Philippines: Finished steel production inches down in CY22. What lies ahead?

The Philippines' economy has registered a rapid growth in GDP than expected from 3.77% y-o-y in 2021 to 7.6% y-o-y in 2022 growth of 6.4% in the first quarter of 2023. This economy has well rooted with its strong consumer demand which is leading to urbanisation, infrastructural developments, skilled labour force and robust remittances.

Macroeconomic indicators:

The PMI (Philippines' managers index) ranges above 50 post-Covid which is a good sign indicating bullish sentiment on country's manufacturing growth. The inflation has gradually increased recently in the past years. However, it has decreased to 7.6% after registering a high of 8.1% in the calendar year 2022 (CY'22). However, the government's debt position is not in a good condition which is now at Php 13.4. Government plans to decrease debt percentage to 51.1% by 2028 while maintaining high infra spending at 5-6% of GDP through projects.

Steel industry trends in a snapshot

• Finished steel production was 5.1mnt, slightly less from CY'21 which was 5.2 mnt. Out of this, share of longs was 4.6 mnt and that of flats was 0.5 mnt.
  
  
• The imports parallelly have increased where China being the major supplier of steel catering 47% to the overall import followed by Russia (19%), Japan (8%) and Vietnam (4%).
  
  
• The apparent consumption of steel is 9.9 mnt in CY'22 higher than 9.5mnt in CY'21.
  
  
• The upcoming investments caters to a major investment in the infra (P 370 billion) and power distribution segment (aiming share in renewables to 35% by 2030 and 50% by 2040).
  
  

Outlook

The new power plants are increasing the prospect of building additional capacity for steel making, cross border investments among ASEAN members likely to take place.

The demand for steel would rise because of the strong tourism, revenge consumer spending, high infra spending, growing and young working population, new factories and power plants. In addition, an increased share of government-funded projects in the steel demand landscape compared to private sector development, are opportunities ahead for the country.