-Rolling Cold-Rolling Coating Construction 54% Automobiles and parts 16% Machinery and Industrial Products 13% Electrical Appliances 12% Packaging 5% Cold-Drawing Forming 16 Mills TATA G Steel GJS SYS TRIUMP Etc. Production:4.2 m T Import:3.7 m T Export:0.2 mT Demand:7.7 m T Import Russia, Ukraine, Turkey, Brazil Export Vietnam, Philippines, India, Taiwan Long Product Flat Products 3 Mills SUS TCRSS Bluescope Production: 1.7 m T Import:0.7 m T Export: 0.1 m T Demand: 1.6 m T Import Japan, S. Korea, Taiwan, China Export China, India, Italy, Indonesia ~ 50 Mills TATA Sahaviriya Tycoon Etc. Production: 3.7 m T Import: 1.7 m T Export: 0.8 m T Demand: 4.7 m T ~ 100 Mills 1,000 Mills Machining Bending Cutting Welding Forging Heat Treatment Etc. 1 Mill TATA (Mini- Blast Furnace) Source: Iron and Steel Institute of Thailand 5 Mills G Steel GJ Steel Sahaviriya LPN Production: 3.9 m T Import: 3 m T Export :0.3m T Demand : 4.2 m T Import Japan, S. Korea, Australia, China Export Vietnam, Malaysia, Laos ~ 15 Mills Bluescope Thai Tin Plate Production: 0.8 m T Import: 2.2 m T Export: 0.1m T Demand: 2.9 m T Import Japan, S. Korea, Taiwan, China Export Vietnam, Laos, Myanmar, Hong Kong

6 Thailand relies on the Non-ASEAN countries on its import (2009) 5 Thailand steel trade in 2009 (Million USD) Source: WITS

7 Thailand is capable of producing commercial grade, but needs to import quality grade! 6 Thailand steel import in 2010 (Tonnes)

8 Some Evidences The demand for steel is positively related to the economic performance. Obvious! Construction shares more than half of total demand while automobiles, machineries, and electrical appliances share over ten percent Due to the shortage of supply, imports are mostly from non-ASEAN countries; China, Japan, Korea, Australia, Taiwan, Russia, and eastern European countries. Local production for commercial grade, not quality grade Exporting some HS 72 (iron and steel) to ASEAN members Exports to non-ASEAN countries with different destinations from one year to another 7

9 Contents Current Steel Industry Situation Consequences from the ASEAN Economic Community Implications on Thailand and recommendation Implications to the ASEAN Steel Industry 8

10 Milestones of ASEAN Declaration of ASEAN Concord II Bali Indonesia th Anniversary of ASEAN Cebu The Philippines MYANMAR BRUNEI DARUSSALAM 2015 ASEAN Community AFTA 1992 Bangkok Declaration 9 LAOS INDONESIA MALAYSIA PHILIPPINES SINGAPORE THAILAND VIETNAM CAMBODIA

11 AEC Single market and production base (goods, services, capital, skilled workers, and investment) Competitive economic region (Competition policy, IPRs, tax harmonization, e-commerce, and basic infrastructure) Equitable economic development (CLMV) Integration with the global economy (ASEAN plus and plus plus and global production networking) 10

12 11 AEC Single Market and Production base 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 Free flow of goods services, investment, and skilled labor characteristic objective Overview of the ASEAN Economic Community

13 12 Single market and production base

14 ATIGA (ASEAN Trade in Goods Agreement) Tariff Measures 13 ASEAN zero tariff for 60% of IL 2007zero tariff for 80% of IL 2010zero tariff for 100% of IL CLMV 2003 VN with 0-5% for substantial items 2007 LS and MYR with 0-5% for substantial items 2010 CAM with 0-5% for substantial items 2015zero tariff for 100% of IL IL = Inclusion list

15 ATIGA (ASEAN Trade in Goods Agreement) Non-Tariff Issues o Elimination of non tariff barriers Technical Barriers to Trade (Standard, testing procedure, … ) Custom valuation …. o Rule of Origin o Trade Facilitation 14

16 15 AEC and Potential sectors for Thailand Source: Thai Federation Industry 5/6 potential sectors involve steel industry

17 Comparison Thailand and its ASEAN Partners in steel industry Thailand o the largest steel market in region o capable of producing various steel products as compared to ASEAN partners due to the FDI and joint venture steel mills (Korea/Japan/india) Malaysia o strong in rebar, wire rod, wire, galvanized steel and steel pipe market Indonesia o strong in rebar, wire rod, hot-rolled coil and hot-rolled plate market o attract new investment from global steel players as huge market potential and its prosperous economy Singapore o strong in rebar and wire rod and strong steel trader in heavy section, seamless pipe and galvanized steel Vietnam o strong in rebar, cold-rolled coil and zincalume market o Booming steel market in Vietnam is expected after it survives the volatile economic period Philippines steel production serves local market, no role in export 16

18 Recalling the AEC: growth driven within ASEAN and attracted Non-ASEAN Single market and production base (goods, services, capital, skilled workers, and investment) Competitive economic region (Competition policy, IPRs, tax harmonization, e-commerce, and basic infrastructure) Equitable economic development (CLMV) Integration with the global economy (ASEAN plus and plus plus and global production networking) 17

19 Methodology Constructing the value chain from upstream to downstream of Thai Steel Industry base on HS 72 and 73 at 4-6 digits Scope of study on the Five Selected industries Policy gap analysis o AEC factors affecting the supply and demand conditions o Non-AEC factors (other than ASEAN) affecting demand and supply conditions Integrated five selected industries to evaluate the opportunity and threat of the Thai steel industry for each product item Grouping the iron and steel products and indicate the National strategies towards the AEC Identifying policy implications or what to be done at the ASEAN level 18

20 19 Figure 1: Supply chain of steel and automotive industry

21 Figure 2: Factors from AEC to auto-related steel industry 20

22 Figure 3: Factors from AEC Plus to auto-related steel industry 21

23 Contents Current Steel Industry Situation Consequences from the ASEAN Economic Community Implications on Thailand and recommendation Implications to the ASEAN Steel Industry 22

24 23 Implications on the selected downstream industries: Thailand Automobiles ASEAN countries demand more automobiles as the AEC that induces more production and trade level Thailand is center of ASEAN production hub for automobiles New investment from big auto assembly companies also eye on Thailand and Indonesia (even with the flooded situation) Most of steel products are imported mainly from Japan and South Korea (quality and security of supply chain) Electrical Appliances Thailand is center of ASEAN production hub in Air-conditioner, Refrigerator, Washing machine and HHD (60% of global production, but gone with the flood for the time-being) Malaysia is center of ASEAN production hub in LCD, and LED South Korea has invested significantly in ASEAN in the past few years while Japan has been investing since 1980s ASEAN steel producers can serve in some products, while imported quality steel products mainly come from Japan and South Korea

25 24 Implications on the selected downstream industries: Thailand Machinery Fossil and renewable energy boom have driven new investment in oil & gas and petrochemical plants New regulation for double hull ship will drive steel plate demand A lot of new investments from global construction and agricultural machinery assembly companies will allow Thailand to be the hub Most of steel quality grades are imported Canned food Thailand is center of world food factory Canned food output has been grown up slightly but limited by seasonal factor of materials such as fruits and seafoods Mechanization of agricultural process will increase more output in canned food All ASEAN tin-plate and tin-free steel producers are Japan-joint venture firms

26 25 Implications on the selected downstream industries Thailand Construction Largest steel consuming sector in every ASEAN country Great opportunity from the ASEAN connectivity project Still to be liberalize to foreign investment except Singapore Most of steel usage can supply by local producers Every country set its own mandatory standard in steel for construction

27 26 Opportunity Potential of steel demand growth from new investment in construction and manufacturing sectors Rising steel demand in Cambodia, Laos and Myanmar which nearby Thailand Relocation of Japan automotive to Thailand Potential to produce higher value steel to replace imports with JV of non-ASEAN countries Threat Non-Tariff measures among ASEAN members (standard) Higher cost from new regulations in environment and energy usage Rising of steel and steel products import from China (commercial grades)

28 Strategy 1: Improve the Potential of High-Grade Production that are currently imported (import substitution) Strategy 2: Strengthen Potential Producers Strategy 3: Fulfill the Missing Gap in the Supply Chain Strategy 4: Establish an immunity for Domestic Producers 27

29 Strategy 1: Improve the Potential of High-Grade Production that are currently imported (import substitution) 28 Product group All downstream steel products which have not yet produced in Thailand as a result of an inadequate technology Product type Long product: Seamless Pipe Flat product: Electrical Steel Sheet, Hot-Dip Galvanized Steel Sheet – Zero Spangle, Hot-Dip Galvanized Steel Sheet – Galvanneal, Hot-Dip Galvanized Steel Sheet – Galfan, and Hot-Dip Galvanized Steel Sheet – HRC Based and Color & Plastic Coated Steel Sheet Strategy Government should not only allow an import but also lower barriers as well as facilitate the import from ASEAN members. To encourage domestic investment in the Iron and Steel Industry and establish a production network among ASEAN members

30 Strategy 2: Strengthen Potential Producers 29 Product group Potential products which are currently exporting to ASEAN market. Product type Long product: include Rebar, Hot-Rolled Small Steel Section, Hot-Rolled Heavy Steel Section, Cold Drawn Bar, Steel Wire Flat product: Hot-Rolled Steel Sheet for Direct Use, Cold-Rolled Steel Sheet – GIS, Hot-Dip Galvanized – Normal Spangle & Pre - Painted, Galvalume Steel Sheet & Pre – Painted and Welded Carbon Steel Pipe Strategy Facilitating aforementioned products to export and fully utilize benefit from the ASEAN Economic Community. Encouraging a creation of trade and distribution network and supporting joint venture. As a result, we could better expand and access the ASEAN market.

31 Strategy 3: Fulfill the Missing Gap in the Supply Chain 30 Product group Steel products at the upstream of the long supply chain; these products could not produce domestically or we could produce only a limit amount of commercial-grade products as we could not secure enough supply of high quality raw materials Product type Long product: Bar, Wire Rod Flat product: Hot-Rolled Steel Sheet – P&O, Hot-Rolled Steel Sheet for Subseqence Cold Rolling, Hot-Rolled Steel Plate and Hot-Rolled Stainless Steel Sheet & Plate Strategy The government should promote an investment in the upstream industry (Ironmaking) in Thailand. Establishment of raw material network, trade and distribution network, and cooperation mechanism among steel producers and related industries

32 Strategy 4: Establish an immunity for Domestic Producers 31 Product group Products which suffered from the loss of competitiveness due to high costs or import competing products Most of these products have been imported from ASEAN major dialogue partners especially the Peoples Republic of China which is the major producer who is suffering from overcapacity problem. ASEAN members are currently involving in new investment projects; consequently, these countries are likely to be our competitors in the year to come especially when we will be fully integrated in Product type Long product: Rebar, Steel Wire, Wire Product Flat product: Hot-Rolled Steel Sheet for Direct Use, Hot-Dip Galvanized – Normal Spangle & Pre - Painted, Galvalume Steel Sheet & Pre – Painted, Electro-Galvanized Steel Sheet, Tin – Plated Steel Sheet, Tin-Free Steel Sheet, Cold – Rolled Stainless Steel Sheet and Welded Stainless Steel Pipe Strategy Strengthening producers in this group of products so that they could lower their costs and improve their production processes which would eventually help them compete and export to the ASEAN market.

33 Contents Current Steel Industry Situation Consequences from the ASEAN Economic Community Implications on Thailand and recommendation Implications to the ASEAN Steel Industry 32

34 33 ASEAN-Korea FTA ASEAN-Japan CEP ASEAN-EU ASEAN-India FTA ASEAN-China FTA ASEAN-Australia- New Zealand FTA ASEAN external economics relations AEC

35 34 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

36 35 Implications to the ASEAN Steel Industry ASEAN plus three and ASEAN plus six ASEAN is a channel to access to high potential markets like China and India ASEAN centrality for the East Asia Enhancement cooperation of ASEAN members is the key to sustain the ASEAN steel industry under competition from global steel companies


Download ppt "19 November 2011 19 November 2011 AEC and Thai Steel Industry 0."

Similar presentations


Ads by Google