PHILIPPINES Country Report 2016

Philippine Iron and Steel Institute

Philippines: Key Economic Trends in 2016

GDP posted a 6.8% growth in 2016

• Robust private and household consumption coupled with an increase in capital

investments

• Growth was more balanced - private consumption, public and private

investment and resurgence in manufacturing and construction

• Resurgence in all sectors following presidential elections

GDP Growth by Sector, 2014-2016

2016 2015 2014

GROSS DOMESTIC PRODUCT 6.8 5.8 6.1

Agriculture, Fishery and Forestry (1.3) 0.2 1.9

Industry 8.0 6.0 7.5

Mining and Quarrying (0.3) (1.3) 3.5

Manufacturing 7.0 5.7 8.1

Construction 12.6 8.9 8.5

Electricity, Gas and Water 9.6 4.8 3.2

Services 7.5 6.7 6.0

Transport, Comm., Storage 5.9 7.9 6.6

Trade 7.3 6.9 6.0

Finance 7.7 5.7 6.7

Ownership of Dwelling and Real Estate 9.1 7.3 8.1

Private Services 6.9 8.0 4.2

Government Services 7.5 0.6 3.5

Key Economic & Monetary Indicators2016 2015

GDP P8.113T ($183.6) P7.579T ($171.5)

GNI P9.735T ($220.3) P9.109T ($206.1)

Inflation Rate 1.8% 1.4%

Interest Rate

Bank Lending Rate (annual ave.)5.64% 5.58%

Exchange Rate (per USD)

Average

End of year

P47.49

P49.81

P45.50

P47.23

Foreign Trade

Merchandise Exports Growth

Merchandise Imports Growth

Trade Balance

0.6%

16.6%

($34,079)

(13.1%)p

(3.2%) p

($21,698)p

Foreign Direct Investments $7.93B $5.72B

Balance of Payments ($420B) $2.616B

Source: Bangko Sentral ng Pilipinas (BSP) – The Philippine Central Bank Annual Report

Performance of the Steel Industry in 2016Apparent steel consumption reached 9.68 million MT in 2016,

growing by 10% compared to 8.75 million MT in 2015.

.

4.15.3

6 6.57.27

8.759.7

7.6

3.7

6.67.2

6.1 5.8

6.8

0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015 2016

ASC GDP

Key Developments in 2016

STEEL DEMAND

• Increased demand for flat products to address ongoing

housing and reconstruction activities

• Increased demand for long products to supply private

residential and commercial developments

• Increased demand for construction steel to supply

government projects

STEEL SUPPLY

• Increase in semi-finished and finished steel products from

China

• Slight uptake in local billet production

Comparative Steel Demand

2016 2015

81%

9%

5%4%

1%

Construction

Light & Heavy Fabrication

Others

Packaging Ship building

81%

9%

5%4%

1%

Construction

Light & Heavy Fabrication

Others

Packaging Ship building

Summary of Key Steel Statistics

In Metric Tons Yr-Yr

2016 2015 Change

CRUDE STEEL PRODUCTION 1,075,182 968,022 11%

FINISHED STEEL PRODUCTION 5,791,038 5,683,251 2%

FINISHED STEEL IMPORT 5,497,958 4,917,559 11%

FINISHED STEEL EXPORT 100,000 100,000 0%

APPARENT STEEL CONSUMPTIONAdjusted for double counting

9,677,422 8,759,700 10%

Apparent Consumption:

SEMI-FINISHED STEELIn Metric Tons Yr-Yr

2016 2015 Change

BILLETS

Production 1,075,182 968,022 11%

Import 3,148,178 2,886,806 9%

Export -

Apparent Consumption 4,223,360 3,854,828 9%

SLABS

Production - -

Import -

Export - -

Apparent Consumption - -

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

Apparent Steel Consumption:

In Metric Tons Yr-Yr

2016 2015 Change

LONG PRODUCTS

Production1&2 4,346,038 4,013,251 8%

Import 1,922,200 1,798,036 7%

Export

Apparent Consumption 6,268,238 5,811,287 8%

FLAT PRODUCTS

Production1 0 0 0%

Import 3,509,184 3,048,413 15%

Export 100,000 100,000 0%

Apparent Consumption 3,409,184 2,948,413 15%

Total Long & Flat Products 9,677,422 8,759,700 10%

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 Productionin MT (2016 vs. 2015)

In Metric Tons Yr-Yr

2016 2015 Change

LONG PRODUCTS 4,966,038 4,633,251 7%

Bars1 4,256,038 3,953,251 7%

Shapes and Sections1 490,000 460,000 6%

Wires 220,000 220,000 0%

FLAT PRODUCTS 850,000 1,150,000 (26%)

Hot Rolled Coils

Cold Rolled Coils

GI/Pre-painted/Zn-Al Coated Sheets 520,000 820,000 (36%)

Welded Pipes and Tubes 330,000 330,000 0%

Source: Industry Sources1 Includes bar products converted from wire rods

Breakdown of Finished Steel Importsin MT (2016 vs. 2015)

In Metric Tons Yr-Yr2016 2015 Change

Long Products 1,922,200 1,798,036 7%

Wire Rods 821,789 668,965 23%

Bars 81,410 75,137 8%

Shapes and Sections 773,138 849,418 (9%)

Sheet Piles 167,000 135,361 23%

Seamless Pipes and Tubes 68,820 65,411 5%

Rails 10,043 3,744 168%

Others (Alloy & Stainless Steels) 0 0

Flat Products 3,509,184 3,048,413 15%

Plates 795,127 736,999 8%

Hot Rolled Coils/Sheets 448,169 509,861 (12%)

Cold Rolled Coils/Sheets 501,160 397,824 26%

GI Sheets/ Pre-painted/Zn-Al 1,255,127 951,304 32%

Tinplates/TFS* 205,244 199,169 3%

Welded Pipes and Tubes 304,357 253,256 20%

Others (Alloy & Stainless Steels) 0 0 -

Breakdown of Finished Steel Exportsin MT (2016 vs. 2015)

In Metric Tons Yr-Yr

2016 2015 Change

Bars / Sections - -

Wires - -

Hot Rolled Coils/Sheets - -

Cold Rolled Coils/Sheets - -

GI Sheets/ Pre-painted/Zn-Al - -

Welded Pipes and Tubes 100,000 100,000 -

TOTAL 100,000 100,000

Philippine Economic Outlook for 2017

Government forecast is for GDP to grow 6.9% in 2017

However, there are downside risks arising from:

1. Power shortage (regional)

2. Natural calamities

3. Political distractions

The challenge to the Philippines:

1. China exports (all products)

2. Port congestion, timely delivery of finished goods

3. Shortage of skilled workers

4. Absorptive capacity of private and public sectors to build the required physical infrastructure

Steel Outlook for 2017

Steel demand to benefit from:

• Implementation of big-ticket government infrastructure

• Increased government spending on nationwide

infrastructure development

• Expected resurgence of manufacturing sector

The steel supply situation in 2017:

• Full utilization for the local production of rebars, shapes

and sections

• Increased importation of finished steel products

New Steel Projects

• SteelAsia - New 500MTPA Small Sections and Merchant Bar Rolling Mill in Calaca, Batangas– commissioning Q4 2019

• Mitsubishi Motors Philippines Corporation –New Stamping Shop Facility in Sta. Rosa, Laguna – operational in Q1 2018

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E-Mail: pisisteel@yahoo.com.ph

PHILIPPINE IRON & STEEL INSTITUTE

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