The Grey Chronicles


Summary: NSC Production versus External Factors

World / ASEAN Steel Supply (Capacity). Katrak (2002) observed that world steel capacity was ruled by consolidation and deregulation. Payne (2001) noted a fast pace of restructuring and consolidation for West European steel industry during the last several years prior to 2000, while Weston (2002) reported a lackluster progress in North America. By 2000, Woetzel (2002) noted an undersupply of world’s flat steel capacities, while there was an overcapacity for other steels. For ASEAN, Koda, et. al. (1995) observed that self-support ratio between capacity expansion and steel demand increase over time, but a situation of lack of supply capacity in ASEAN will continue until the year 2005.

For the Philippine scenario, only NSC has a hot-rolling production capacity from 1985 to 1999. Its hot-rolled capacity was increased from 0.5mtpy to 1.7mtpy in 1995, the Phase II-A of its Five-Year Expansion Program.

World/ASEAN Supply (Production). The World steel supply (production), including ASEAN increased over time.

Taccone (2006) reported that the world steel supply recovered a 6% growth after 1998, the last year of the Asian Financial Crises, from the 1979-1998 “an aberration” when the industry exhibited only a meager 3% growth. Only Thailand and the Philippines decreased their respective hot-rolled production starting in 1996. On a year-on-year comparison, moreover, NSC crude production started its decline in 1994.

The data shows that there is a strong positive correlation between NSC crude (hot-rolled and cold-rolled coils) production and the Philippine crude production. The data, moreover, exhibited a negative correlation to the World crude production, World and ASEAN HRC production. A weak negative correlation is also shown for ASEAN crude production.

World/ASEAN Steel Demand (Consumption): In terms of apparent consumption per capita (ACC), in kilograms, the Philippines apparent consumption hovered at 45kg per capita, almost one-fifth that of the averaged ASEAN at almost 200kg per capita; or one-third that of the World at 132kg per capita. During the Asian Financial Crises 1997-98, the apparent consumption per capita (ACC) the world over, including ASEAN, decreased.

The Philippine steel intensity was steadily climbing since 1984, but wavered in 1994 as a reaction with the then impending privatization of NSC. The trend recovered until 1996 and for the successive years circled between 1998 and 2001.

NSC crude, particularly cold-rolled coils, production shows a strong correlation to the ASEAN apparent consumption per capita (ACC), while there is a weak correlation with the apparent consumption of finished steel (ACFS) for both the Philippines and ASEAN; and a moderate correlation with the Philippine apparent consumption per capita (ACC).

Philippines’ Raw Steel Imports: The HRCs imported by NSC remarkably decreased in 1995 when NSC brought Hot Strip Mill No. 2 into commercial operations, thus imported slabs increased until 1996.

The results of price elasticity for NSC’s slabs at –0.12, and NSC’s HRCs at –0.50, although accounted for in a short-run, i.e., 1995 to 1999, are consistent with the range of long-run price elasticity of demand for steel, between –0.2 and –0.3 (Barnett and Crandall, 2002).

The price inelasticity of both NSC’s imported slabs and hot-rolled coils suggests that even if the respective import prices of these raw materials were low, the quantity demanded of these input steels remained low.

NSC flat carbon steel crude production shows a strong correlation to the following factors: Philippine import volume for cold-rolled coils, hot-rolled coils, hot-rolled plates, and tinplates. NSC production data, moreover, shows a weak correlation to the Philippine and ASEAN semi-finished and finished (SF&F) steel imports.

Steel and Raw Materials International Pricing Trends. NSC flat carbon steel production shows a strong correlation to the following monthly steel prices: Global, Flats, Asia, and North American Steel Price indices.

Similarly, NSC production is positively correlated to most of the average import prices for both hot-rolled and cold-rolled coils. Quarterly NSC, especially cold-rolled coils production is positively correlated to all Steel Price Indices, but show higher correlation to Asia Flats and Global Steel price indices.


Katrak, Firoze E., (2002). Is Globalization “good” for the North American Steel Industry? Proceedings of American Iron and Steel Technology’s 2002 Steelmaking Conference. Boston, USA: Charles River Associates, 2002. p. 519. back to text

Payne, Mark (2001), “Consolidation in EU steel industry — A global model?” USA: MBP Research, The Gale Group, Inc., 2001. back to text

Weston, J. Fred (2002), M&As As Adjustment Processes, Journal of Industry, Competition and Trade. CA, USA: 12 March 2002. pp. 18back to text

Woetzel, Jonathan (2002), Transition in Asian Steel–The Ultimate Challenge or an Opportunity for Chinese Companies? Proceedings of First Far East Steel Summit 2002, Shanghai, China: October 21, 2002. back to text

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

Taccone, Tony (2006), Emerging from the Dark Period: The Steel Industry in an Enlightened Age. Proceedings of The Steel Industry in the 21st Century: A Trans-Atlantic and Global View, Pittsburgh: University of Pittsburgh, 12 September 2006. back to text

Barnett, Donald F, & Robert W. Crandall (2002), Industry Studies Steel: Decline and Renewal. USA: M.E. Sharpe, 2002. Duetsch, Larry L. (ed), p. 129. back to text


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