The Grey Chronicles

2008.July.25

NSC Flat Carbon Steel Production, 1995 – 1999


From 1975, NSC was the only manufacturer of hot-rolled flat carbon steels in the Philippines but its hot-rolled production waned by June 1999. Beginning December 1999, moreover, there was no flat carbon steel production at NSC until resumption of operations by GSPI in December 2004.

Table 1: NSC Flat Carbon Steel Production, 1994 -2000

NSC Flat Carbon Steel Production, 1994 -2000

(Data Source: NSC)

Table 1 shows a yearly summary of NSC production for the three flat carbon steel, namely hot-rolled coils/plates, cold-rolled coils, and tin-milled black plates. Moreover, with reference to Figure 4 above in page 43, only hot-rolled and cold-rolled steel are considered at NSC as crude steel. Hot-rolled coils used imported slabs as raw materials and subsequently hot-rolled coils are the input for cold-rolled coils. Tin-milled black-plates, or TMBPs, although physically flat in form, fall in the sub-category of coated steel under the finished steel classification.

The Minitab’s Anderson-Darlington normality test was used (refer to Appendix F for CRC and HRC). The p-value is 0.024 for CRC and 0.013 for HRC. P-values exhibited less than the predetermined 0.05 significance level, thus both the gathered data do not follow a normal distribution.

NSC)

Figure 5: NSC Monthly HRC and CRC Production, 1995 -1999

NSC monthly production shown in Figure 5 illustrates the dependency of cold-rolled coils volume to that of hot-rolled coils production at NSC’s Hot Strip Mill No. 2. Whenever HSM No. 2 HRC production from slabs is insufficient, NSC resorted to purchasing additional HRC from its regular suppliers from China, Russia, Mexico, Australia, South Korea and Brazil. This scenario for NSC is a simple example of Koda’s (1995) theorem on self-support ratio between capacity expansion and steel demand.

Panganiban, Analyst of Philippine Iron and Steel Institute [PISI], claimed that based on her previous studies, historical NSC production is not cyclical in tendency on a monthly- or quarterly-basis, thus she suggested that this study would suffice with a year-end summaries for production volumes (Interview, 2007) .

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Figure 6: NSC Quarterly Flats (CRC) Production, 1995 – 2000 (Data: NSC)

On a quarterly-basis, flats production, particularly cold rolled coils, see Figure 6, at NSC also peaked in the third quarter of 1997. NSC’s production was severely affected by the accidental fire sustained at its Five-Stand Continuous Mill in March 1998 that cold-rolled production considerably declined thereafter and never regained its pre-Asian Financial Crises level until its liquidation in 1999 allegedly, according to industry observers, due to Hottick mismanagement.

There is apparent trend of per cent quarter-on-quarter (% qtr-on-qtr) as shown in Figure 6, but disregarding the fire between 1997Q4 and 1998Q1, the quarterly increase during Q3 each year would virtually exist except for the peak in 1995Q2.

Several managers explained this Q3 peak as NSC’s attempt to stock finished goods prior to the holidays in Q4. From inception, they clarified; NSC adopted the manufacturing policy of production-to-inventory, especially for identified fast-moving CRC gauges.


Notes:

Koda’s (1995) Koda, S., Kaihara, T. and Dobashi M. (1995), “Steel Demand Projection in Asia,” Tokyo: Kawasaki Steel, 03 August 1995. pp. 1-5. back to text

Interview with Teresita Panganiban, Analyst, Philippine Iron and Steel Institute, Makati City. 16 and 17 April 2007. back to text

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