Displaying items by tag: Department of Trade and Industry

Philippines: Republic Cement has said that it expects the cement sector in the Philippines to grow strongly in 2021 following a 10% decline in demand in 2020. Speaking to local press, the company’s president and chief executive officer Nabil Francis said that the drop in demand in 2020 was actually less severe than the expected 15%. He added, “We strongly believe that we will get back to 2019 level in 2021. That means 12% growth compared to 2020.” Francis added that the industry is expected to sell 35Mt of cement during 2021. The main driver is the bagged cement segment, with infrastructure and the non-residential, likely to grow less rapidly.

Francis additionally said that he welcomed the Department of Trade and Industry’s investigation into alleged dumping of cement into the Philippines from Vietnam. He said that the imported cement is sold at very low prices, its production having been subsidised by the Vietnamese government. He said the influx of imported cement has injured the local industry.

Philippines: The Department of Trade and Industry (DTI) has launched a probe into the possible imposition of a new anti-dumping duty on imports of cement from Vietnam. The Philippine Star newspaper has reported that Vietnamese cement continues to enter the Philippine market at allegedly dumped prices despite the DTI’s safeguard measures on the product. The DTI is authorised to investigate where prices are believed to be harmful to the domestic industry. Cemex Philippines, Holcim Philippines and Republic Cement have applied for a probe.

Philippines: The Department of Trade and Industry (DTI) has issued an order amending its previous order on cement safeguards. The Manila Bulletin newspaper has reported that the amendment extends safeguard measures to 13 new countries which now exceed the necessary 3% import volume share. These are Chile, the Czech Republic, Estonia, Hungary, Israel, Indonesia, Latvia, Lithuania, Poland, Slovenia, Slovakia and South Korea. Imported cement from these countries will now face a safeguard duty of US$0.2/bag. An official source quoted by the newspaper called the surge in importation from these countries "trade diversion" tactics by importers since these countries were previously exempt from the safeguard duty.

Philippines: The Department of Trade and Industry (DTI) plans to establish a new cement testing facility. The Philippine News Agency has reported that the department has made an allocation in its 2021 budget for the facility.

DTI Bureau of Product Standards (BPS) Catajay said “For setting up a testing facility for cement by BPS, our target is to finish within the first half of 2021. Our procurement of equipment is on-going, so that we can conduct testing in the third quarter of 2021.”

The Philippines presently has two cement testing facilities.

Philippines: The Tariff Commission (TC) has said that it was unaware of a Department of Trade and Industry (DTI) order imposing higher-than-scheduled duties on imports of cement. The Manila Bulletin newspaper has reported that TC commissioner Ernesto Albano said that it was legally ‘impossible’ for rates to rise above the previously scheduled US$0.19/bag. The DTI order in December 2020 set a duty of US$0.20/bag in the second year of the three-year tariff scheme. Albano said, "The DTI cannot do that. The schedule has been set.” He added, “The industry should improve so the duty should go down."

The Bureau of Customs (BOC) has implemented the new rate imposed by the DTI.

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: Phinma Group subsidiary PhilCement has committed to the adoption of the Department of Trade and Industry’s new labelling regulations for cement. The Manila Bulletin newspaper has reported that the producer agreed to cooperate with the department in the interests of the country’s construction materials’ quality and stability. This followed on from a deadlock when the department suspended cement bag printing to ensure than no new cement bags marked ‘Product of the Philippines’ were able to enter circulation containing imported cement.

In a joint statement, Phinma Group and the Department of Trade and Industry said, “DTI and Phinma Group are in full agreement that this clarity in labelling conventions would help consumers in selecting and deciding on the cement products they prefer. This will also strengthen the country’s ability to support and patronise locally manufactured products.” The department also reiterated its commitment to ensuring that all cement producers uphold consumer welfare by supplying affordable cement.

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 September 2019 customs duty of US$4.81/t on imported cement is in danger of disrupting a Philippine Competition Commission (PCC) probe. The Philippine Star has reported that the PCC is conducting an investigation into domestic cement producers’ alleged anticompetetiveness following an accusation by a Department of Trade and Industry (DTI) official in 2017 that a ‘cartel’ of producers was maintaining artificially high pricing and spreading of misinformation about the quality of imported products. PCC chair Arsenio Balisacan has noted the danger of ‘having an ongoing investigation and introducing a policy which can influence the outcome of that investigation.’

Napoleon Co, chairman of the Philippine Cement Importers Association (PCIA), has stated that cement traders will keep on importing unless the local cement sector produces more. He said that foreign producers’ Philippine sales were driven not by their lower prices but by the domestic industry’s inability to fulfill the country’s 28Mt/yr demand.

Predictably, the recent investigation by the Tariff Commission in the Philippines on whether to maintain duties on imported cement recommended that the safeguard duty be kept. It even suggested raising the rate to nearly US$6/t from US$4/t at present. The report has been passed to the Department of Trade and Industry (DTI), which will make the final decision on the matter.

Graph 1: Market share of the Philippines cement industry between local producers and traders, 2013 - 2018. Source: Tariff Commission of the Philippines.

As the commission built its argument it released a great snapshot of the local cement industry and it’s well worth a read for anyone who is interested. One key graph here was the speed at which the market share of cement sold by local producers fell compared to importers from 2013 to 2018. As Graph 1 shows above, traders imported 0.29Mt in 2015 and this rose to 4.66Mt 2018. Imports by local producers also grew during this time but at a far slower rate. They were 0.45Mt in 2015, grew to a high of 1.65Mt in 2016 and then stabilised at around 1Mt/yr since then. Seven of the top 10 cement exporters were Vietnamese companies followed by two from China and one from Thailand. However, the local producers were importing clinker on a far larger scale during this period. 16.8Mt of clinker was imported from 2013 to 2018 led by Holcim Philippines with 5.54Mt or a 33% share. In Holcim’s case this was coming from China, Indonesia, Japan, South Korea, Malaysia, Thailand and Vietnam.

Elsewhere, the report established the various production capacity upgrades the local cement producers had invested in or were planning to in the near future. Taiheiyo Cement Philippines, for example, was reported as planning an expansion to its Cebu plant production line from 2022 to 2025. It then looked at kiln capacity utilisation rates, prices and how profits have changed amongst much else. It concluded that the import surge from 2015 to 2018 had depressed prices and decreased the profitability of the local producers. This fitted its definition of ‘serious injury’ as one reason to impose a safeguard duty on imports.

Importers presented a different scenario to the commission during its investigation and afterwards. Phinma, for example, told local press that the commission’s comparison calculation of the costs behind local and imported cement didn’t take into all the costs the importers endured such as a local distribution and handling once in the country. The Philippines Cement Importers Association reiterated the view of its members that they were simply meeting market demand, that local producers had caused their own problems through overcapacity and that profits varied considerably amongst local producers, amongst other arguments. This has been borne out by some of the half-year results amongst the local producers. Eagle Cement, for example, saw its earnings before interest, taxation, depreciation and amortisation (EBITDA) grow by 21% year-on-year to US$80.6m.

With the publication of the commission’s report the DTI has been handed the impetus to hold up or even raise the duty on imported cement. Based on its actions in recent years the ministry seems likely to do so. This presents a contrast to Trinidad & Tobago where importer Rock Hard Cement won a legal battle earlier in August 2019 against competitor and Cemex-subsidiary Trinidad Cement over the classification of imported cement products. These kinds of trade conflicts are likely to proliferate whilst global production capacity outstrips demand but the outcomes may vary.