The Office of Industrial Economics
Industrial Economic Status Report
April 2009
Industrial Economic Status
April 2009
Summary
Industrial Indices in March 2009
- The manufacturing production index (MPI) was 13.9% higher in March 2009 than it was in February 2009. However, that figure still represents a 17.7% y-o-y decrease as the MPI has been in decline since October 2008. The MPI of almost every industry is down since March of last year, including motor vehicles (51.5%), electronics (35.4%), and hard disk drives (7.5%).
- The average capacity utilization rate was 54.5% in March 2009, its first monthly increase since August 2008. However, analysis revealed that the capacity utilization rates of most industries were still lower than 50%.
Industrial Economic Situation in April 2009
- Food Industry
· Production by the food industry should be down this month, as should exports, as global markets continue to recover from the economic recession. However, domestic sales will likely increase as the government stimulus checks increase household expenditures.
- Textile and Garment Industry
· Production by the textile and garment industry is expected to be stable or increase slightly over the next couple of months, and domestic sales, particularly of t-shirts, should grow. However, fabric exports are expected to decrease due to a decline in purchase orders for clothing and ready-made clothes. As a result of JTEPA (Japan-Thailand Economic Partnership Agreement), which has been in effect since 2007, and AJCEP (ASEAN-Japan Comprehensive Economic Partnership), which will take effect this year, bilateral trade between Japan and Thailand is expected to experience significant growth, particularly in the textile and garment industry.
- Electrical Appliance and Electronics Industry
· The total sales volume of the electrical appliance industry is expected to decrease 30.05% in April 2009. The electronics industry is also expected to experience lower domestics sales due to fewer sales of HDDs (8.73%) and ICs (34.20%); however, the decrease in sales was smaller this month than last month due to an increase of incoming purchase orders, something which lead to a slight increase of employment.
Industrial Indices in the First Quarter of 2009
- Manufacturing Production Index (weighted by value added):
· In the first quarter of 2009, the manufacturing production index (MPI) was 146.1, a 12.0% decline from the previous quarter (165.9) and 22.1% decline from the first quarter of 2008 (187.4).
· The main industries responsible for the quarterly MPI decrease were the manufacture of hard disk drives (HDDs), motor vehicles, electronics, frozen shrimp, frozen fish, canned sardines, and woven fabrics.
· Industries whose MPIs have decreased since last year are the manufacture of hard disk drives (HDDs), motor vehicles, electronics, air-conditioners, and woven fabrics.
- Average Capacity Utilization Rate:
· Capacity utilization rate is a value defining the status of industrial production by comparing actual production to predicted production. In the first quarter of 2009, the capacity utilization rate was 52.1%, a decline from both last quarter (56.5%) and from the same quarter in 2008 (67.5%). The capacity utilization rate has been in decline since the second quarter of 2008.
· Industries that caused the capacity utilization rate to decrease from last quarter were the manufacture of motor vehicles, hard disk drives (HDDs), canned sardines, frozen shrimp, frozen fish, pure cotton yarns, blended cotton yarns, and color television sets.
· The main industries that caused the capacity utilization rate to decrease from the first quarter of 2008 were the manufacture of motor vehicles, pure cotton yarns, pure polyester fibers, round bars, deformed bars, hot-rolled coils, cold-rolled steel sheets, and color television sets.
- Economic Trends in 2009
· In 2009, the Industrial Gross Domestic Product is expected to contract 8-10% after experiencing 3.9% growth in 2008. The MPI is forecasted to shrink 10-12% after growing 3.9% last year.
· Overall industrial production is expected to improve after the first quarter of 2009 as the MPI has now risen for two consecutive months. The prediction is that the MPI will continue to decline in the second quarter, but it will decline less than it did in the first quarter. If the local political turmoil is resolved, the government’s economic stimulus package should increase domestic expenditures and lead to industrial recovery.
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
Industrial Indices
Manufacturing Production Index
(Weighted by value added)
February 2009 = 139.8
March 2009 = 159.2 é
Activities contributing to the increase of MPI:
· Hard disk drives
· Beer
· Petroleum fuel
Capacity Utilization Rate
February 2009 = 50.0
March 2009 = 54.5 é
Activities contributing to the higher rate:
· Petroleum fuel
· Hard disk drives
· Motor vehicles
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
Industry Status Reports
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
I. Food Industry
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
Production experienced its annual March increase in preparation of April’s Songkran festival while export value increased due to the depreciation of the baht. However, both are expected to decline in April. Domestic sales should increase in April as consumers will be encouraged to spend more after receiving their government stimulus checks.
1. Production
In March 2009, the overall production of the food industry (not including sugar) decreased 10.0% y-o-y but increased 3.7% m-o-m.
Several products meant mainly for export experienced y-o-y production declines due to a shortage of raw materials, including refrigerated and frozen shrimp (13.0%), canned pineapple (55.8%), and canned baby corn (80.3%). Canned tuna production increased 8.3% y-o-y as there was a shortage of raw materials in 2008.
The production of palm oil, an important domestic product, decreased 14.2% y-o-y and 11.7% m-o-m due to a shortage of raw materials. The production of soy bean oil increased 32.6% y-o-y and 20.5% m-o-m as a result of lower soy bean prices in world markets.
2. Marketing
Domestic Market
The domestic sales volume of food and agricultural products increased 9.6% m-o-m in March, but the figure was still 8.3% lower than it was during March of last year. This decline in sales is in large part due to the general lack of confidence in the economy causing consumers to reduce their expenses.
International Market
The total export value of the food industry (not including sugar) decreased 6.9% y-o-y due to a delay of purchase orders, but it increased 10.0% m-o-m because of the depreciation of baht.
3. Trends
Both production and export volume should be down in April compared to March as holiday season will have passed and many markets are still suffering from the global economic recession. However, domestic sales should improve due to the government gift checks stimulating higher household expenditures.
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
II. Textile and Garment Industry
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The production of the textile and garment industry should be stable or increase slightly over the next couple of months.
1. Production
Products whose m-o-m production increased in March were textile fibers (5.9%), fabrics (1.4%), garments from knitted fabrics (11.2%), and garments from woven fabrics (8.9%). Compared to a year ago, several products have experienced production declines, including textile fibers (22.0%), fabrics (30.2%), garments from knitted fabrics (34.0%), and garments from woven fabrics (11.2%). The decreases were mainly due to the economic crisis causing customers to delay their purchases, and also the domestic political turmoil causing overseas customers to avoid traveling to Thailand.
2. Marketing
Domestic sales of textiles and garments expanded m-o-m in March, but they still decreased y-o-y. Although consumers were conservative with their expenses, demand for fashionable women’s clothing still increased.
Export volume of textile products increased 2.3% m-o-m. The upstream and middle stream products whose export volumes increased were cotton yarns (26.1%), synthetic yarns (15.9%, home fabrics (13.7%), synthetic fibers (9.3%), and other textiles (13.0%); the export volume of garments decreased 6.4%, however. Since March 2008, the industry’s total export volume has decreased 15.9%, declining for nearly every major market, including the US, the EU, and ASEAN. The exception was Japan, where exports increased 15.0% y-o-y.
3. Trends
Production by the textile and garment industry is expected to be stable or increase slightly over the next couple of months, and domestic sales, particularly of t-shirts, should grow. However, fabric exports are expected to decrease due to fewer purchase orders for clothing and ready-made clothes. As a result of JTEPA (Japan-Thailand Economic Partnership Agreement), which has been in effect since 2007, and AJCEP (ASEAN-Japan Comprehensive Economic Partnership), which will take effect this year, bilateral trade between Japan and Thailand, is expected to experience significant growth, particularly in the textile and garment industry.
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
III. Iron and Steel Industry
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Indian Ministry of Finance has imposed anti-dumping duties on cold-rolled flat stainless steel products from China, Japan, South Korea, Taiwan, Thailand, South Africa, the US, and the EU. The mandate is effective from April 22, 2009 until October 21, 2009.
1. Production
In March 2009, iron and steel production increased 1.99% m-o-m as the industry’s MPI was at 90.67. Specifically, the long-steel MPI grew 13.42% due to increases in the production of steel wire (26.23%), wire rod (23.73%), and round bar (15.69%) as a result of fulfilling the existing special purchase orders. The flat-steel MPI fell 3.34% due to the decreased production of hot-rolled coil (27.88%) and chromium-coated plate (2.08%). However, the reduced production of hot-rolled coil was expected after manufacturers accelerated production to meet February’s orders.
Since March 2007, total iron and steel production has declined 44.35%. Long-steel production has decreased 38.58% as pre-stressed concrete wire (48.72%) and deformed bar (47.24%) have both experienced significant production decreases. The production of flat-steel fell 47.20% y-o-y as a result of the decreased production of hot-rolled coil (51.80%) and cold-rolled flat sheet (51.56%).
2. Metal Prices
In April 2009, the Free on Board (FOB) prices at the Commonwealth of Independent States (CIS) market at the Black Sea ports were lower than they were in March. The price of cold-rolled flat sheet decreased 10.64%, from US$470 to US$420 per ton. The price of hot-rolled flat sheet decreased 10.47%, from US$390 to US$349 per ton. The price of slab steel decreased 3.13%, from US$320 to US$310 per ton. The price of steel bar was stable at US$398 per ton, and the price of billet increased 15.23%, from US$304 to US$350 per ton.
3. Trends
Long-steel production will be stable in April 2009 as demand from the construction sector remains low and there already being sufficient products in stock. Y-o-y flat-steel production will also be stable due to the slowdown of linkage industries.
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
IV. Automobile Industry
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The automobile industry experienced a decrease in yearly production due to the global economic slowdown.
1. Production
Production volume decreased from 133,943 units in March 2008 to 65,449 units in March 2009, a 51.14% decrease. M-o-m production increased 7.18%.
2. Sales
A total of 41,328 units were sold in March 2009, a 37.48% decrease from March of last year when 66,107 units were sold. Contributing to the reduced sales were financial institutions being more stringent about offering vehicle loans. Monthly sales volume increased 20.28% from February 2009, partly due to the 30th Bangkok International Motor Show.
3. Exports
Export volume was down 38.69% from March 2008, decreasing from 72,972 units to 44,742 units. Exports to most markets decreased, with the exception of the Middle East, which increased 27%. The export volume increased 0.30% m-o-m.
4. Trends
The automobile industry is projected to be sluggish in April 2009 due to the long holiday. Production is expected to be 47% for domestic sales and 53% for export.
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
Motorcycle Industry
The Office of Industrial Economics
Industrial Economic Status Report
April 2009
The motorcycle industry experienced slow y-o-y growth due to the world economic recession as well as the drop in agricultural produce prices, something which affects farmers, the principal consumers of motorcycles.
1. Production
Production decreased 20.44% y-o-y, from 158,601 units to 126,184 units. The March 2009 figure was 4.92% higher than the previous month’s figure.
2. Sales
A total of 126,477 motorcycles were sold in March 2009, 12.38% fewer than were sold in March 2008 (144,797 units), but 6.19% more than were sold in February 2009.
3. Exports
There was an 11.97% y-o-y increase in exports, from 15,511 units in March 2008 to 17,367 units in March 2009. The export volume increased 23.21% m-o-m.
4. Trends
The motorcycle industry is expected to be slow in April 2009 because of the long holiday. Production will be 89% for domestic sales and 11% for export.