Displaying items by tag: Cement Manufacturers Association of the Philippines

Philippines: The Department of Trade and Industry (DTI) has backed a recommendation from the Tariff Commission (TC) to repeal import duties on Ordinary Portland Cement and Blended Cement. The so-called safeguard measures were originally introduced in October 2019 for a period of three years, according to the Philippine Star newspaper. The latest investigation by the TC was started due to a request by the Cement Manufacturers Association of the Philippines (CEMAP). However, it found that the domestic cement industry was generally profitable and it said, “There is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future.” CEMAP said it was saddened by the recommendation of the TC and that it would jeopardise the local sector’s progress.

Cement imports are back on the agenda this week in the Philippines with the news that the Tariff Commission has backed repealing the duties currently being implemented. If it’s anything like what happened last time, back in 2019, the commission’s opinion will once again be passed back to the Department of Trade and Industry (DTI) for the final decision. The safeguard measure the commission wants to cut covers Ordinary Portland Cement (OPC) and Blended Cement. It summarised the situation as follows, “There is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future.”

The commission reviewed the sector between 2019 and 2021 and concluded that the domestic cement industry maintained its market position, increased its mill capacities, stabilised its manufacturing costs and improved its profitability. It found that local producers recovered their profits in 2021, following the coronavirus pandemic. It also noted that imports continued to rise whilst the safeguard measure was in force. Volumes of imported OPC and blended cements increased at levels above 10% year-on-year in both the 2019 – 2020 and 2020 – 2021 periods. They also rose by 7% year-on-year to 3.51Mt in the first half of 2022 compared to the half-year average from 2019 - 2021. In the commission’s view, relaxing the duties on imported cement would slow price rises for both locally produced and imported cement leading to an overall national economic benefit.

Local cement producers in the Philippines are likely to be unhappy with the Tariff Commission’s recommendation. The Cement Manufacturers Association of the Philippines (CEMAP) spent the summer of 2022 lobbying for the safeguard measure to be extended past October 2022. It too pointed out that imports of cement had continued to grow even whilst the increased duties had been levied from 2019. A few days before the commission’s decision was published, APO Cement said that it had temporarily suspended operations at its Davao terminal. The subsidiary of Cemex Philippines blamed imports of cement, particularly from Vietnam, for the decision.

Yet, the local sector has been active over the last year with a number of capacity upgrades being launched or underway. In January 2022 the government gave tax breaks to San Miguel Equity Investments for the construction of a 2Mt/yr cement plant in Mindanao. In February 2022 San Miguel subsidiary Southern Concrete Industries said it was doubling the capacity of an upgrade to its grinding plant at Davao del Sur, with initial commissioning planned in mid-2022. Meanwhile, Solid Cement’s upgrade of a new production line at its integrated plant in Antipolo, Rizal, has been ongoing since it officially started in 2019. The current commissioning date for the subsidiary of Cemex is now expected in early 2024. In August 2022 Taiheiyo Cement Philippines held a groundbreaking ceremony for the start of construction of a new production line at its integrated San Fernando plant in Cebu. The US$85m project is due to be commissioned in mid-2024. Finally, importer Philcement revealed in late September 2022 that it had taken out a US$1.73m loan for an expansion and upgrades to its Mariveles cement terminal in Bataan.

Holcim Philippines’ president and chief executive officer Horia Adrain told local press in July 2022 that the cement sector was continuing to recover in 2022, following the coronavirus pandemic in 2020, but that the pace would be slower. And so it proved, with reduced revenue, earnings and profits reported by Holcim for the first half of 2022. Costs rose due to higher fuel and energy prices like elsewhere in the world but a construction ban in connection with the presidential election in May 2022 didn’t help either. Both CRH and Cemex Philippines reported a similar situation in their financial results. However, Eagle Cement did manage to raise its revenue in the same period.

The Tariff Commission has been explicit with its opinion about the impact of imports upon the local cement sector. Investment by the local producers has been forthcoming with a number of new plants and upgrades on the way. Finally, despite the market recovering since 2020, there has been less growth in the first half of 2022 due to global energy prices and the country’s elections. This last point has handed a gift to the cement producers as any further reductions in growth can be blamed on imports, whether it is connected or not. One thing is certain, if or when the safeguard measures are lifted, then the regular calls to restrict imports will resume just like they did prior to 2019.

Philippines: The Philippines imported 6.47Mt of cement from Vietnam in 2021, 91% of a total 7.11Mt of cement imported in the year. The Cement Manufacturers Association of the Philippines (CeMAP) recorded that total imports increased by 14% year-on-year from 6.25Mt of cement in 2020, while imports from Vietnam increased by 20% year-on-year from 5.4Mt.

The Manila Bulletin newspaper has reported that Philippine cement producers increased their production capacity by 23% year-on-year to 35.3Mt/yr at the beginning of 2022. CeMAP projected further capacity growth of 55% to 54.8Mt/yr by the end of 2025, against a domestic demand that year of 66Mt/yr.

Philippines: The Philippines Tariff Commission (TC) has launched an investigation into the possible extension of the safeguard measure against imports of ordinary Portland cement (OPC) Type 1 and blended cement Type 1P. The Cement Manufacturers Association of the Philippines previously filed a petition for the extension. The TC will hold its preliminary conference on the matter on 8 March 2022.

The commission said “Matters for discussion include the timelines, nature of investigation, appearance of counsel and parties, number of witnesses, notification, accessibility of documents and public file, confidentiality of documents, submission of position paper(s) and memoranda, conduct of inspection and verification of data and schedules of public hearings and other activities.”

Philippines: The Department of Trade and Industry (DTI) has raised the import duty per 40kg bag of cement to US$0.20 from US$0.19. The Manila Bulletin newspaper has reported that the department issued the administrative order following a petition from the Cement Manufacturers Association of the Philippines (CeMAP). The petition suggested a US$0.25/bag levy as an effective means to maintain domestic cement production. The association has blamed growing imports on a surplus in countries such as Vietnam.

The DTI previously imposed tariffs on imported cement for three year from October 2019 with a staggered reduction in the duty. However, the DTI said it would review the safeguard measure in order to modify the rate as it deemed necessary.

Philippines: The Department of Trade and Industry says that it is considering banning Bureau of Philippines Standards-certified companies’ cement from bearing the label ‘Made in the Philippines’ where it was produced in another country. The Cement Manufacturers Association of the Philippines has complained that the labels constitute false advertising.

Trade Secretary Ramon Lopez said that any regulative action would follow a thorough review, but “offhand, if products are not really manufactured here, they cannot be labelled as ‘Made in the Philippines.’”

Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) says it is confident that the Tariff Commission will increase the duty on imported cement on a permanent basis. In a statement Cirilo M Pestaño II, CEMAP’s executive director, noted that the commission had observed a rise in import volumes since 2016, according to the Manila Bulletin newspaper. He said that the association was confident that the commission would issue a, “ruling consistent with the national interest.” The association added that imports might be good for consumers in the short-term but they were bad for everyone beyond this due to lost economic earnings and reduced industrial production capacity.

Philippines: Cement producers say that if the government does not implement a permanent safeguard duty on cement imports they may reconsider investment plans to upgrade their plants. Representatives of Taiheyo Cement, Republic Cement, Holcim and Cemex made the comments at public hearings by the Tariff Commission, according to the Philippine Star newspaper. The commission is conducting an investigation to determine whether the provisional safeguard duty imposed by the Department of Trade and Industry (DTI) on cement imports should be kept.

During the hearings, Cirilo Pestaño II the executive director of the Cement Manufacturers Association of the Philippines (CEMAP), lobbied the government to impose a higher ‘definitive’ safeguard duty. He said that imports of cement rose by 64% year-on-year to 1.74Mt in the first quarter of 2019 from 1.06Mt in the same period in 2018 despite the provisional safeguard measure being in place.

The cement industry in the Philippines has been generating a lot of ‘steam’ in the past three months. Some of this has now come to a head in the last few weeks with the Department of Trade and Industry’s (DTI) decision to impose tariffs on imported cement and the Philippine Competition Commission’s (PCC) on-going investigation into alleged-anti-competitive behaviour. Then, there was the unnamed sourced quoted by Bloomberg this week that LafargeHolcim was seriously thinking about selling up in the country.

Resistance to imported cement has been building for a while as local producers and importers have repeatedly clashed in the media. The latest thread of this story started in September 2018 when the DTI started an investigation into imports. A review by the department found that imports grew by 70% year-on-year in 2014, 4391% in 2015, 549% in 2016 and 72% in 2017. However, the market share of imports grew from 0.02% in 2013 to 15% in 2017. This was followed by various organisations taking sides. The Philippine Constructors Association, Laban Konsyumer (a consumer group), the Philippine Cement Importers Association and others came out on the side of the importers, warning of the risk to prices and consumers if duties were implemented.

It didn’t stop the DTI though. It imposed a provisional safeguard duty of US$0.16/bag on imported cement, around 4% of the cost of a 40kg bag. The PCC then said that it was going to consider the new tariff as part of its on-going investigation. Its probe started in 2017 following allegations that the Cement Manufacturers Association of the Philippines (CEMAP), LafargeHolcim Philippines and Republic Cement and Building Materials had violated the Philippines Competition Act by engaging in anti-competitive agreements.

Amid all of this, LafargeHolcim popped up earlier this week with a news story that it was actively trying to find the ‘right’ price for its local subsidiary, Holcim Philippines. The ‘right’ price at the moment being something around US$2.5bn for four integrated plants and associated assets. That’s around US$225/t of production capacity using the total of 8.4Mt/yr in the Global Cement Directory 2019 and considering LafargeHolcim’s 75% share in the subsidiary. This is about what you’d expect, but it is certainly higher than the US$120/t LafargeHolcim has officially accepted for its divestment of its Indonesian operations.

Given the anonymous nature of the sources involved, it’s uncertain whether LafargeHolcim’s alleged intentions to sell in the Philippines is anything more than market scuttlebutt. What is more certain is that Holcim Philippines has had a tough time so far in 2018, reporting a 23% year-on-year drop in earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$64.8m in the first nine months of 2018 from US$83.9m in the same period in 2017. Sales have grown but this has been hit by the fuel, power and distribution costs as well as the depreciation of the Philippine Peso against the US Dollar. It also blamed imports for its problems. However, alongside all of this the company announced in December 2018 that it was spending US$300m towards increasing its production capacity by 30% to 13Mt/yr by 2020. This includes upgrades to its plants at Bulacan and Misamis Oriental with the installation of new kilns, mills and waste heat recovery systems.

The latest victory in the war between producers and importers seems to be on the side of the producers as the government steps in with protection for the industry. The Philippines’ economy is doing well with its gross domestic product (GDP) forecast to rise by 6.5% in 2019 by the World Bank. The trick for the government will be striking the balance between shielding industry from dumping and allowing the construction industry to keep on growing. Rumours about LafargeHolcim selling up are enticing but seem less likely than LafargeHolcim’s decision to exit Indonesia. Leaving would mean abandoning South-East Asia and exiting a country with a growing industry.

Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) has decided to stop collating quarterly sales data on the cement industry due to competition concerns. Instead its president Ernesto Ordonez has urged the government to gather the information, according to the Philippines Star newspaper. Its last report was in 2016. CEMAP is currently under investigation by the Philippine Competition Commission for allegations of anti-competitive behaviour.