Displaying items by tag: Philippines

Philippines: SCG Philippines Country Director Anuvat Chalermchai says he is unconcerned about the country’s new tariff on imported cement because the company’s imports are ‘very small.’ The subsidiary of the Thai conglomerate imports 0.2 – 0.3Mt/yr of cement, according to Business World. It operates seven companies in the Philippines: United Pulp and Paper Company, SCG Trading Philippines, Green Siam Resources, Green Alternative Technology Specialist, SCG Marketing Philippines and Mariwasa Siam Ceramics.

Philippines: The Philippines Tariff Commission has started a formal investigation into the provisional safeguard tariff placed by the Department of Trade and Industry (DTI). Consumer group Laban Konsyumer asked the commission to place a temporary restraining order on the tax but the body said it lacked the power to do so, according to the Philippine Star newspaper. The commission has three months to reach its verdict. The DTI placed tariffs on cement imports in January 2019 to protect local producers.

Philippines: Cemex Philippines has received a set of tax breaks and financial incentives for the new 1.5Mtyr production line it is planning to build at its Solid Cement plant in Antipolo, Rizal. Its subsidiary Solid Cement has obtained ‘pioneer’ status from the Board of Investment (BOI) but with ‘non-pioneer’ incentives, according to the Inquirer newspaper. This means that the project may be able to benefit from a longer income-tax holiday. The new production line is scheduled to be operational by early 2020.

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: Church and non-government organisations (NGO) have filed a document with the local government expressing their opposition against several San Miguel projects, including a new 2Mt/yr cement plant at Pagbilao in Quezon. They allege that no public hearing was given for local communities to comment on the projects among other complaints, according to the Business Mirror newspaper. San Miguel is planning to build a group of projects at the site in Ibabang Polo including a coal power plant, a logistics hub and a quarry.

Philippines: LafargeHolcim is considering selling its subsidiary Holcim Philippines. Sources quoted by Bloomberg said that the multinational building materials producer was trying to find the ‘right’ price for the business. Holcim Philippines has been valued at around US$2.5bn. It operates integrated cement plants at La Union, Bulacan, Misamis Oriental and Davao. As part part of its ongoing portfolio assessment scheme, LafargeHolcim announced that it was selling its business in Indonesia to Semen Indonesia for US$1.75bn in November 2018.

Philippines: The Philippine Competition Commission (PCC) says it will consider a new tariff on imported cement as part of its investigation into alleged anti-competitive behaviour. In early January 2019 The Department of Trade and Industry (DTI) said it would impose a provisional safeguard duty of US$0.16/bag on imported cement, according to the Philippine Star newspaper. The PCC started its latest investigation into the cement industry in 2017. Previously it said it planned to complete the study in 2019.

Philippines: Republic Cement Services plans to commission two cement grinding mills in 2019 at a cost of US$20m each. Once completed the company will have a cement production capacity of around 9Mt/yr, according to GMA News. President Nabil Francis also said that the company would need more clinker for the mills. This could either be sourced locally or from imports.

Philippines: The Department of Trade and Industry (DTI) has issued supplemental guidelines for the certification of cement. The regulations require producers or importers to follow conditions set by the Bureau of Philippine Standards (BPS), according to the Manila Times newspaper. The new rules require producers or importers to post a bond ahead of trading. Non-compliance with the certification rules can then lead to a forfeit of some or all of the bond. Not following the regulations can also lead to a producer or importer being prevented from supplying, distributing, selling or displaying their products. The new rules specify that an importer should apply for a statement of confirmation (SOC) on a per product, per shipment, per bill of lading basis prior to its distribution in the market.

Philippines: The Department of Trade and Industry (DTI) will impose a provisional safeguard duty of US$0.16/bag on imported cement. The decision follows an investigation where it said there were clear elements of a surge in cement imports and that this would cause injury to local producers, according to the Philippine News Agency. The import duty is equivalent to about 4% of the cost of a 40kg bag of cement. Data from the Philippine Cement Importers Association (PCIA) using sources from the Bureau of Import Services showed that of the total 28.6Mt of demand in 2017, local manufacturers supplied 25.6Mt while importers supplied the remaining 3Mt.