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Galvanized iron | Photo from sonicsteel.com.ph

The Department of Trade and Industry (DTI) has initiated preliminary safeguard measure investigations on aluminum zinc (GL) and galvanized irons (GI) imports following allegations of increased imports that have negatively affected the local industry.

In three separate notices dated June 15, DTI said it has evaluated applications of Puyat Steel Corp. and Sonic Steel Industries, Inc., and found “a prima facie case that will justify the initiation of a preliminary safeguard measures investigation” on importation of GL sheets and coils; GI sheets, coils and strips; and prepainted galvanized iron (PPGI) and prepainted aluminum zinc (PPGL), including other coated products and painted strips.

DTI is mandated by Republic Act No. 8800 (Safeguard Measures Act) to protect the domestic industry from serious injury caused by a surge in imports.

Sonic Steel in 2019 applied for the initiation of a preliminary safeguard measures investigation on the importation of GL sheets, coils and strips from various countries, alleging that the increased imports have contributed significantly to the serious injury suffered by the local industry. Sonic Steel is the sole manufacturer and accounts for 100% share of the total domestic production of GL sheets.

A separate application was submitted by Puyat Steel in 2019 for a preliminary safeguard measures investigation on the importation of GI sheets, coils and strips. Puyat Steel accounts for 82% of the total domestic production of GI sheets.

In another separate application in 2019, both companies have requested a preliminary safeguard measures investigation on the importation of PPGI and PPGL. Sonic Steel and Puyat Steel accounts for 70% of the total domestic production of PPGL and PPGI.

For the period of investigation (POI) from 2014 to 2018, DTI in a report said significant increases in the volume of imported GL in 2015 (3,090%), 2016 (300%), 2017 (7%) and in 2018 (20%) “preceded the serious injury to the industry in 2018.”

The report said the industry suffered declines in sales, production, utilization rate, profitability and employment, while inventory increased from 2014 to 2018.

The market share of domestic product also decreased during the POI from 99% in 2014 to 25% in 2018, as share of imports in the domestic market displaced locally produced GL.

Another DTI report showed significant increase in the volume of imported GI in 2015 (527%), 2016 (145%) but declined in 2017 (16%) and increased again in 2018 (26%).

The report said the industry suffered fluctuating domestic sales resulting to cut in EBIT (earnings before interest and taxes) into half from 2014 to 2018.

The market share of domestic product decreased from 69% in 2014 to 9% in 2018, as share of imports in the domestic market significantly increased.

In another report, DTI said imported GL continuously increased during the POI from about 770 metric tons (MT) in 2014 to 126,000 MT in 2018. In 2018, imports increased by approximately 21,000 MT compared to the 2017 level.

Another DTI report showed a significant uptick in volume of imported PPGI/PPGL by 46% in 2016. Volume fell by 15% in 2017 but was still higher by 16% over the 2014 level. In 2018, imports increased by 7%.

“The domestic industry suffered and is suffering significant impairment in its overall condition in terms of loss of market share, declining domestic sales, production, utilization rate, profitability, reduction in employment and increase inventory,” DTI stated.

The market share of domestic product decreased from 38% in 2015 to 29% in 2018, as share of imports in the domestic market significantly increased.

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