Steel Asia sets $270M Expansion

Steel Asia Manufacturing Corp. is investing $270 million in three new plants to double capacity to 3.2 million metric tons (MT) by 2016.

Ronald Magsajo, assistant general manager for industry affairs of Steel Asia, said the bigger capacity will enable the company to meet the expected increase in demand for rebars (or reinforcing bars).

Steel Asia currently operates three plants in Bulacan, Batangas and Cebu with a combined capacity of a range of 1.2  million to 1.3 million MT per year.

Magsajo said the first new plant to be built will be in Davao, to be be commissioned in the first quarter of next year. The plant costs $70 million and can produce half a million metric tons of rebars a year.  Two more plants worth $100 million each with capacity of 800,000 MT each per year.

The first of the two will be in Bulacan, expected to come on stream by 2015, and the other will be in Cebu which would start operations in 2016.  The company plans to install state-of-the-art equipment from Italy.

Magsajo said the Davao project was registered with the Board of Investments (BOI). Steel Asia also filed for registration for the two other projects and has yet to receive approval.

The $270-million investment does not include the capital outlay for upgrading the existing plants.

Roberto Cola, manager for industry affairs of Steel Asia, said the company is bullish on the economy and "we feel that demand for steel would go up."  Cola said steel demand in the Philippines is growing faster than that of the GDP, creating a huge opportunity to expand the market.

He said the apparent demand for steel in the Philippines is 6 million MT, of which 60 percent is for long products and rest for flat products. All flat products are now imported.

Cola added that per capita consumption of steel in the Philippines is 60 kilograms which is far behind those of its neighbors like Indonesia and Malaysia and the global average of 220 kg.  The Philippine Iron and Steel Institute (PISI) forecasts that  per capita steel consumption in the country would hit 130 kgs, said Cola, who is also is president of PISI.

He added that the country has the capacity to serve local demand for long products.  Under the steel industry roadmap, PISI proposes the reoperation of two ailing firms—Steel Corporation of Asia and Global Steel Corp. (the former National Steel Corp.)—to resupply the market with flat products which the country now has to import.

Long products produced locally are pipes and tubes as well as some nails and wires from imported wire rods.  Flat products include slabs, hot-rolled coil, cold-rolled coil, coated steel products, tinplate and heavy plate. They are used in automotive, heavy machinery, pipes and tubes, construction, packaging and appliances.

Long products include billets, blooms, rebars, wire rod, sections, rails, sheet piles and drawn wire. The main markets for these products are construction, mechanical engineering, energy and automotive.

SteelAsia supplies rebars to around 70 percent of the Philippines' infrastructure, high-rise, commercial mall, school, factory and power plant construction.

The company operates the Philippines' only modern meltshop. It has a 500,000 metric ton per annum capacity and a 3-strand CCM that is capable of hot-charging directly into an adjacent rolling mill.

source wireworld