The Office of Industrial Economics
Industrial Economic Status Report
April 2008
Summary
Industrial Index of March 2008
- The production index (weighted by value added) was 193.37, which was 6.3% higher than in February 2008 (181.96) and 9% higher than March 2007 (177.45).
- The industries whose production index increased when compared to February 2008 were manufacture of motor vehicles; manufacture of refined petroleum products; manufacture of electronic valves and tubes and other electronic components; manufacture of office, accounting and computing machinery; and manufacture of other general purpose machinery.
-The average capacity utilization rate was 68.09, which was higher than February 2008 (66.02), but lower than March 2007 (68.71).
Industrial Economic Situation in April 2008
-Textile and Garment Industry
- It is predicted that textile and garment’s production and exportation will increase due to the rise of ASEAN’s (Association of Southeastern Asian Nations) and Japan’s market; especially the export of whole clothes and its made-up material from Thailand to Vietnam, Laos and Cambodia, whose market for exported apparel were rapidly increasing.
- China’s government sector decreased its support from textile and garment industry, added with the strong currency, made China unable to compete against Thailand’s textile and garment products, which had higher quality.
-Iron and Steel Industry
- Situation in April 2008 will be stable for both long steel and flat steel productions compare to the previous month, due to the national’s holidays, which decreased the working days and thus decreased the production.
- The increasing price of iron increased the amount of investment capital and made the producers hesitate to import basic material.
-Cement Industry
- Exportation of cement will increase due to the emphasis on Asia’s markets to decrease the shipping fees, which was steadily increasing with fuel price. Vietnam was the most important export market because of the increasing construction to support its economic growth.
Economic Situation Status
Industrial Index of the First Quarter in the Year 2008
Production index(weighted by value added):In the first quarter of the year 2008, the production index was 187.4, increased from the last quarter (183.7) by 2.7 %, and increased from the previous year of the same quarter (168.03) by 11.5%.
The main industries that helped increase the production index from the previous quarterincludemanufacture of sugar; manufacture of refined petroleum products; and manufacture of other general purpose machinery (air conditioner).
The main industries, which helped increase the production index from the same quarter of the year 2007, were manufacture of office, accounting and computing (hard disk drive, HDD); manufacture of motor vehicles; manufacture of electronic valves and tubes and other electronic components and many others.
Average capacity utilization ratewas a value defining the industrial production status by comparing the actual production to the predicted production. In the first quarter of 2008, the capacity utilization was 67.4, an increase from both, the previous quarter (67.3), and the same quarter in 2007 (65.5).
Industries that caused the capacity utilization rate to increase from the previous quarter were manufacture of sugar; manufacture of refined petroleum products and manufacture of other general purpose machinery (air conditioner).
Main industries that caused the capacity utilization rate to increase from year 2007 of the same quarter were manufacture of motor vehicles; manufacture of basic chemicals, except fertilizers and nitrogen compounds and manufacture of office, accounting and computing machinery (hard disk drives, HDD).
Industrial Economic Trend of 2008
The total domestic production in the year 2008 should increase by 6.6% (6.3 - 7.0%), increases from the year 2007 by 5.8%.
The production index of 2008 should increase by 8.3% – 9.0%, which will be an increase from 2007 by 8.1%.
Industrial economic trend will be better due to the new government, who will reassure consumers and investors to come back to continue buying and investing. The proportion of consumption and investing in private sectors in total mass production is 70%.
The economic trend will be better after the new government becomes stable, which couldbring trust from consumers and invertors. The ratio of consumption and private’investment in total production mass was more than 70%.
Exportation, compared to 2007 will decline, due to the sluggish world’s economy. The new market will induce further exportation to increase continuously from 2007. Risksshould be taken into consideration were the price of fuel and inflation, which will at high levels will affect the consumption,and private sectors investment and industrial expansion.
The Office of Industrial Economics
Industrial Economic Status Report
April 2008
Industrial Economic Status Report
Manufacturing production index
(weighted by value added)
February 2008 = 181.96
March 2008 = 193.37
Industries contribute to the higher production index were:
-Manufacture of motor vehicles
-Manufacture of refined petroleum products
-Manufacture of electronic valves and tubes and other electronic components
Capacity utilization rate
February 2008 = 66.02
March 2008 = 68.09
Industries contribute to the higher rate were:
-Manufacture of refined petroleum products
-Manufacture of basic iron and steel
-Preparation and spinning of textile fibers; weaving of textile
I.Food industry
The production of food products will decrease because of the national holiday which decreaseamount of workdays, while export will increase due to the higher demand ofthe world’s market. Domestic consumption will increase.
1. Production
The overall production (not including sugar) increased by 3.2% year-on-year (y-o-y) and 7.7% month-on-month (m-o-m).
Products mainly for exports, such as, canned pineapple, increased its production by 50.4% y-o-y, and increased by 17.6% m-o-m. As for shrimp and tuna, their production decreased by 12.7% and 1.8% y-o-y respectively, due to the decrease volume of ingredients, the strength of the Baht and the low purchase order from the United States, the main market.
Important domestic products such as soybean oil and palm oil decreased their total refined products by (-3.0%) and (-11.6%) y-o-y respectively, due to the decrease in consumption rate, which stemmed from the rise in price of vegetable oil, and excess of ingredient.
Sugar market at this time was slow due to the end of sugar cane season. The total production of sugar, compared to the previous month was 5.6% lower, however, compare to previous year the total production increased by 50.94% due to the increase in sugar cane’s volume.
2. Marketing
Domestic Market
Food and agricultural products decreased theirs sales volume by (-0.6%), due to the adjusted price. When compared to the previous month, the consumption rate increased by 6.6% due to the upcoming national holidays.
International Market
Total exportation in food industry increased by 13.4% and 6.4% m-o-m and y-o-y, respectively, due to the increase in purchase of processed chicken, canned tuna and canned pineapple each increased by 38%, 30.7% and 19.9% respectively.
However, the increasing strength of the Baht, and the slow United States’ market, will affect the main exportation products to America. Products affected, such as frozen shrimp, though, increased by 20.7% from the previous month, but decreased by (-16.7%) when compare to last year.
3. Trend
In April, the production rate will decrease due to the national holidays. Domestic market will increase due to the increase in demand, as previously stated. Exportation will increase due to the increase demandsfromthe world market.
II. Textile and garment industry
... the expansion inASEAN market led to the increase in consumption, especially the export of whole cloth and made-up material from Thailand to Vietnam...
1. Production
Textile and garment market in March 2008 increased its total production, when compared to the previous month: manufacture of fibers and whole cloth increased 4.6% and 16.6% respectively; knitted and spinning garment increased by 1.0% each. ASEAN (the Association of Southeastern Asian Nation) market’s expansion led to the increase in consumption rate, especially in Thailand’s whole cloth.
2. Marketing
The domestic sales of textile in March 2008 decreased by (-0.8%), but knitted garment increased by 20.9%; while garment from woven fabric increased by 8.4% m-o-m.
The export of textile of March increased when compared to the previous month. Products, such as whole cloth (+8.5%), fibers and synthetic materials (+11.8%), home textile (+18.2%) and synthetic fibers (+36.0%), increased in ASEAN market while export of garment inJapan increased by 8.3% but decreased in the United States by (-14.9%).
3. Trend
Textile production and exports should increase, compared to last month because of the expansion of ASEAN and Japan markets, especially the exports of whole cloth and made-up material from Thailand to Vietnam, Laos and Cambodia. These purchases used to produce whole garment for export, which was rising rapidly.
China’s government sector decreased its support from textile and garment industry, added with its strong currency, made China unable to compete against Thailand’s textile and garment products, which had higher quality.
III. Iron and steel industry
The government of India enforced export tariff on finished iron and semi-finished iron as high as 15%. It decreased imports tariff on finished iron and semi-finished iron, coke, zinc ferro-alloys to 0%, due to the increasing price of domestic iron.
1.Production
The iron industry in March 2008 increased by 25.86%, m-o-m. The production index in March was 162.94. When examined the product list, stainless steel had increased its production by 75.84%. The producers decided to decrease their exports in February to counter the hiking fuel price and moved its export to March. Flat steel increased its production by 32.5%, while hot-rolled coil increased by 92.13% because one merchant increased his production to subsidize for the low inventory ratio index, which resulted from the increasing demand from last month. Another merchant finished repairing and was back to production.
Longsteel increased its production by 12.09%, wire rod and round bar increased by 28.47% and 9.71% respectively, this was an expanded production to even out the increasing purchasing order, in addition to the suitable weather for construction. Theproducers increased their production, as compared to March 2007, by 4.46%,long steel, such as, wire rod increased by 23.36%, and round bar by 15.32%. Flat steel had a stable production, while hot-formed sheet increased by 24.61% but cold-formed sheet and zinc plates decreased by (-19.94%) and (-14.35%) respectively due to the lack of materials.
2. Iron Price
In April 2008, the average change in the FOB price in the CIS market at the Black Sea ports the, majority of iron and steel products increased their price over the previous month. Cold-rolled sheet increased from $840 to $1,080 American dollars per ton; this was a 28.57% increase. Hot-rolled sheet increased from $775 to $970 per ton, a 25.16% increased. Slab sheet increased from $675 to $795 per ton, a 17.78% increased. Steel bar increased from $836 to $945 per ton, a 13% increased. Billet increased $786 to $885, a 12.56% increased.
The price increased due to the price of the basic material such as iron ore and coke increased. Iron ore’s price increased by 65% because there was a higher demand for iron, and the cooperation between the main producers such asBrazil and Australia. Coke’s price increased by more than 100% due to the main producer, Australia and China werefaced with natural disaster, which result in the decrease in volume of the coke. Since the price increased, the producers had to facewith increase investment capital while the need for domestic use, which madethe merchantunable to store the materials and only buy them as needed. In any case, this cost was withoutfreight and insurance, once the shipment reached the destination, the price would increase. For example, the price of billet inVietnam’s port had a price of$900 per ton, due to the lack of products from CIS and the decrease in exports of China in preparation for the Olympic.
3. Trend
Iron situation in April 2008 was expected to stabilize when compare to March 2008, flat iron and long iron production, due to the upcoming national holidays. Working days will decrease which led to lower production. The trend of rising price of iron will affect Thai’s producer because the higher production price and hesitant of importing material because the unknown change in iron’s pricing.
IV. Automobile Industry
Automobiles
Automobile industry, in March 2008, increased y-o-y. The “Bangkok International Motor Show 2008” at the BiTechConvention CenterduringMarch 28 to April 6, 2008 sent a positive result tothe industry by introducing new automobiles to the market. The information on Automobiles industry was as follow:
Automobiles Production
There were 133,943 units produced in March 2008, which was 19.86% increased from March 2007 (111,751 units). The majority of these numbers were passenger cars, which increased its production volume sinceFebruary 2008 by 8.41%.
Automobiles Sales
66,088 units were produced, a 17.97% increase from March 2007, which produced only 56,021 units. There was also a 34.19% increase in sales, compared to February this year. The rise in sales was the result from the decrease in consumer’staxes; whose passenger cars use 20% concentrated Ethanol (E20) during the oil crisis.
Automobile Exports
There were 72,972 units exported, a 21.18% increase from March 2007 (60,217 units). The automobiles with a high export rate were PPV (Pick-up Passenger Vehicle), whose export market was in Central America and Southern America. One-ton truck and passenger cars were expanding the market without any difficulty and had a 10.44% increase sinceFebruary 2008.
Trend
Automobile industry in April 2008 should decrease, compared to March 2008 due to the national holidays. The production of automobile in this month expected to be 44% for domestic sales and 56% for exports.
Motorcycle Industry
Motorcycle Industry in March 2008 increased when compared to March 2007. Information was as followed:
Motorcycle Production
There were 158,601 units produced in March 2008, an 18.95% increase, while during March 2007 there were only 133,329 units produced. The volume of production increased from February 2008 by 14.18%.
Motorcycle Sales
There were 144,758 units sold in March 2008, while last year there were only 139,329 units sold, a 3.90% increased. However, the sale was 1.59% lower than February 2008.
Motorcycle Exports (CBU)
There were 15,511 units exported, a 24.91% increased since March 2007 (12,418 units). The majority of motorcycles were exported to Europe and Canada, which increasedits exports since February 2008 by 7.89%.
Trend
The motorcycle industry in April 2008 will become slow, compared to March 2008, due to the national holidays. Production of completely built unit motorcycles in April will be 89% for domestic sales and 11% for exports.
V.Cement Industry
“In the big picture, the sale of Cement has not increased as it should because there are hesitation in consuming and investing. Even the governmentalMega Project has not finalized. Exports value has increased due to the change in Cement’s export to neighboring ASEAN countries to lower the increasing shipping price.”
Source: Industrial Economic InformationCenter, Office of Industry Economics
Source: Industrial Economic InformationCenter, Office of Industry Economics
Source: Information and CommunicationsTechnologiesCenters,
Department of Trade Negotiations, Ministry of Commerce
1.Production and domestic sales
Production volume of cement and its domestic sales in March 2008 increased by 3.44% and 5.16% m-o-m, respectively. This was due the rise of construction works in the first quarter, though, comparing to March 2007, the production and domestic sales decreased by (-1.85%) and (-5.36%) respectively. Consumers were careful of when they were using their money on, thus, affected Thailand’s real estate business, which did not increase its demand of cement.
2. Exports
Exports value of cement in March 2008 was 5,863.33 million Baht. When compared to lastmonth and March 2007, this was a 3 times increase, due to the merchant who can adjustthe price of cement following the rising invested capital. Thailand put an emphasis on exporting to neighboring ASEAN (Association of Southeastern Asian Nations) countries to decrease the capital while shipping, while the main market, such as, the United States, was suffering from its real estate’s low quality (Subprime Loans).
3. Trend
The production and sales of cement in April and May 2008 will be slow due to the national holidays and the beginning of the rain season, added with the uncertainty of large investment from the government. Inflation problem also pressed on the total economic.
Exports in this period will increase, as the Asia market is now the main market of choice to decrease the exports fee, which was increasing with the fuel price. The most important market is Vietnam because there is a large increment in economic, which leads to anincrease in construction works.
VI. Electrical and Electronics Industry
- The production of electrical and electronics in April 2008 increasedwhen compared to March 2007 by 20.61%, due to theincrease of electronics production index, such products responsible were HDD/Other IC.
- Exports of electronics machinery and electronics, in March 2008 were higher than March 2007 by 3.48%.
- IC decreased in the beginning of January to March 2008 due tothe world market reduction. The two remaining markets, one in Hong Kong, and another in the United States increased in total value but had lower rate.
Table 1: Top Electrical Appliances and Electronic Products Exports in March 2008
Electrical/ Electronic Products / Value / CPM / CPYComputer Products / 1,522.13 / 9.08 / 15.77
IC / 665.70 / 24.64 / -21.89
Air Conditioner / 380.24 / 21.66 / 13.68
Electrical Appliances / 170.15 / 23.25 / 22.82
Total Electrical/ Electronic Products / 4,342.54 / 14.02 / 3.48
Source: The Customs Department
1. Production
The production of electrical and electronics industry in March 2008 increased from lastmonth by 5.59%, the production index was 343.70, compared to March 2007, this was a 20.61% increase. This was due to the increase inindex in the production of HDD (hard disk drive) and other IC.
2. Marketing
Exports value of electrical appliances and electronics in March 2008 increased by 14.02% m-o-m, and 3.48% y-o-y. The total exports value was $4,342.54 million American dollars. The top export product in electronic appliances was air conditioner for household and factory, which contributed up to$380.24 million dollars. Top electronics export product was computer products at $1,552.13 million dollars.