News article from Bworldonline.com by K.A. Martin

The Makati Business Club Vice-Chairman Roberto Ocampo said that public-private partnership (PPP) program would be a channel for the government to acquire better investment. He emphasized that PPP projects particularly in infrastructure would aid in achievingsustainable growth. Hence, the 21 projects which are related to transit lines, expressways, roads, airports and school infrastructure projectare already lined up for PPP.These projects have already received approval from Investment Coordination Committee (ICC) Cabinet Committee and only awaitsfor President Aquino III’s final approval.1

From this news, the relation of iron and steel industry may not be known initially. However, steel is highly utilized in this type of projects. Sincethe output of this industry is mainly used as a key input by other sectors such as automotive, shipbuilding, electronic, packaging, and in the constructionof buildings, railroads and bridges, it suggests that steel is one of the basic industries that contribute significantly to achieving development and industrialization.

The record of Sectoral Breakdown of Philippine ASC (2008) showed that 74% of total supply of iron and steel products is accounted by construction, 19% for light and heavy fabrication such asautomotives, and 7% packaginglike tin plating for canned goods. Recently, from 2011 record, consumption of construction increase to 81%, light and heavy fabrication decrease to 14%, while packaging and others constitute to 5% of the total demand for steel. As of now, the government continues to enhance performance of iron and steel indirectly through recent projects similar to 3 million units backlog from housing development, and public-private partnership (PPP) program for infrastructure development. And because of the continuous increase in demand for iron and steel in construction, the industry acknowledges the need to produce more billets locally. These semi-product billets are then casted as structural, bars, rails mills, pipe and tubes used for construction.

In the article, it was also stated that Energy Secretary Jose Rene D. Almendras said that more energy investments are needed to support the growth of the economy and that there is a need to find as much energy sources in the Philippines. The efforts to be done to address electricity issues would highly affect iron and steel industry.  One of the industry’s Achilles heel is identified to be energy consumption because it generally accounts for 20-45% of the entire industrial energy demandsince it requires a huge amount of heat to cast steel into different forms.

Nevertheless, with a generally optimistic macroeconomic outlook because of the vibrant real estate sector that is supported by sustained OFW remittances, an additional 3 million units backlog from housing development, and most speciallythe public-private partnership (PPP) program of the government on infrastructure development, there is an optimistic outlook towards steel consumption.

[1]K.A. Martin, “Power, factory, infrastructure ventures sought for growth,” Business World, July 25, 2012, Economy Section, http://
http://www.bworldonline.com/content.php?section=Economy&title=Power,-factory,-infrastructure-ventures-sought-for-growth&id=55772 (accessed July 26 2012).



Authors:
Agas, Tyrone Dale
Molleno, Paolo Miguel
Panganiban, DanicaLeane




Leave a Reply.