The Office of Industrial Economics
Industrial Economic Status Report
March 2011
Summary of Industrial Economic Status
Industrial Indices in February 2011
- The manufacturing production index (MPI) in February 2011 dropped 5.3% m-o-m and 3.4% y-o-y. Production of several industries has decreased over a year, particularly hard disk drives (HDDs) and petroleum products.
- The average capacity utilization rate was 59.1% in February, down from 62.3% in January 2011.
Industrial Economic Status
- Motor Vehicle Industry
· In March 2011, the industry is expected to expand from the previous month due to new models being launched at the 32nd Bangkok International Motor Show, held at Impact Arena, Muang Thong Thani.
· Production in March 2011 will be 45% for domestic sales and 55% for exports. However, imports of auto parts used in assembling new vehicles should be threatened by Japan’s powerful March earthquake and tsunami.
- Electrical Appliances and Electronics Industry
· The growth rate of the electrical appliances sector should go up 12.78% y-o-y, stemming from the likely 18.5% y-o-y increase of air conditioners.
· The electronic sector should face a slower y-o-y growth rate of 11.52% due to the decrease of HDDs, for which production accelerated in the previous year.
2
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
Industrial Indices
Manufacturing Production Index
January 2011 = 186.9
February 2011 = 176.9 ê
Activities contributing to the decrease of the MPI:
· Petroleum products
· Sugar
· Canned and frozen seafood products
Capacity Utilization Rate
January 2011 = 62.3
February 2011 = 59.1 ê
Activities contributing to the lower rate:
· Petroleum products
· Textile fibers
· Canned and frozen seafood products
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
- The total MPI was 176.9 in February 2011, a 5.3% decrease from January 2011 (186.9) and a 3.4% drop from February 2010 (183.2).
· The main activities that caused the m-o-m MPI to drop were petroleum products, sugar, canned and frozen seafood products, apparel, and television sets.
· The activities responsible for the y-o-y MPI decrease were HDDs, petroleum products, artificial accessories, television sets, and beer.
- The average capacity utilization rate was 59.1% in February 2011, a slip from 62.4% in January 2011 and 60.6% in February 2010.
· The main activities that caused the average capacity utilization rate to decrease from January 2011 were petroleum products, textile fibers, canned and frozen seafood products, television sets, and tobacco products.
· The industries contributing to the lower y-o-y figure of the average capacity utilization rate were petroleum products, television sets, HDDs, canned and frozen seafood products, and iron.
Industrial Activity in February 2011
- The Department of Industrial Works (DIW) reported that 261 plants began operations in February 2011, down 11.82% from January 2011 (296 start-up plants). Investment capital showed a decrease of 78.18% m-o-m, from 43,488.90 million baht to 9,489.25 million baht. The number of employed went up by 6,918 people in February 2011, a 19.73% increase from 5,778 the month before.
- The number of plant openings dropped 7.77% compared to February 2010, when there were 283 openings. Investment capital from the plant openings was 40.84% lower than the 16,039.35 million baht invested a year earlier. The number of people employed went up 35.41% y-o-y from the 5,109 increase in February 2010.
· The activity which had the most plants starting up in February 2011 was the repairing and spray painting of motor vehicles (22 plants), followed by the digging and washing of soil or sand (13 plants).
· The activity with the highest level of investment capital in February 2011 was the generating or distributing of electrical power (3,391.20 million baht), followed by the repairing and spray painting of motor vehicles (1,273.16 million baht).
· The activity which had the highest employment in February 2011 was the cutting and sewing of garments (1,725 jobs), followed by the making of window frames, door frames, windowpanes, door panes, tables, closets, and bed frames (606 jobs).
- The DIW reported that 69 plants closed in February 2011, down by 36.70% from the previous month, when 109 plants closed. The total amount of investment capital lost by the closures was 587.40 million baht in February 2011, lower than the 661.99 million baht loss recorded a month earlier. The number of layoffs in February increased over the month, from 1,274 to 3,211.
- According to the DIW, the number of plant closures represented a 31.68% decrease from February 2010, when 101 plants closed. The investment capital lost due to plant closures in February 2011 was less than the 5,253.44 million baht loss recorded in February 2010. The number of layoffs represented a yearly decrease, as 3,358 were reported in February 2010.
· The activities with the most plant closures in February 2011 were the repairing and spray painting of motor vehicles (8 plants), followed by sand suction and the manufacture of concrete products, mixed concrete products, gypsum products, or plaster products (6 plants each).
· The activity that lost the most investment capital due to plant closures in February 2011 was the cutting and sewing of garments (215.65 million baht), followed by the manufacturing, embellishing, and repairing of household furnishings that are made or mainly made of metal, including components and equipment (88 million baht).
· The activity from which the most employees were laid off in February 2011 was the manufacture of shoes or parts of shoes that are not made of wood, skimmed block rubber, or plastic (1,590 layoffs), followed by the cutting and sewing of garments (560 layoffs).
- The Office of the Board of Investment (BOI) reported that in January-February 2011 there were 266 approved investment projects, a 14.66% increase from the 232 investment projects approved in the same period of the previous year. The investment capital totaled 79,300 million baht, an increase of 50.76% from a year earlier, when 52,600 million baht was invested.
Shareholders of BOI-approved investment projects in January-February 2011
Shareholder / Number of Projects / Investment Capital (Million Baht)1. 100% Thai Shareholders / 119 / 31,200
2. 100% Foreign Shareholders / 84 / 22,800
3. Joint Ventures / 63 / 25,300
· The activities with the highest level of BOI-approved investment capital in January-February 2011 were services and public utilities (24,300 million baht), followed by agriculture and agricultural products (22,100 million baht).
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
I. Food Industry
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
The production and export value of the food industry should drop in line with declining order volume. The overseas purchasing power should decline due to the consistent rise of oil prices, stemming from political turmoil in petroleum producing countries and the temporary halt in exports to Japan after that country’s powerful earthquake and tsunami. Domestic sales should go down as a result of rising product prices and floods in the South causing consumers to lower their expenses.
1. Production
In February 2011, major products of the food industry (excluding sugar) were stable when compared with a year earlier, but decreased 3.1% m-o-m.
Major products mainly for export: Processed chicken, frozen/chilled shrimp, and cassava flour saw y-o-y production decreases of 13.6%, 28.5%, and 1.5%, respectively, due to a decline in the volume of raw materials.
Products mainly for domestic market: The production of palm oil grew 79.0% m-o-m due to the approval of importing extra palm oil to solve the domestic shortage. The sugar production sector started its sugarcane pressing later than in the previous year. Even so, with increased material quantity, the production volume showed a m-o-m 2.5% increase.
2. Sales
Domestic Market
In February 2011, the domestic sales volume of food and agricultural products went down 1.8% m-o-m but up 4.5% y-o-y, as spending volume grew due to increases of the minimum wage and household income in the agricultural sector.
International Markets
The total export value (baht) of the food industry saw an increase of 15.2% y-o-y and 11.9% m-o-m. Products whose y-o-y export value increased were cassava products (30.0%), canned pineapple (7.6%), processed chicken (7.1%), and canned tuna (6.8%), due to the depreciation of the baht from the previous month. Sugar export volume and value increased m-o-m in response to rising prices in the world market. The reason for the price increase was the lower inventory stock level after India and Australia reduced their export volume.
3. Trends
Production and exports are forecasted to slow down from the previous month due to decreased orders. Oil prices have continued rising due to political turmoil in petroleum producing countries, which will also decrease the purchasing power of overseas customers, and the temporary halt in exports to Japan after its March earthquake and tsunami. Domestic sales should contract due to rising product prices and floods in the South causing consumers to lower their expenses.
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
II. Textile and Garment Industry
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
Production of the textile and garment industry in the next couple of months should drop consistently. Exports of woven fabrics might show a negative figure.
Source: Industrial Economics Information Center,
Office of Industrial Economics
Source: Industrial Economics Information Center,
Office of Industrial Economics
Source: Information and Communications Technologies Centers,
Department of Trade Negotiations, Ministry of Commerce
1. Production
In February 2011, the production of major textile products went down from the previous month, including textile fibers (6.1%), fabrics (11.5%), bedding (18.6%), knitted-fabric garments (13.4%), and woven-fabric garments (2.0%), due to the higher prices of materials forcing manufacturers to only complete orders. Compared with a year earlier, fabrics, bedding, and woven-fabric garments dropped 0.6%, 22.9%, and 0.2%, respectively. The products showing a y-o-y increase were textile fibers (2.7%), lace (23.0%), and knitted-fabric garments (6.2%).
2. Sales
Most products for the domestic market saw m-o-m decreases in February 2011. The y-o-y sales increased, including for fabrics (6.3%), lace (27.0%), woven-fabric garments (7.4%), and knitted-fabric garments (8.3%).
Exports overall went up 1.2% m-o-m. In particular, products in upstream processes increased, including cotton yarns (36.7%), synthetic filament fibers (7.9%), and other textiles (10.4%). Garments decreased 0.6% m-o-m. When compared with the previous year, exports rose 20.1%. Products showing y-o-y growth included fabrics (21.6%), cotton yarns (70.2%), man-made filament yarns (38.8%), household textiles (10.2%), synthetic filament fibers (49.2%), and garments (7.5%). The export markets showing m-o-m expansion were ASEAN (4.9%) and Japan (7.2%). Those decreasing included the United States (5.3%) and the European Union (0.9%). By a y-o-y comparison, the major markets that increased were ASEAN (31.1%), Japan (32.3%), the United States (2.8%), and the European Union (13.5%).
3. Trends
Production of the textile and garment industry in the next couple of months is forecasted to decline in accordance with seasonal factors. Exports, particularly in fabrics, should show negative figures due to rising material prices such as for cotton yarns, and decreased orders of clothing accessories and garments. However, orders should increase in Q3 2011 especially from the European Union and the United States, and will continue rising in Q4 to stock products for the year-end festivals.
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
III. Iron and Steel Industry
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
Nippon Steel Corp., Japan’s largest producer, and Sumitomo Metal Industries, its third-biggest, plan to merge business. If the agreement is settled successfully in October 2012, it will create the world’s second-largest steel company after ArcelorMittal.
1. Production
In February 2011, the MPI of the industry climbed 0.49% m-o-m to 136.62 points. The MPI of long-steel products was up 7.87%, with increases by deformed bars (18.72%), round bars (5.26%), and pre-stressed concrete wires (2.93%) to fulfill the growing purchase orders for the construction season in the first quarter. The MPI of flat-steel products went down 2.34%. Products contributing to the decrease included galvanized sheets (22.80%) and hot-rolled coils (7.41%).
The y-o-y production declined 7.83%. Flat-steel production went down 10.88% due to decreases of cold-rolled steel sheets (19.38%) and tin plates (10.81%). Long-steel production was down 2.86% along with the drop of steel wires (26.41%).
2. Metal Prices
The free-on-board (FOB) prices at Black Sea ports of the Commonwealth of Independent States in March 2011 compared with the previous month were as follows: The price of hot-rolled steel sheets went up 5.59%, from US$150.76 to US$159.18 per tonne. The price of cold-rolled steel sheets grew 4.74%, from US$157.94 to US$165.42 per tonne. That of slab was stable at US$159.65 per tonne. The price of rebar decreased 1.81%, from US$146.80 to US$144.15 per tonne. That of billet dropped 0.20%, from US$141.47 to US$141.18 per tonne. Metal prices are forecasted to increase due to rising material costs, coke in particular. Another factor causing prices to go up is Japan’s higher demand of iron for the country’s restoration after the earthquake.
3. Trends
The industry’s production in March 2011 is expected to expand when compared with a year earlier. Flat-steel production should increase due to growth in related industries, especially motor vehicles and parts, and electrical appliances, stemming from higher demand. Long-steel production should grow due to increasing purchase order volume.
11
The Office of Industrial Economics
Industrial Economic Status Report
March 2011
11
The Office of Industrial Economics