ASEAN Steel Industry Amid the Global Economic Meltdown

2008 saw the steel industry in the ASEAN region going in dramatic upward and downward situation. The first half was a significant growth and the 2nd half a massive downturn. Overall for the year however, it still posted an increase, thanks mainly to the high performance in the first half of the year.

According to the SEAISI Newsletter, January 2009 edition (South East Asia Iron and Steel Institute, or SEASI), apparent steel consumption in the first half of 2008 was estimated to reach 25.2 million tonnes, an increase of 10.2% from the 2007 record. The steel output on the other hand was estimated to reach 15.2% or 13% increase year to year. Imports increased by 13% to 15.6 million tonnnes while export was up by 28% to 5.6 million tonnes.

The same article reported that of the 6 nations (ASEAN 6, namely, Indonesia, Vietnam, Malaysia, Thailand, Singapore and the Philippines), Indonesia recorded the highest growth rate at 24% to 5.5 million tonnes. Other nations that posted an increase in consumption growth are Thailand (13.6% at 7.45M), Vietnam (10.5% year on year to 5.3M), and Malaysia (5-6% to 4M). On the other hand, Singapore and the Philippines experienced negative growth rates. Singapore's consumption decreases by 12% to 1.8 million tonnes while the Philippines registered a drop by 9.5% to 1.57 million tonnes. Philippine production though increased by 20% to 1 million tonnes but imports dropped by 34% to 0.66 million. When the negative impact of the global crisis started to sink in, i.e, steel prices sharply went down due to weak demand, many steel producers around the world including those in the ASEAN resorted to production cutbacks.

Their report concluded that despite the slowdown in the 2nd half of 2008, overall apparent steel consumption of the ASEAN 6 increased by 4-5% to 45-46 million tonnes, mainly due to the high consumption experienced in the ist half of the year.

How Thick is Your GI?

I just had a talk with an esteemed former colleague from National Steel Corp (Iligan City). He's now managing a drum-making plant somewhere in Northern Mindanao. Our discussion centered on his query on what could be the technical reasons why for a given GI sheets order, there is a huge and significant difference on prices between suppliers. He is buying GI sheets for their drums and he was comparing the quotations submitted.

I explained the common "technical" reasons relating to price difference. First is on the actual base metal thickness used. While the nominal thickness maybe the same, the actual maybe different and very far in comparison. The use of the old nomenclature describing thicknesses as say Gage 18 for example is misleading. For one, just what is Gage 18 really? Ordinary consumers may not really know what it is really as long as their supplier says it is Gage 18.

In the old book, The Making and Shaping of Steel, Gage 18 is actually MSG ( Manufacturers Standards Gage) Gage No. 18 which corresponds to 1.214mm. But in reality, thicknesses as low as 1.0mm to as thick as 1.4mm maybe passed off as Gage 18. A steel coil with 1.0mm actual base metal thickness will yield more sheets than a coil with 1.2mm actual thickness, thus can command a definite price advantage. This also commonly happens in GI for roofing sheets where the most popular size of Gage 26, which is supposed to be 0.4mm ( originally it is 0.455, then reduced to 0.426mm) would now be 0.35mm and below. With the Metrication system implemented a long time ago, this practice of naming sheets as Gage 18, 31, 26, 16, etc should have been stopped and instead the direct nominal thicknesses as 1.2mm, 0.2mm, 0.4mm, 1.4mm, etc should be used. In the PNS (Pilippine National Standards) and all other international standards, like ASTM, JIS, ISO, etc, the latter is specified

The second factor is on the actual mass of coating. A coating of 100gms/m2 (Z 100) would definitely be price advantageous than a coating of 140gms/m2 ( Z 140). It should be noted that in galvanizing, cold rolled steel coil (CRC) raw material and zinc comprise the bulk of production cost.To get therefore a real comparison, actual apple to apple comparison is needed.

My "Scary" Valentine

T'was Valentine 2005. My wife decided a simple celebration- a movie date at Glorietta 4 (Ayala Center, Makati); the title of the movie I could not now recall.

I left our plant office a little before 5 for a 1 to 1 1/2 hour drive to Makati. We had hoped to catch an early evening screening time so we still can have a late dinner when the dining crowds thin out. A little past 6 then I was already traversing EDSA Magallanes.

The shortest route would have been to go left to Pasay Road (now Arnaiz Ave) where just a few meters away is the Park Square 1 parking area. Back then however, from 4 to 9pm, traffic here was one way going out to EDSA. So I went straight to EDSA Ayala, made a U turn and turned right on a strip between Dusit Hotel and SM Makati. I passed by a line of buses cramped on MMDA's fence wall, waiting for passengers coming from the back of SM Makati, below the Ayala MRT station. Just as I was about to turn right, some 30 meters away, I heard a very loud deafening explosion. For a moment, I came to an abrupt brake. At that first moment, I thought my tires blew up but I sensed nothing abnormal about the car.

Just then, I saw people running towards the direction of the buses. I then decided to immediately drive away and went up straight to the nearby parking area at Park Square1. Up there, at every floor people were running, cars lining up for exit. I still didn't know what was happening. When I looked down, I was surprised to see streams of people crowding the roads, rushing to the Glorietta malls exits while security guards started to close down the entrances to the malls. The guard at the parking area told me, a bomb exploded at MRT station. By then, I knew my wife was already inside the mall, perhaps at the cinema lobby. I frantically called her to stay where she was while running and rushing past the guards towards the entrance of the mall. I thought I should get inside before they completely close down the mall.

I did not panic, nor at that time felt scared. Somehow, I have borne witness to several bombings when I was still in Iligan City and bomb threats then were not strange. From the food court overlooking the MRT station and the Intercon Hotel, we could see police cordoning off the area, people were shooed away from the site and traffic came to a standstill in that area. There was still no news about the extent and other details. Inside, the shows went on so we still went to our movie date.

After the show, we went towards the direction of Landmark. At a corner store across Shangri-La Makati, we saw people converging, watching TV. Curious, we joined the group, only to find out that it was a news coverage of the bombing.We were aghast to see the damage brought by the bombing. It was no ordinary bombing. It intended to really kill.

The next day, it was all over the news. It was horrible to see the remains of the bus and terrifying to imagine what became of the passengers inside. A car that passed by the bus at the time the bomb exploded was also severely damaged. It could have been me. I missed it by a hairline, thank God. I was at the same spot just 2 or 3 seconds earlier.

It was a terrorist attack, the investigators concluded. A lovely Valentine evening turned bloody.

BPS Technical Committee on Flat Steel Products

The Technical Committee on Flat Steel Products, otherwise known as TC 64 was finally convened for the first time this year last January 30 at the Bureau of Product Standards Conference Room, 3/F Trade and Industry Building, 361 Sen. Gil Puyat Ave., Makati City. The main agenda was the formulation of the work program for 2009, but most important in this program is the final resolution and adoption of product standards for galvanized roofing.

The technical committee is the technical arm of the Bureau of Product Standards (BPS) in charge of formulation, review, and development of product standards. When promulgated, such standards become a Philippine National Standard (PNS) which will govern the production, distribution, and sale of such product. The TC 64 is composed of representatives from various sectors, namely, the manufacturers, government agencies, testing centers, and the academe. When needed, other sectors like the consumers, and other authorities are likewise consulted.

The manufacturers are represented by Filipino Galvanizers Institute (FGI), Puyat Steel, Union Galvasteel Corp., Steelcorp/Philsteel, Sonic Steel, Tower Steel, Galvaphil, and AC steel. Government agencies include the National Housing Authority(NHA), DTI- Construction Industry Authority of the Phil(CIAP), Metals Industry Research Development (MIRDC). Mapua represents the academe and SGS Phil represents the private sector testing center. A BPS Project Manager serves as the overall coordinator of the group.

So far, the committee has approved the following product standards ready for promulgation.

1. PNS 127:2004 Cold-reduced steel sheet of commercial and drawing qualities- Specification
2. PNS 1990:2004 Hot-dip zinc coated carbon steel sheets
3. PNS 2003:2004 Continuous hot-dip zinc/5% aluminum alloy coated steel sheets
4. PNS 1993:2004 Continuous hot-dip 55% aluminum/zinc-coated steel sheet of commercial,drawing and structural qualitites.For resolution and promulgation is PNS 67:2008 Hot-dip metallic coated steel sheets for roofing-Specification.
   

I have been a member of this committee since 1998 and the chairman of its Working Group subcommittee.

Australia Still On My Mind

I love Melbourne. To my mind, it is the most livable city. It is an urban city yet laid back, not similar to the razzle and dazzle of many urban cities. It is clean, green and generally peaceful. Its shops close early at night; its night life is tame compared to even Manila's nightlife. Its architecture is magnificent, typically classical European, specifically French and British inspired. It is a city abundant with fresh fruits and vegetables and dairy products, including meat, of beef and lamb variety. Outside the city, I saw vast green lands on both sides of the highways, cattles and sheep grazing, with only a few vehicles going along or opposite our direction.

I underwent training orientation on the operation of atomic absorption spectrophotometer (AAS) at Varian Techtron's main plant and laboratory at Mulgrave, Victoria, outside Melbourne. Our company bought a unit which will be used to analyze aluminum, zinc, and other elements of our kettle bath of our then newly operated continuous galvanizing line. There were 5 of us and my co-trainees came from Makban (Laguna and Tiwi, Albay) Geothermal Plants and Cebu Water District. All these companies also bought new Varian Techtron units, and our training was part of the package.

I also had the opportunity to visit the Pasminco office (Pasminco was once our suppliers of zinc ingots and a major supplier in the Southeast Asia region) where I had an educational technical discusion with Mr. Mike Ainsley, Pasminco's head of technical services in our region. Pasminco was once the world's biggest zinc producer supplying over ten percent of the global output.

My Pasminco visit was capped by a trip to their zinc smelter plant in Hobart, Tasmania, a small island down south of Melbourne.There I learned that the first exiles from England arrived and settled there before eventually moving to the mainland. And that the famous Tasmanian Devil could not be found in Tasmania. It was in Hobart though where I ate the biggest oysters I had ever seen. Over lunch at a restaurant by the wharf, after engaging a large plateful belatedly knowing it was just an appetizer, I could not have imagined how I managed to still take the main course. Perhaps a bottle of wine each for us with Mike Ainsley proved helpful. Another adventurous sidetrip was a car drive to the island's highest mountain, Mt. Wellington. It was amusing to see the tall pine trees along the curved road becoming smaller and shorter as we went up, ultimately becoming a bonsai up there.

Outside Melbourne, I visited the Furphy Metal Center, a steel fabrication plant specializing in the fabrication of galvanizing kettles. Their company slogan of "Good, Better, Best" was prominently displayed on their plant's walls.l I evaluated their capability to supply us with our requirement; mainly from the technical/quality point of view. I examined their quality records, from mill test certificates of their steel and electrode chemical composition to non-destructive tests, e.g. ultrasonic tests, magnetic particle and dye penetrant tests, etc. I was also able to observe their fabrication process, especially the cold bending process where plates as thick as 50mm(2 inches) are bent and how they were subsequently stress relieved.

There was also this zinc ash recycling plant which i visited within the city itself. It is interesting to note that our zinc wastes, namely, dross and ash, are converted and recycled into high value raw materials for rubber, paint and even pharmaceuticals. At that time, our dross and ash generation were significant in volume and their zinc content still high which made it favorable for this plant. However over the years as we gained experience and knowledge and skill our dross and ash generation were drastically reduced that exporting them to Australia became not feasible.

The last days of my stay in Melbourne was spent with a close friend and fellow Jaycee from Iligan City who settled there 5 years before. We then had a great time roaming Melbourne, from toboggan skiing to mall visits, to boat ride along the Melbourne river and going to the Victoria market for some famous cheese.

The day I left Melbourne, a Saturday, thousands of visitors from nearby New Zealand were roaming the streets, riding the city trams, boozing in sidewalk bars, etc. It was said that almost 30% of New Zealand population descended to Melbourne. They were there for the much awaited rugby match later in the evening between their New Zealand All Blacks team against the Aussies Wallabies team. It was all in the papers. The people in the market were talking about it. It was a great sporting event at that moment.

I took a Sunday midnight trip back to Manila via Qantas Airways. As I approached the check-in and pre-departure areas, I thought the place was noisy, booming, and seemed crowded. I found out that they were the Kiwis who went to see the game and were now going back home. I saw big, wide bodied, tall and seemingly brown skinned (but definitely not white) people. I was told they were from the race of the original natives of their place. The kind, we here in the Philippines and also Australia call aborigines.

Australia On My Mind

Two events dominated my time and attention over the weekend; and both involved only one subject, Australia, otherwise known as the country Down Under. First was the just concluded Australian Tennis open Championship and the second, the movie simply titled Australia.

The first was a great and historic sporting event, capped by the scintillating win of power playing 2nd seed American Serena Williams over a hapless 3rd seed Russian Dinara Safina and finally a classic 5 set thriller in the men's final, won by Spaniard Rafael Nadal, the world's current No. 1, over No. 2 Swiss Roger Federer, not too long ago the dominant player in the tennis circuit.

It was a heartbreaking loss for Federer who entered the match favored by many past champions to equal Pete Sampras' all time 14 Grand Slam Championships. He broke down unabashedly during the Awards Ceremony, watched by an appreciative and roaring full house crowd in and out of the Rod Laver Arena and viewed by millions of tennis fans all over the world. It was a scene which also made my 9-year-old kid cry in sympathy, despite the fact that all throughout the tournament and the final game, he was rooting for his favorite, Rafa Nadal.

Friday evening, while Nadal was struggling against fellow Spanaird and Davis Cup teammate, Fernando Vesdasco in a gripping and epic 5-set-semi-final thriller played in a record 5 hours and 14 min (the longest match in Australian Open history) , my wife and I were watching at a Greenbelt 3 moviehouse one of the most talked and awaited movies, Australia, starring our favorite Nicole Kidman and Hugh Jackman, themselves both Aussies.

The movie was a touching story about Australia's aboriginal history and its past separation policy, not unlike the slavery and apartheid issues of the US and South Africa. It was only last year, as the movie's epilogue took note, that the Australian government thru its Prime Minister formally apologized to its aboriginal people for the treatment and this policy. It should be remembered that Cathy Freeman, a champion runner of aboriginal ancestry, who lit the Olympic flame 8 years ago during the opening of the Sydney Olympics, a symbolic gesture of Australia reconciling with its past.

I was in Melbourne many years ago doing several job-related missions for our steel company. My 1-week stay there during the cold winter of July 1997 was the connection of the two recent events to my steel journey.

Stay tuned!