PH initiates safeguards probe on surge in imported steel products

The Department of Trade and Industry (DTI) has ordered preliminary safeguards investigation on imported aluminum zinc (GL) sheets, coils and strips citing the surge in importation of these steel products has caused serious injury to the domestic industry.

In a June 15, 2020 order, DTI Secretary Ramon M. Lopez said that based on its findings that during the period of investigation (POI) 2014-2018, increased importation of GL sheets, coils and strips have caused serious injury to the domestic industry in terms of declining market share, production, sales, capacity utilization, profitability, employment, price depression, suppression and price undercutting.

“The Department, finds prima facie evidence to initiate and conduct a preliminary safeguards investigation to determine whether GL sheets, coils and strips are being imported into the Philippines in increased quantities and is causing serious injury to the domestic industry,” the order stated.

With this order, the Philippines will also notify the World Trade Organization and exporting countries of its decision to initiate the preliminary investigation process under Republic Act 8800 or The Safeguard Measures Act.

Based on its initial findings in the investigation covering the period 2014-2015, significant increases in the volume of imported GL sheets in 2015 (3,090%), 2016 (300%), 2017 (7%) and in 2018 (20%) preceded the serious injury to the industry in 2018. The industry suffered declines in sales, production, utilization rate, profitability and employment. Inventory increased from 2014 to 2018.

The condition of competition showed that the market share of domestic product decreased during the POI from 99 percent in 2014 to 25 percent in 2018, as share of imports in the domestic market displaced locally produced GL.

With higher imports, domestic production declined from 20152018. Production increased in 2015 by 4 percent, but declined from 2016 to 2018 by 3 percent, 1 percent and 6 percent, respectively, as sales exhibited a declining trend during the POI.

Domestic manufacturers production continued to fall despite an increase in market size. Total Philippine apparent market grew during the POI from approximately 66,000MT in 2014 to 219,000MT in 2018. Total Philippine market expanded from approximately 66,000MT in 2014 to 91,000MT in 2015. In 2016, it increased to 183,000MT or by 102 percent compared to 2017. Total consumption went up to about 219,000MT or by 6 percent in 2018.

But the share of non-manufacturers (traders and importers) to total Philippine market increased significantly from 1 percent in 2014 to more than 50 percent in 2018.Share of domestic sales to the Philippine market contracted during the POI. In 2014, domestic industry dominated the market at 99 percent.

Local sales experienced a continuous decline, from 68 percent in 2015 to its lowest share at 25 percent in 2018.

Sales volume recorded a continuous decline of 5 percent in 2015, 3 percent in 2016 and 2017 and 6 percent in 2018 while sales value declined by 2 percent each year from 2014 to 2017 and further by 3 percent decline in 2018.

DTI investigation also showed continued decline in industry employment. During the period of investigation 2014 to 2018, employment declined by 40 percent.

There was a strong evidence of price undercutting where weighted average landed cost of imports from all sources is lower than the average selling price of the domestic product indicating a price undercutting of approximately 9 percent in 2018.

Price depression was recorded at 1.49 percent in 2016 to 0.77 percent in 2017 and 1.08 percent in 2018. DTI also detected of price suppression in 2016 by 1 percent and in 2018 by 5 percent.