The State of the Philippine Steel Industry: An initial Look Today

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Two Wednesdays ago, I attended the regular board meeting of the Philippine Iron and Steel Institute (PISI) in lieu of our president who was then out of town. Our president has been a long time officer of the board representing the Flat Steel Sector and in times that he is not available, he would send our vice president for manufacturing, or me to pitch in for him in such meetings or in other PISI activities, forums, etc. That  help us get first hand updates of what’s going on in our world of steel from steel gurus and businessmen.

The PISI is an umbrella organization of all steel stakeholders, namely, suppliers, traders/importers, manufacturers, etc. Its membership cuts across various steel industry associations and individual companies. Its objective is to promote, enhance, and protect the interest of its members as well as the steel industry as a whole. Incidentally, the current president, was my close colleague during our years at National Steel Corporation in Iligan City.

A hot topic discussed (which is actually a regular item in all meetings) is the hottest subject which hogged the headlines recently- smuggling. For many years, smuggling or technical smuggling specifically, has always been identified as the menace in the industry. In recent years, it has become rampant to alarming levels. Like other business sectors such as oil, agri- products ( like meat, poultry, and rice), etc.,  the Institute had been expressing outcry and consistently decried the unabated rampant smuggling, most common of which are under declaration or misdeclaration. For 2012 alone, estimated loss due to smuggling reached P1 billion. It has been common that people are already immune to it  and that any news about it is not news anymore. When will that day come when we all can say,” it’s time to play hardball”.

Another main feature of the meeting is the report on imported steel price. From scrap to billets, slabs, hot-rolled and cold rolled coils, plates, tin plates, GI, PPGI, figures from traditional sources namely, China, Taiwan, Japan, Russia, it was reported that  last month’s prices generally went down compared to the previous month. April prices for  (figures are in US dollars per MT) scrap bulk sea cargo was at 375, containerized ex Taiwan at 395, HRC ex Taiwan was 580 and ex China is 560, 0.6mm CRC at 600 and 0.17mm CRC iwa at 700, 0.33m GI at 840 and PPGI at 950. Interestingly, while prices are going down and analysts say demand will be depressed, China increased its steel output by 9.1% this first quarter, year on year. For Jan-March 2013 alone, total China output is now pegged at 192 Million MT.

Next month, SEASI or Southeast East Asia Steel Institute will hold its annual international conference. Every country member presents their respective country report. During the board meeting, a tentative PISI country report was presented for comments, validation, etc. I noted some highlights; first on the  GDP  report where, from the 6.6% GDP growth registered in 2012, in the Industrial sector, it was Construction which registered the highest growth of 14.4% while Manufacturing stood at only 5.4%. In the Services sector, transport was highest at 9.1%. Another notable highlight was in our GI/PPGI/Aluzinc/EGI sector. For 2012, total 2012 importation reached over 530,000MT, around 35%   increase from the previous year level indicated by the updated data from the Bureau of Imports (BIS). This is because, most, if not all galvanizing plants are not anymore producing or are not anymore operating and merely imports these coated products mostly from China. The reason is pure business economics. It is now cheaper to buy imported GI products than buy CRC raw materials  and process or convert them to GI. Sadly,manufacturing of galvanized steel is one sector which has not only declined but is tilting on the verge of extinction.