The Office of Industrial Economics
Industrial Economic Status Report
December 2007
Industrial Economic Status
December 2007
Summary
Industrial Index of November 2007
- The production index (with value added) was 183.61, which was 1.0% higher than October 2007 (181.84), and 13.0% higher than November 2006 (162.47).
- The increase in the production index, compared with October 2007, was the result of the following sectors: manufacture of office, accounting and computing machinery (Hard disk drive), manufacture of wearing apparel, except fur apparel, manufacture of jewelry and related articles, manufacture of tobacco products, and manufacture of other general purpose of machinery (Air-conditioners).
- The average capacity utilization rate was 68.25, higher than October 2007 (67.97), and higher than November 2006 (66.71).
Industrial Economic Situation in December 2007
- Production and exports in the food industry should increase from the previous month due to the increase of purchase orders from overseas. Domestic sales are also expected to increase during the election and New Year’s celebration.
- Production and exports in the textile and garment industry should rise from last month. The increase is expected to be caused by the higher volume of purchase orders from domestic and overseas and advanced export plans to Japan and ASEAN countries. Domestic sales should increase for celebrations of upcoming holidays, including Christmas, New Year’s and Chinese New Year’s.
- The iron and steel industry’s output in December 2007 remained the same compared with the previous month. The production of long steel should remain stable due to the unchanged situation in the real estate sector. Flat steel should slightly increase due to the demand of global markets; while domestic demand was stable.
- The automobile industry in December 2007 is expected to expand m-o-m due to the sales season and sales promotions held by manufacturers in order to stimulate markets. Domestic sales accounted for 50% of production and exports accounted for 50%.
- For December 2007 and January 2008, the production and domestic sales of cement are expected to increase due to the beginning of the construction season. Political clarity is another factor that boosted the confidence of consumption and investment. However, rising oil prices are a critical variable which could affect the recovery of the real estate sector. It is estimated that exports will increase because of demand from the countries in ASEAN, South Asia, Middle East, Europe, Latin America, and Africa.
- The production of electrical appliances in December 2007 should increase by 3.0% y-o-y due to increases in air-conditioners and refrigerators, mainly, for export. The production of electronics in December 2007 should also expand by 28.0% due to the increasing demand of IT markets which caused electronics production and sales to rise at the end of the year. Electrical appliance exports were expected to increase by 9.0%. The export value of electronics should increase by 11.0% due to the expansion of almost all major export markets (excluding America), especially Chinese and ASEAN markets, which caused the sales volume of electronics parts to increase.
Industrial Index in 2007 and in 2008
- The production index (weighted with value added) in 2007 grew by 7.8%, which is higher than its expansion of 6.4% in 2006. The production index (weighted with value added) in 2008 was expected to expand by 8.0% – 8.5% due to increases in domestic consumption and investment.
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The Office of Industrial Economics
Industrial Economic Status Report
December 2007
Industrial Economic Situation
- Manufacturing Production Index (weighted with value added)
October 2007 = 181.84
November 2007 = 183.61 é
Main industries that caused the index to increase include:
o Office, accounting and computing machinery (Hard disk drive)
o Wearing apparel, except fur apparel
o Jewelry and related articles
- Average Capacity Utilization Rate
October 2007 = 67.97
November 2007 = 68.25 é
Main industries that caused the index to increase include:
o Tobacco products
o Other manufactures, not elsewhere classified (n.e.c) (Artificial flowers and artificial accessories)
o Television and radio receivers and related items
Page 7 of 16
The Office of Industrial Economics
Industrial Economic Status Report
December 2007
I. Food Industry
Production and exports of the food industry in December should continue to grow from last month. Domestic sales should be better due to the New Year’s festival.
1. Production
Overall production (not including sugar) in November 2007 increased by 7.1% y-o-y and 8.8% m-o-m.
Products for export, such as canned pineapple, increased by 63.8% compared with last year due to the production season and an increase in raw materials.
Products for domestic sales, such as chicken feed and soybean oil increased their production by 13.3% and 52.2%, y-o-y, respectively, due to higher demand.
For sugar, the extracting season will start in the beginning of December.
2. Marketing
1) Domestic Markets
The sales volume of food and agricultural products in November 2007 increased by 10.6% y-o-y due to political clarity and the news of rising product prices which caused consumers to spend more for products before prices were adjusted.
2) Overseas Markets
The overall export value of the food industry (not including sugar) increased by 12.1% y-o-y and 11.4% m-o-m due to the increased volume in purchase orders. Canned pineapple, canned tuna, and processed chicken increased by 32.3%, 47.7%, and 28.4%, respectively, compared with last year. However, the export value of other products, e.g. refrigerated and frozen shrimp declined by 5.1% y-o-y due to the strength of the baht and trade barriers.
3. Trends
It is predicted that production and exports should increase due to a higher volume of purchase orders. Domestic sales should increase during the election and New Year’s celebration.
II. Textile and Garment Industry
…the volumes of purchase orders and sales increased corresponding to the increase of domestic and overseas consumption…
1. Production
Textile production in November was stable compared with last month, but declined by 2.4%, y-o-y. Production of garments made from knitted fabric increased by 11.4% and 7.8% compared with last month and last year, respectively. Production of garments made from woven fabric increased by 5.9%, m-o-m, and by 2.0%, y-o-y due to advanced purchase orders for upcoming Christmas and New Year’s. Additionally, manufacturers planned to increase their exports to Japan as a result of the Japan-Thailand Economic Partnership Agreement (JTEPA), effective since November 1.
2. Marketing
Domestic sales adjusted accordingly to the increase of purchase orders. Garments made from knitted fabric increased by 7.4%; garments made from woven fabric increased by 12.7%.
Exports of most products in November increased m-o-m. Fabrics, synthetic filament yarns, synthetic fibers, and home fabrics increased by 3.2%, 22.1%, 22.4%, and 10.4%, respectively. Exports increased in American markets (+0.3%), ASEAN markets (+17.3%), and Japanese markets (+27.0%).
3. Trends
Production and exports were expected to increase from last month due to the higher volume of purchase orders and advanced production plans exporting to Japanese and ASEAN markets. Domestic sales should increase due to celebrations for upcoming festivals: Christmas, New Year’s and Chinese New Year’s.
III. Iron and Steel Industry
China increased export tax rates for steel and steel-related products. The tax rate of semi-finished steel products increased to 25% from 15%. Wire rods and steel bars were up to 15% from 10%. Welded pipe, which previously had no tax, was adjusted to 15%. Hot-rolled narrow strip (under the export code 7211 1900), cold-rolled narrow strip, galvanized and coated narrow strip increased from 5% to 15%. These new Chinese export tax rates should result in higher metal prices.
1. Production
The production index in November 2007 reached 148.03, an increase of 7.84%. Long steel production increased by 8.08%, led by round bar, which were up 35.76% due to the decline in production volume last month, as a result of sluggish domestic demand. This month, manufacturers increased their production only to fulfill purchase orders, not inventory levels because they were afraid of effects from rising material prices. Deformed bar increased by 9.98%. Flat steel increased in production by 7.07%. Tin plates increased the most by 17.70% due to continually incoming purchase orders. Hot-rolled coil increased by 15.72% to complete overseas purchase orders. Compared with last year, long steel production increased by 6.34%, led by wire and deformed bar, which increased by 48.13% and 18.16%, respectively. Flat steel production increased by 4.86%, led by cold-rolled coil, which grew by 21.64%.
2. Metal Prices
The average change in the FOB price in the CIS market at the Black Sea Port in December 2007 of every product increased over last month. The price of billet increased by 6.95%, from US$ 501 to US$ 536 per ton. The price of steel bar increased by 5.12%, from US$ 547 to US$ 575 per ton. The price of slab increased by 1.45%, from US$ 529 to US$ 537 per ton. The price of cold-rolled coil increased by 0.58%, from US$ 633 to US$ 637 per ton. The price of hot-rolled coil increased by 0.45%, from US$ 589 to US$ 592 per ton. These increases were caused by higher demand from the BRIC countries, comprised of Brazil, Russia, India, and China.
3. Trends
Long steel production should be stable due to the unchanged situation in the real estate sector. Flat steel is expected to grow slightly due to the demand of global markets; while domestic demand should be unchanged.
IV. Automobile Industry
Automobiles
In November 2007, the automobile industry grew year-on-year. Information for the automotive industry in November is as follows:
- Automobile production in November 2007 was 125,071 units, a 23.69% increase from the 101,117 units in November 2006; and an increase of 0.99% from last month.
- Sales in November 2007 were 57,719 units, a 0.14% decrease, from 57,800 units in November 2006, and a decrease from the previous month by 0.24%.
- Automobile exports were 69,783 units, 58.29% higher than the 44,085 units exported in November 2006 due to exports of 1-ton pickup to countries in the Middle East, Europe, Central America, and South America; and 19.31% higher than in October 2007.
- The automobile industry in December 2007 is expected to expand m-o-m due to the sales season and sales promotions from car makers to stimulate domestic sales. Production in December 2007 will be broken down into 50% for domestic sales and 50% for exports.
Motorcycles
Motorcycle production in November 2007 slowed down, y-o-y, due to a slowdown in domestic sales; however, exports expanded. The information for the motorcycle industry in November is as follows:
- Motorcycle production of 139,514 units in November 2007 was 10.36% lower than the 155,646 units produced in November 2006, but 2.16% higher than the amount produced in October 2007.
- Motorcycle sales were 129,608 units, 18.86% lower than the 159,737 units sold in November 2006, but 2.88% higher than those sold in October 2007.
- Motorcycle exports (CBU) increased by 15.01% to 7,072 units from 6,149 units exported in November 2006, but 18.46% lower than the number of units exported in October 2007.
- The trend for December 2007 was expected to be stable compared to last month.
V. Cement Industry
“Domestic production and sales declined due to the sluggishness of the real estate sector. Domestic demand in cement should increase after the election. However, rising oil prices are a critical variable in the recovery of the real estate sector.”
Source: Industrial Economics Information Center, Office of Industry Economics
Source: Industrial Economics Information Center, Office of Industry Economics
Source: Information and Communications Technologies Center, Department of Trade Negotiations, Ministry of Commerce
1. Domestic Production and Sales
The volume of cement production and domestic sales in November 2007 continued to slow down m-o-m, by 4.16% and 0.56%, respectively. Compared with last year, production and domestic sales decreased by 2.76% and 7.29%, respectively due to the slowdown of the real estate sector in accordance with the sluggishness of consumption and investment as a result of a lack of economic confidence.
2. Exports
The value of cement exports in November 2007 increased by 24.49% m-o-m, and 13.75% y-o-y due to higher demand in ASEAN countries, especially in Cambodia.
3. Trends
For December 2007 and January 2008, it is expected that production and domestic sales will increase due to the construction season and political clarity after the election which should increase confidence in consumption and investment. However, rising oil prices are a critical variable which could affect the recovery of the real estate sector. It is estimated that exports will increase as a result of demand from neighboring countries in ASEAN and South Asia, including countries from the Middle East, Europe, Latin America, and Africa.
VI. Electrical and Electronics Industry
· Electrical and electronics production in November 2007 increased by 27.13%, y-o-y, with a production index of 333.65, as a result of a 33.54% increase of the electronics production index, mainly due to HDDs, other ICs, monolithic ICs, and semiconductor devices and transistors.
· The export value of electrical appliances and electronics in November 2007 increased by 9.56% y-o-y, with a total value of USD 4,092.90 million. The highest export value of electrical appliances was air-conditioners for residences and factories, with a value of USD 183.82 million.