PhilippinesCOUNTRY REPORT

Presented by: JOEL T. RONQUILLO

Philippine Iron and Steel Institute

2011 SEAISI Economic, Environmental & Safety Seminar

Nov. 21-22, 2011 • Hotel Istana, Kuala Lumpur City Centre, Malaysia

• Government forecasted a 7-8% GDP growth in 2011.

• GDP posted a 7.3% growth in 2010.

ECONOMIC UPDATES:

• Apparent steel consumption growth of 14% (4.02M tons in 2010 vs 3.53M tons in 2009).

• World steel demand is projected to be 1,340 million tons in 2011 (an increase of 5.30% from 2010).

2008 2009 2010GROSS DOMESTIC PRODUCT 3.7 1.1 7.3Agriculture, Fishery and Forestry 3.1 0 (0.5)Industry 4.9 (0.9) 12.1

Mining and Quarrying 1.9 21.5 18.4

Manufacturing 4.2 (4.4) 12.3

Construction 7.6 9.8 10.5

Electricity, Gas and Water 7.3 (2.9) 8.5

Services 3.1 2.8 7.1 Transport, Comm., Storage 4.2 0.6 1.9

Trade 1.2 1 10.7

Finance 2.5 5.9 6.5

Ownership of Dwelling and Real Estate

5.8 (0.3) 6.8

Private Services 4.9 6.4 8.8

Government Services 3 6.1 1.7

GDP Growth by Sector, 2008-2010

Performance of the Steel Industry in 2010

Apparent steel consumption reached 4.02 million MT in 2010, growing by 14% compared to 3.53

million MT in 2009.

Apparent Steel C onsumption (1990-2010) In Million Metric Tons

4.2

3.03.3

3.03.3

3.73.5

3.1 3.1 3.13.4 3.3

3.5

4.0

2.5

1.7 1.92.0

2.5

3.4

4.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

mill

ion

me

tric

to

ns

1% 4%

81%

14%

Construction

Light & Heavy FabricationOthers Packaging

2009

14%

81%

4%1%

Construction

Light & Heavy FabricationOthers

Packaging

2010

Comparative Steel Demand

Summary of Key Steel Statistics

In Metric Tons Yr-Yr

2010 2009 Change

CRUDE STEEL PRODUCTION 1,235,294 969,412 27%

FINISHED STEEL PRODUCTION

2,762,221 2,773,736 (0.4%)

FINISHED STEEL IMPORT 1,989,442 1,711,016 16%

FINISHED STEEL EXPORT 104,836 73,768 42%

APPARENT STEEL CONSUMPTIONAdjusted for double counting

4,017,118 3,530,034 14%

Apparent Consumption:SEMI-FINISHED STEEL

In Metric Tons Yr-Yr

2010 2009 Change

BILLETS

Production 1,050,000 824,000 27%

Import 1,169,998 1,117,789 5%

Export - -

Apparent Consumption 2,219,998 1,941,789 14%

SLABS

Production - -

Import 64,286 (100%)

Export - -

Apparent Consumption - 64,286 (100%)

Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

Apparent Consumption:FINISHED STEEL

In Metric Tons Yr-Yr

2010 2009 Change

LONG PRODUCTS

Production12 2,132,512 1,790,724 19%

Import 642,827 465,285 38%

Export 829 320 159%

Apparent Consumption 2,774,510 2,255,689 23%

FLAT PRODUCTS

Production1 0 102,062 (100%)

Import 1,346,615 1,245,731 8%

Export 104,006 73,448 42%

Apparent Consumption 1,242,609 1,274,345 (2%)

1 Covers hot rolled products only in order to avoid double counting

2 Excludes bar products converted from wire rods

Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

Breakdown of Finished Steel Production

in MT (2010 vs. 2009)In Metric Tons Yr-Yr

2010 2009 Change

LONG PRODUCTS 2,508,218 2,216,500 13%

Bars1 2,092,548 1,848,469 13%

Shapes and Sections1 201,074 179,065 12%

Wires 214,596 188,966 14%

FLAT PRODUCTS 254,003 557,236 (54%)

Hot Rolled Coils - 102,062 (100%)

Cold Rolled Coils 5,552 104,477 (95%)

GI/Pre-painted/Zn-Al Coated Sheets

198,095 293,179 (32%)

Pipes and Tubes2 50,356 57,518 (12%)Source: Industry Sources

1 Includes bar products converted from wire rods2 2009 figures are revised due to new available information

Breakdown of Finished Steel Imports

in MT (2010 vs. 2009)In Metric Tons Yr-Yr  2010 2009 ChangeLong Products 642,827 465,285 38%

Wire Rods 336,854 337,730 0%Bars 54,831 21,722 152%Shapes and Sections 189,771 56,328 237%Sheet Piles 29,946 10,434 187%Wires 12,503 23,306 (46%)Rails 2,174 2,464 (12%)Others (Alloy & Stainless Steels) 16,748 13,301 26%

Flat Products 1,346,615 1,245,731 8%Plates 275,587 326,804 (16%)Hot Rolled Coils/Sheets 214,908 277,742 (23%)Cold Rolled Coils/Sheets 292,648 211,257 39%GI Sheets/ Pre-painted/Zn-Al 231,116 150,791 53%Tinplates/TFS 188,190 151,263 24%Pipes and Tubes 121,781 98,632 23%Others (Alloy & Stainless Steels) 22,385 29,242 (23%)

Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

Breakdown of Finished Steel Exports

in MT (2010 vs. 2009)

In Metric Tons Yr-Yr  2010 2009 Change

Bars / Sections 465 189 146%

Wires 364 130 180%

Hot Rolled Coils/Sheets 21,795 12,647 72%

Cold Rolled Coils/Sheets 24,695 20,671 19%

GI Sheets/ Pre-painted/Zn-Al 40,839 37,034 10%

Pipes and Tubes 16,678 3,096 439%

TOTAL 104,836 73,768 42%

Source: National Statistics Office

Steel ProjectsCOMPANY LOCATION DESCRIPTION STATUS

TKC Steel ILigan City(Mindanao)

New installation1st Blast Furnace400,000 mtpy

On-going testing operation

New installation2nd Blast Furnace400,000 mtpy

On-going installationCommissioning - 3Q 2012

New Carcar Manufacturing Corp.

Davao City(Mindanao)

New capacity Bar rolling mill 400,000 mtpy

Start of construction - 3Q 2011Commissioning - 4Q 2012

Cebu (Visayas)

New capacityEAF to produce billets400,000 mtpy

On-going planningCommercial operation- Jan 2014

La Union (Luzon)

New capacityEAF to produce billets 400,000 mtpy

On-going planningCommercial operation- Jan 2014

Davao del Norte (Mindanao)

New capacityEAF to produce billets 400,000 mtpy

On-going planning Commercial operation - Jan 2014

Source: Industry Sources

ENVIRONMENTAL UPDATES:• 20% drop of total suspended particulates (TSP) for

the first quarter of 2011 at 131 µg/Ncm as against 163 µg/Ncm for the same period of 2010.

• TSP levels recorded for the third quarter of 2011 went down further at 120 µg/Ncm.

• 25% drop of TSP for the second quarter of 2011 at 125 µg/Ncm as against 166 µg/Ncm for the same period of 2010.

ENVIRONMENTAL UPDATES:

• Proposal from DENR to use EURO IV fuels by Jan. 01, 2016 for all new passenger and light duty motor vehicle types.

• Issues on the proposed DENR Administrative Order regarding oxygen correction factors and emission averaging and guidelines for employing the emission averaging approach for compliance purposes.

Thank You for

your attention!