Ending safeguard measures vs imported cement gets flak

The Tariff Commission has rejected an extension of anti-dumping duty on cement that local producers fear will cause serious harm to the market and consumers.

Among the TC finding in a 5 October report but which the local industry disputed as not reflecting reality was that there was no significant overall impairment in the position of the domestic cement industry that will constitute serious injury; and that “there is no imminent threat of serious injury and significant overall impairment to the condition of the domestic cement industry in the near future.”

Nothing much has changed in the market condition from the time that cement dumping has been alleged, according to the petitioners.

Holcim Philippines Inc. vice president for Sustainability Zoe Sibala said during the TC hearing that the conditions which justified safeguard measures against cement imports almost three years ago remain practically unchanged which makes an extension necessary.

Based on the import data from the Bureau of Customs and the Staff Report of the TC, the volume of imported cement continues to increase and at lower prices at the retail level notwithstanding the increases in the prices of fuel and energy.

Based on the report of the TC staff, the share of imports to domestic production in terms of volume increased steadily from zero in 2013 to 5.3 million metric tons in 2019, increasing further to 6.88 million metric tons in 2021.

In contrast, the TC stated reasons for recommending an end to the punitive tariff on cement:

• The production output of the domestic industry constituted a major proportion of the total local production of Ordinary Portland Cement Type 1 and Blended Cement Type 1P and thus satisfies the requirement of the law;

• The domestic cement industry has undertaken, and continues to undertake, considerable efforts to comply with its adjustment plans and is thus making positive adjustment to import competition;

• During the review, there was no significant overall impairment in the position of the domestic cement industry that constituted serious injury; and

• 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.

Progressively, the percentage in the share of imports to domestic production rose from zero in 2013 to 26.09 percent in 2019, rising further to 38.42 percent in 2021.

“We can only absorb so much of this. It is adversely affecting us, not only with our ability to continue with our investment on our adjustment plans,” Holcim’s Sibala added.

Sibala warned it may even be more difficult for local cement manufacturers to implement their strategies to meet the challenge of global competition without relief against the influx of imported cement.

Sibala, though, pointed out that her company remains committed to the completion of their adjustment plans but they need the “breathing space” provided by the safeguards to complete these.

Cement Manufacturers Association of the Philippines counsel Jose Salvador Rivera Jr. disputed claims that local manufacturers failed to make the necessary adjustments to rising demand.

Rivera asserted that this cannot be characterized as “failure” on the part of the petitioners, citing that many of the projects were completed while some were simply delayed due to the pandemic.

Projects put at risk

The unabated influx of cheap imports “puts at risk our ability to complete our adjustment plans that entail billions of pesos to become globally competitive,” Sibala added.

Sibala said despite the two-month work restrictions that affected cement plants in Luzon in 2020 after the pandemic struck, the capability of the cement makers to meet the local demand was not significantly impaired.

CeMAP’s Pestano said the government must strike a balance between protecting consumers against rising prices and ensuring the viability of local industries.

He said terminating the safeguard measure would jeopardize the efforts of the local industry which is investing significant capital to improve competitiveness.

Records showed that total cement imports by trader-importers have reached almost 7 million metric tons in 2021.

“Imported cement volumes by trader-importers have shown sustained year-on-year increases, notwithstanding safeguard duties. It is, therefore, necessary that the Safeguard Measure continues to prevent or remedy the serious injury caused by imported cement,” the CeMAP official said.

CeMAP said fair competition in the domestic cement industry should be upheld and protected since “the continuing rise in the volume of imported cement, particularly from Vietnam, puts at risk our country’s economic recovery.”

Massive investments

The TC, in its report, enumerated its findings on the industry:

• As of 2021, the industry invested a total of P69 billion, with P66.9 billion allocated in the original adjustment plans and P2.1 billion for the additional committed measures;

• The cost of completed measures amounted to P13 billion, equivalent to 19 percent of the total cost. Among the completed projects were the mill expansions and equipment upgrades by Holcim and Republic); construction of additional warehouses of APO and Solid) and cost-saving or productivity-improving measures of all four cement companies;

• Majority of the committed measures, 78 percent or P54 billion, refer to projects that were delayed due to the unfavorable economic consequences of the Covid-19 pandemic. Nevertheless, completion of these measures was kept in the pipeline for completion.

These measures included plant expansions of Solid and Holcim-Bulacan plants; cost optimization projects of APO, Holcim, and Republic and the installation of new equipment of APO, Holcim, and Republic;

• Approximately P1.4 billion, or two percent were allocated for new measures that are still for implementation. These would include kiln and equipment improvements of APO, Holcim); integration of digital tools of Holcim and adoption of energy cost-saving measures of APO, Holcim, and Republic); and the remaining P665 million relate to deferred measures.

Among these measures were the purchase of additional equipment and cement plant expansions.

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