Displaying items by tag: Philippines

Philippines: Phinma Corporation is spending around US$50m on a new cement plant at Bataan with a production capacity of 2Mt/yr. Philcement, a subsidiary of Phinma Corp. and Seasia Nectar Port Services (SNPS), have signed a deal to take over certain construction-in-progress assets, including the usage rights to pier facilities and land currently under lease by Philcement, for a terminal for US$15.5m, according to the Philippine Daily Inquirer newspaper. Eduardo Sahagun, the president and chief executive officer (CEO) said that the company would need up to US$35m to complete the project. Once competed it will be possible to expand the unit to 4Mt/yr depending on market demand.

Philippines: Big Boss Cement and the related company Petra Cement are spending US$193m on cement grinding plant projects in Pampanga and Zamboanga. Big Boss Cement is building four cement lines at its Pampanga plant, according to the Business Mirror newspaper. Petra Cement is building two lines at Zamboanga del Norte. Both companies have the same shareholders, led by prominent businessman Henry Sy Jr.

Company President Gilbert S Cruz said that the companies will spend US$135m at Pampanga plant and US$58m at the Zamboanga plant. Each line will have a cement production capacity of around 0.5Mt/yr. Two production lines have been completed at the Pampanga plant and the remaining two are scheduled for completion in the first quarter of 2020. The first new line at Zamboanga will be completed in November 2019 with preliminary work on the second to follow afterwards. Big Boss Cement and its related companies also plan to build new plants at General Santos, Negros and Iloilo. It aims to reach a production capacity of over 5Mt/yr by the mid-2020s.

The company says it is using a grinded activated sand by heating (G-ASH) process to produce a binding material for concrete that does not use imported clinker. It has claimed that it is the first cement company in the world to do so.

Philippines: Premiere Slag has received an investment of US$1.95m from the Philippines’ AbaCore Capital Holdings for the construction of a cement facility in Mabina, Luzon.

Philippines: The 30-day inquiry by the Mergers and Acquisitions Office (MAO) of the Philippine Competition Commission (PCC) into First Stronghold Cement’s takeover of Holcim Philippines has concluded that the deal may affect market concentration in the cement sector. The Philippine Star reports that this finding clears the way for a phase-two review. The MAO will seek to ascertain whether the deal might result in lessened competition or increase the likelihood of cartel-like activities. This ties in with the Commission’s general investigation into anti-competitiveness in the cement industry.

First Stronghold Cement, a subsidiary of San Miguel, has a stake in Northern Cement and its president and chief operating officer, Ramón Ang, is also the majority owner and chairman of Eagle Cement. In May 2019 it acquired 85.7% of Holcim Philippines for US$2.15bn.

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.

Philippines: Cemex’s subsidiary APO has stopped operations at its Barangay Tina-An cement plant in Naga during morning and afternoon/evening rush-hour to ease the city’s traffic congestion problem. The Philippine Star has reported that lorries dispatching cement from the 4.0Mt/yr integrated plant were a cause of traffic build-up on the Pan-Philippine Highway. Ignacio Mijares, President of Cemex Holdings Philippines, agreed to the restriction following a meeting with Gwendolen Garcia, Governor of Cebu Province. Representatives of Cemex and regional government will meet next week to discuss the working of the solution.

The disruption to production follows the introduction of tariffs of US$4.81/t on imported cement.

Philippines: The Department of Trade and Industry (DTI) has introduced a customs duty on imported cement of US$4.81/t. The Manila Times reports that the measure is subject to annual review and will be in place for three years, decreasing by US$0.48/yr.

The government previously imposed a provisional tariff of US$4.02/t, in spite of protests from Vietnam that any executive action would be in contravention of World Trade Organisation rules. Philippine law allows for the imposition of such measures where an appointed advisory body has determined that increased imports ‘threaten to substantially cause injury to the domestic industry.’

The advisory body in question is the Tariff Commission, who in August 2019 recommended a tariff of US$5.68/t. Secretary of Trade and Industry Ramón López stated that the figure aims to address the threat with minimal impact on buyers. Cement prices in the country hit a low in early January 2019 of US$98.6/t, rising to US$108.25/t after the imposition of the provisional tariff.

Vietnamese producers will be the hardest hit by the price hike, with 75% of the Philippines’ imported cement originating in Vietnam. Asian Review reports that a further 18% comes from neighbouring China and 8% from Thailand.

Philippines: The tariff on cement imports will not exceed US$5.68/t, the figure recommended by the Tariff Commission. Trade and Industry Secretary Ramón López has stated that the safeguard ought not cause prices to rise. The provisional safeguard duty of US$4.02/t will remain until 10th September 2019.

Ireland: CRH’s revenue for the six months up to 30th June 2019 was Euro13.2bn, up 11% from Euro11.9bn over the same period in 2018, with a 36% increase in EBITDA to Euro1.54bn from Euro1.13bn in the first half of 2018.

In its interim results, CRH attributed increased cement volumes in the US to synergy delivery and strong price realisation in spite of adverse weather conditions in its key markets, noting ‘a strong contribution from our Ash Grove acquisition,’ obtained at the end of June 2018.

A general improvement in cement pricing in the EU28 saw operating profits ahead of the first half of 2018, with increased demand in the French market from non-residential and civil engineering sectors offsetting the effects of reduced residential demand. The UK market reversed this trend, with operating profit behind 2018 due to higher input costs and volume pressure.

In addition to operating profit improvements reported by subsidiary businesses in the Philippines, CRH group benefited from its share in profit after tax of China’s Yatai Building Materials and India’s My Home Industries Limited, both of which enjoyed improved operating profits compared to 2018.

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.