23 May 2017 2017 SEAISI Conference and Exhibition, Sentosa, Singapore

By Iron and Steel Institute of Thailand

Thailand Economics & Steel Industry Performance in 2016 and Outlook for 2017

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Content

Economics Performance

Steel Industry Update 2016 and 2017 outlook

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Thai Economic Performance in 2016 and Q1/2017.

Source: Office of the National Economic and Social Development Board (NESDB)

The GDP rose by 3.3%, accelerating from a 3.0% growth in Q4/2016. Private consumption and Public investment rose notably by 3.2% and 9.7% respectively. Export value of goods grew by 6.6%. Meanwhile, the inflation rate was 1.3 percent and the current account registered a surplus of 12.3 percent to GDP.

Q1/2017 =3.3%

2016 = 3.2 %

GDP Growth (%YoY) 2015 2016 2017

Year Year Q3 Q4 Q1

GDP (CVM) 2.9 3.2 3.2 3.0 3.3

Total Investment 4.4 2.8 1.0 1.8 1.7

Private -2.2 0.4 -0.8 -0.4 -1.1

Public 29.3 9.9 5.8 8.6 9.7

Private Consumption 2.2 3.1 3.0 2.5 3.2

Public Consumption 3.0 1.6 -5.2 1.8 0.2

Export of Goods -5.6 0.0 0.4 3.6 6.6

Volume -3.4 0.1 -0.4 1.4 2.8

Import of Goods -10.6 -4.7 -2.4 6.7 15.9

Volume 0.2 -2.1 -1.4 3.2 7.3

Current Account to GDP (%) 8.1 11.5 10.6 9.2 12.3

Inflation -0.9 0.2 0.3 0.7 1.3

2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Q1/2017, Overall expenditure side improved, both private and public consumption expenditure.

Source: Office of the National Economic and Social Development Board (NESDB)

Private consumption expenditure grew by 3.2 percent, accelerating from 2.5 percent expansion in previous quarter. Public consumption expenditure rose by 0.2 percent decelerating from 1.8 percent expansion in previous quarter. .

Growth (%) 2015 2016 2017

Q1 Q2 Q3 Q4 Q1

Private consumption 2.2 2.3 3.8 3.0 2.5 3.2

Public consumption 3.0 8.0 2.2 -5.2 1.8 0.2

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore Source: Office of the National Economic and Social Development Board (NESDB)

Private investment decreased by 1.1% Public investment expanded by 9.7%

Q1/2017, Total investment grew by 1.7%

Growth (%) 2015 2016 2017

Q1 Q2 Q3 Q4 Q1

Total Investment 4.4 4.9 2.7 1.0 1.8 1.7

Private -2.2 2.1 0.1 -0.8 -0.4 -1.1

Public 29.3 13.3 10.4 5.8 8.6 9.7

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore Source: Office of the National Economic and Social Development Board (NESDB)

Q1/2017 construction sector expanded by 2.8%

Public Construction rose by 8.5% Private sector Construction decreased by 4.5%

Growth (%) 2015 2016 2017

Q1 Q2 Q3 Q4 Q1

Construction Sector 15.8 11.2 7.8 5.0 6.1 2.8

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Source: Office of the National Economic and Social Development Board (NESDB)

Thai economy is projected to grow by 3.3 – 3.8 percent

-Export value of goods will expand by 3.6 percent -Private consumption and total investment will grow by 3.0 and 4.4 percent respectively

Key Components of Economic Projection for 2017

(%YoY) 2015 2016 2017

Year Year Q3 Q4 Q1 Year(f)

GDP (CVM) 2.9 3.2 3.2 3.0 3.3 3.3-3.8

Total Investment 4.4 2.8 1.0 1.8 1.7 4.4

Private -2.2 0.4 -0.8 -0.4 -1.1 2.0

Public 29.3 9.9 5.8 8.6 9.7 12.6

Private Consumption 2.2 3.1 3.0 2.5 3.2 3.0

Public Consumption 3.0 1.6 -5.2 1.8 0.2 3.2

Export of Goods -5.6 0.0 0.4 3.6 6.6 3.6

Volume -3.4 0.1 -0.4 1.4 2.8 1.6

Import of Goods1 -10.6 -4.7 -2.4 6.7 15.9 7.0

Volume 0.2 -2.1 -1.4 3.2 7.3 3.0

Current Account to GDP (%) 8.1 11.5 10.6 9.2 12.3 8.9

Inflation -0.9 0.2 0.3 0.7 1.3 0.8-1.3

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Content

Economics Performance

Steel Industry Update 2016 and 2017 outlook

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

+15.4%

Growth Rate 16/15

+23.0%

+10.3%

+8.1%

Economic recovery & growth Construction boom

Economic slowdown Construction contracted Manufacturing growth

Economic contracted

Economic growth Construction recovery Manufacturing boom

Economic slowdown Construction contracted

Source : ISIT analysis

12,6

15

8,031

3,837

5,960 6,762

7,607

10,049 10,967

12,341

14,164

13,655 12,685

13,565

10,713

14,012

14,518

16,784

17,924 17,708

16,726

19,297

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Thailand Apparent Steel Consumption ('000 tonnes)

Production Import Export Apparent Consumption

THAILAND STELL DEMAND GROWTH BY 15.4% YoY TO 19.297 MT IN 2016

New

hig

h

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Long Product 2014 2015 2016 % 16/15 Q1/2017 Q1/2016 %17/16 Production 4,326 2,463 5,301 115.2% 1,020 1,186 -14.0% Import 3,182 8,494 3,125 -63.2% 583 780 -25.3% Export 955 371 817 120.1% 244 214 14.0% Consumption 6,553 10,586 7,610 -28.1% 1,359 1,752 -22.5%

Flat Product 2014 2015 2016 % 16/15 Q1/2017 Q1/2016 %17/16 Production 2,837 4,024 2,676 -33.5% 672 661 1.7% Import 8,715 2,943 9,489 222.5% 2,239 2,049 9.3% Export 397 827 478 -42.2% 160 123 29.9% Consumption 11,155 6,140 11,687 90.4% 2,751 2,587 6.3%

Finished product 2014 2015 2016 % 16/15 Q1/2017 Q1/2016 %17/16 Production 7,163 6,487 7,978 23.0% 1,692 1,847 -8.4% Import 11,896 11,436 12,615 10.3% 2,822 2,829 -0.3% Export 1,352 1,198 1,295 8.1% 404 337 19.8% Consumption 17,708 16,726 19,297 15.4% 4,110 4,340 -5.3%

Apparent steel demand in Q1/2017 decreased by 5.3%. Lo

ng

Flat

To

tal

Unit : 1,000 Tonnes

Unit : 1,000 Tonnes

Unit : 1,000 Tonnes

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Source : Custom and ISIT Analysis

2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Ratio Long product : Flat product = 40 : 60

Demand per capita is 294 Kg.

Downstream industry performance Cement -1.9% Car production +0.2% Canned Fruit -7.2% Canned Seafood -4% Compressors -7.8% Refrigerator +1.0%

CONSTRUCTION IS THE MAJOR STEEL CONSUMING SECTOR

Source : OIE & ISIT Analysis

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

THAILAND FINISHED STEEL IMPORT HITS NEW HIGH IN 2016

4.3 4.8

6.5 7.3 7.0 6.6

7.6

1.0 1.1

1.2

1.1 1.2 1.2

1.3

2.3 2.4

2.7

3.0 2.7

2.6

2.7

8.2

9.1

11.3

12.2 11.9

11.4

12.6

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2010 2011 2012 2013 2014 2015 2016

Thailand Finished Steel Import Breakdown by Products (unit in million tonnes)

Hot-rolled steel products Cold-rolled steel products

Coated steel sheets & strips Pipes & Tubes (excl. pipe fittings)

Cold-finished & Cold-formed Steels

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2010 2011 2012 2013 2014 2015 2016

Breakdown by Major Country

(unit in million tonnes)

WORLD (LHS) CHINA (RHS) S. KOREA (RHS) VIETNAM (RHS)

Source : Custom and ISIT Analysis

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Source : ISIT Analysis

Best Case +1.1%

Worst Case -1.0%

THAILAND STEEL OUTLOOK 2017

Assumption GDP growth 3-4% Construction growth 3-5%

Automotive growth 2-6% Appliance growth 1-3%

Machinery & Industrial growth 0-1% Packaging growth 1-2%

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

THE GOVERNMENT POLICY OF THAILAND

The Thailand 4.0 development plan is focused on 10 targeted industries, which can be divided into two segments; developing existing industrial sectors by adding value through advanced technologies for five industries: Next-Generation Automotive; Smart Electronics; High-Income Tourism and Medical Tourism; Efficient Agriculture and Bio-technology; and Food Innovation. The government has targeted five additional growth engines to accelerate Thailand’s future growth: Automation and Robotics; Aerospace; Bio-Energy and Bio-chemicals; Digital; and Medical and Healthcare. Investment Promotion Measure in the Eastern Economic Corridor Development (EEC)

Source : Thailand Board of Investment, February 2017

Targeted Industries in the EEC (Chachoengsao, Chonburi, Rayong)

• Next-Generation Automotive • Smart Electronics • Eco-friendly Petrochemicals and Bio-Chemicals • Automation and Robotics • Aviation • Medical Hub • Affluent, Medical & Wellness Tourism • Food for the Future • Digital

Emphasize on projects that will enhance competitiveness in the EEC such as:

• Targeted industries that utilize advanced technologies • Infrastructure development • Development of tourist destinations • R&D and high-value services

Projects eligible for CIT exemption (Group A) shall be given an additional 50% CIT reduction for 5 years Incentives will be granted in line with the Competitiveness Enhancement Act for Strategic Projects located in the EEC special zones including a maximum CIT exemption of 15 years + grants Incorporate supporting tools from various agencies as well as eliminate barriers, rules and regulations in order to generate real, high-value investments One Stop Service to facilitate investment in the area

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

EASTERN ECONOMIC CORRIDOR DEVELOPMENT (EEC) - TARGET

Source : “Eastern Economic Corridor Development project” Driving Forward…,15th February 2017, Ministry of Industry

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2017 SEAISI Conference and Exhibition, Sentosa, Singapore

Source : “Eastern Economic Corridor Development project” Driving Forward…,15th February 2017, Ministry of Industry

5 HIGH PRIORITY PROJECTS TO START IN 2017

U-Tapao Airport • 3 million tourists • MRO (Maintenance Repair & Overhaul center) First phase by Thai Airways and strategic alliances • Start constructing 2nd runway • Grant concession for new city airport

Laem Chabang Port

• Provide PPP for bidding 3rd phase

High Speed Rail • Provide PPP for bidding to connect 3 airports

Target Industries • Acquire lead investors for target industries - Bioeconomy - Auto, Auto part, Electronics, and Robotics - Aviation, Maintenance and Related Businesses - Medical Hub

New Cities • Develop city planning and identify location

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Thank you

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23 May 2017 2017 SEAISI Conference and Exhibition, Sentosa, Singapore