Industrial Economic Status Report – May 2007
Office of Industrial Economics
Industrial Economics Report
May 2007
Summary
Industrial Index of April 2007
- The manufacturing production index for April was 152.04, 14.3% lower than March 2007 (177.45), but 6.3% higher than April 2006 (142.97).
- The increase in the manufacturing production index, compared with March 2007, was the result of manufacture of office, accounting and computing machinery, motor vehicles, sugar, malt liquors and malt, and wearing apparel (except fur apparel).
- The average capacity utilization rate was 60.91, lower than March 2007 (68.71), but lower than April 2006 (63.57).
Industrial Economic Situation in May 2007
- Production and exports in the Food Industry slowed down because manufacturers cut down on taking purchase orders from overseas due to concerns about the strength of the Baht. Domestic sales declined from last month due to the higher expenditure at the beginning of new academic year.
- Production and exports in the Textile and Garment Industry in May 2007 slowed down in response to market mechanisms. Thai exports were still affected by the strength of the Baht and competition from China and Vietnam. Domestic sales were not high, even though it was the beginning of new academic year.
- Iron and Steel Industry output in May was stable from the previous month. The production of flat steel was stable as a result of the country’s slow demand. The production of long steel was stable due to the sluggishness of domestic markets. Manufacturers expanded markets to overseas where purchase orders were continually made.
- The Automotive Industry in May 2007 expanded compared with the previous month, with 50% for domestic sales and 50% for exports.
- In May and June 2007, the domestic production and sales in Cement Industry were expected to decrease slightly due to the rainy season and the sluggishness of real estates. Exports would depend on demand from Thailand’s major export markets, such as America and the neighboring countries in ASEAN.
- The electrical appliances industry in May 2007 slightly increased from last month because production returned to normal. Domestic sales of air-conditioners and coolers were stable due to the early arrival of the rainy season, even though the prices were low, in line with marketing promotion strategies and sales. Air-conditioner exports increased after July 1, 2006, when the EU implemented the Restrictions on Hazardous Substances directive (RoHS). The Middle East markets had good prospects as major export markets for these products. The electronics industry also increased both production and sales. During the first half of the year, production and sales slightly increased, while in the second half, which is typically the highest production and sales period, production and sales are expected to grow by 8-10%, consistent with global market trends.
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Industrial Economic Status Report – May 2007
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Industrial Economic Status Report – May 2007
Industrial Economic Situation
- Manufacturing production index
March 2007 = 177.45
April 2007 = 152.04 ê
Main industries that caused the index to increase include:
o Office, accounting and computing machinery
o Motor Vehicles
o Sugar
- Average capacity utilization rate
March 2007 = 68.71
April 2007 = 60.91 ê
Main industries that caused the rate to increase include:
o Motor vehicles
o Preparation and spinning of textile fibers; weaving of textiles
o Office, accounting and computing machinery
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Industrial Economic Status Report – May 2007
I. Food Industry
Food Industry production and exports slowed down continually due to the seasonality and the strength of the Baht. Domestic sales declined due to the increase expenditure at the beginning of new academic year.
1. Production
Overall production (not including sugar) in April 2007 decreased by 10.8% from the same month of the previous year, or year-on-year (y-o-y), but increased by 19.6% from March 2007, or month-on-month (m-o-m). Products that registered a y-o-y decrease in exports were cassava flour (22.1%), canned tuna (19.6%), refrigerated and frozen chicken (14.1%), canned pineapple (9.3%), and refrigerated and frozen shrimp (2.8%). The purchase orders slowed down in response to seasonality and the strength of the Baht. In industries that produce for domestic consumers, animal feed decreased by 10.7% due to the high prices of inputs and the declining price of meats, which caused the decrease in volume of the livestock, such as pigs and chickens. Sugar production at the end of the extracting season (2006/2007) increased by 202.6% from last year, due to the higher volume of sugar cane, which capacity utilization increased from 2.5% in 2006 to 7.4% in 2006.
2. Marketing
1) Domestic market
The sales volume of food and agricultural products (not including sugar) decreased by 11.0%, y-o-y and m-o-m, respectively, due to concerns about the economic situation, which caused consumers to slow down their expenditure.
2) Overseas market
Overall exports (not including sugar and cassava flour) declined by 2.1% (y-o-y) and by 17.2% (m-o-m), due to the decline of purchase orders in response to the seasonality and the strength of the Baht. The economies of major markets, such as America and Europe, were sluggish, causing the export value of canned tuna and canned pineapples to decrease by 1.0% and 5.4%, respectively.
3. Trends
It was projected that food production and exports would slow down because manufacturers might cut back on taking purchase orders due to concerns about the strength of the Baht. Domestic sales might decline due to higher expenditures at the beginning of new academic year.
II. Sugar Industry
1. Sugar
1.1 Production
The total amount of sugar produced in March 2007 was 1,394,492.70 tons. This included 591,616.73 tons of raw sugar or 42% of total sugar production, with the rest was white sugar and purified white sugar.
1.2 Consumption
In March 2007, domestic consumption was 210,282.11 tons, an increase of 25% from the previous month which consumption totaled 168,401.65 tons. From Jan-Mar 2007, consumption was 560,731.03 tons, 8% less than consumed in the same period in 2006.
1.3 Exports
Sugar exports in March 2007 totaled 512,761.37 tons, 41% higher than in February 2007 (311,959.27 tons).
The export quantity increased by 209% compared with March 2006. A total of 1,045,926.99 tons of sugar were exported from Jan-Mar 2007. This number included 469,092.53 tons of raw sugar, or 45% of total sugar exports.
1.4 Imports
There was no sugar imports in March 2007. Thailand’s quota in 2007, under an agreement with the WTO, entitled to import 13,760 tons at 65% of the customs rate, and 94% of the customs rate if over the quota.
2. Molasses
In March 2007, molasses production was 655,453.87 tons, an increase of 47% from the previous year.
Molasses exports in January 2007 totaled 32,106.64 tons. The Customs Department didn’t report the total export in Feb-Mar 2007 because the database of tariff classification 2007 was under construction.
III. Textile and Garment Industry
“… Exports were still affected by the strength of the Baht and competition from China and Vietnam…”
1. Production
Textile and garments production in April 2007 declined compared with last month. The textiles and garments that registered month-on-month (m-o-m) decreases in production were textile fibers (10.9%), fabrics (16.6%), towels and beddings (7.6%), garments made of knitted fabric (20.7%), and garments made of woven fabric (12.1%). The purchase orders slowed down in respond to seasonality and the strength of the Baht. Year-on-year (y-o-y), production of textile fibers and fabrics declined due to a higher volume of imports, but knitted fabric garments and woven fabric garments increased by 13.6% and 12.1%, respectively, due to advance purchase orders from the previous quarter, in line with the confidence of foreign customers in Thailand’s product quality.
2. Sales
1) Domestic Sales
Domestic sales in April 2007 decreased m-o-m and y-o-y. The main products whose sales decreased were textile fibers, fabrics, towels and beddings, and garments.
2) Overseas Markets
The export of textile products in April 2007 decreased by 19.0%, m-o-m. The products whose exports declined were garments (20.2%), fabrics (20.7%), yarns and synthetic filament yarns (13.7%), synthetic fibers (6.3%) and embroideries and laces (19.3%). Y-o-y, textile exports increased by 7.6%, mainly to America (+6.8%), the EU (+7.2%), and the ASEAN markets (15.6%).
3. Trends
Textile and garment production and sales were expected to grow slightly in response to market mechanisms. Thai exports would still be affected by the strength of the Baht and competition from China and Vietnam. Domestic sales would be slow, even though it was the beginning of new academic year.
IV. Iron and Steel Industry
Ministry of Commerce, the People’s Republic of China announced the increase of export tariffs on 83 iron and steel products, effective on June 1, 2007. The export tariffs on hot-rolled sheet, coated steel, wire, and stainless steel were raised from 0% to 5%, while export tariffs on steel bars and structural steel were raised from 0% to 10%.
1. Production
Steel production in April 2007 decreased by 15.57%, m-o-m, and the production index in April was 131.69. Long steel production decreased by 24.09%, wire decreased by 32.95%, deformed bars decreased by 25.45%, and wire rods decreased by 23.78%. Production decreased due to the increasing price of raw materials in the past few months. Domestic sales prices increased slightly due to sluggish demand in the local market due to the local construction and economic situations caused manufacturers temporarily stopped their production this month. Flat steel production decreased by 10.60%, m-o-m, led by a 15.31% decrease in production of hot-rolled structural sheet. Manufacturers reduced production due to a high volume of inventory; therefore, they only produced for purchase orders of specialty products. Moreover, one manufacturer stopped production for plant maintenance.
Production slightly slowed down, by 8.93% y-o-y, led by production of round bars and wire rods, which decreased by 51.15% and 26.78%, respectively.
2. Metal prices
The average FOB price for most flat steel products in the CIS market at the Black Sea Ports in May 2007 increased, m-o-m. The price of slab steel sheets increased by 5.42%, from US$508 to US$535 per ton; the price of hot-rolled sheets increased by 2.97%, from US$547 to US$563 per ton; while the cold-rolled sheet price was stable at US$630 per ton. The price of long steel products decreased, m-o-m. The price of billets decreased by 5.44%, from US$540 to US$511 per ton and the price of steel bars decreased by 2.23%, from US$590 to US$576 per ton. The decline in the price of steel bars was due to higher export volume from Turkey and countries in Europe to the Middle East markets and North Africa markets, which caused CIS manufacturers to reduce prices in order to maintain market share.
3. Trends
Iron and Steel Industry output in May 2007 was expected to be stable, m-o-m. Flat steel production was projected to be stable due to the slowdown of domestic demand; long steel production was expected to be stable due to slow demand from the local market. Manufacturers would expand their markets to overseas where the purchase orders were made continually.
V. Automotive Industry
Automobiles
In April 2007, the automotive industry slowed down compared with the previous month due to the overall sluggishness of the Thai economy and many public holidays in April. Information for the automotive industry in April is as follows:
- Automobile production was 82,980 units, a 2.57% decline from 85,166 units in April 2006, and 25.75% lower than the March 2007 figure.
- Automobile sales were 49,658 units, a 7.29% decrease from 53,560 units in April 2006, and 11.36% lower than in March 2007.
- Automobile exports were 43,115 units, 19.86% higher than the 35,972 units exported in April 2006, but 28.40% lower than the volume of exports in March 2007 due to a decline in export volume to Australia and Saudi Arabia.
- The trend of the automotive industry was expected to expand in May 2007, m-o-m, with 50% of production for domestic sales and 50% for exports.
Motorcycles
The production and domestic sales of motorcycles in April 2007 slowed down compared with last month due to the overall sluggishness of the Thai economy and many public holidays in April. The information for the motorcycle industry in April is as follows:
- Motorcycle production of 108,217 units was 27.97% less than the 150,230 units produced in April 2006, and 18.83% less than the production in March 2007.
- Motorcycle sales were 121,568 units, 17.99% less than the 148,242 units sold in April 2006, and 12.69% lower than were sold in March 2007.
- Motorcycle exports (CBU) of 12,723 units were 46.97% higher than the 8,657 units exported in April 2006, and 2.46% higher than exports in March 2007. The major export markets, with the highest growth rates, were the U.K. and Canada. The increase was a result of exporting motorcycles to the U.K. markets that had good quality and which met the EU’s new product standards and were popular in the markets.
- The trend for May 2007 was for the industry to grow compared with the previous month due to the beginning of new academic year, which has historically left to increased motorcycle sales.
VI. Cement Industry
“Cement production and domestic sales decreased due to the sluggishness of real estate. Exports decreased due to the decline of demand in neighboring countries in ASEAN.”
Source: International 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
Domestic production and sales in April 2007 decreased by 8.81% and 25.00%, m-o-m, respectively. Year-on-year, domestic production and sales decreased by 9.48% and 16.67%, respectively, due to the continual slowdown of the real estate sector. In addition, consumers slowed their housing purchases because they lacked of confidence in the economy.