Rise in infra work fuels PH steel industry growth

The Philippine iron and steel industry is poised to continue its growth path this year, in terms of local production and imports, as more infrastructure, rehabilitation and housing projects are rolled out this year.

In a presentation before the Organization for Economic Cooperation and Development (OECD) in France earlier this month, the Philippines’ Board of Investments (BOI) said the demand for steel products would be driven largely by the “implementation of big ticket government infrastructure projects, reconstruction efforts for the typhoon and earthquake affected areas, and the housing backlog and redevelopment of urban centers across the country.”

According to the BOI, the projects are expected to translate into “increased local production of rebars, shapes and sections,” as well as increased importation of billets and coated steel products.

Data provided by the bureau showed that “apparent steel consumption” grew by 9.2 percent to 6.58 million metric tons in 2013, from the 6.03 million metric tons (MT) recorded the previous year.

The increase was attributed to the continuing growth in real estate developments and higher infrastructure spending by the government.

Of the total demand for steel, 81 percent went to the construction industry; 9 percent were used for light and heavy fabrication; 5 percent for shipbuilding; 4 percent for packaging; and the rest went to cover other requirements.

Last year, crude steel production grew by 3.8 percent to 1.31 million MT, while finished steel production rose 30 percent to 4.17 million MT, the BOI said. Finished steel imports and exports stood at 3.67 million MT and 100,000 MT, respectively.

At present, the growth of the steel and iron industry is hampered largely by the high cost of power, technical smuggling, outdated facilities and tariff distortions concerning imported steel products.

The BOI is now looking at providing specific incentives to encourage more investors to set up ironmaking facilities and go into flat products manufacturing.

The BOI also noted the need for strict enforcement of the Customs laws and technical regulations; increased support for research and development; and for the review of tariffs to remove the so-called distortions.

Based on the iron and steel industry roadmap, the industry sees itself becoming a “globally competitive provider of quality steel products for domestic users by 2030.”

Annual demand is seen to rise to as much as 20 million MT by 2030, translating to a 130-kilogram per capita consumption, as opposed to last year’s 50-kilogram consumption.