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The Department of Trade and Industry will conduct a preliminary investigation on whether safeguard duties on imports of liquefied petroleum gas steel cylinders are needed
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LPG steel cylinder manufacturer Ferrotech Steel Corp. claims increased imports is seriously hurting the domestic industry
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An evaluation by DTI found a prima facie case exists, justifying a safeguard-measures investigation
The Department of Trade and Industry (DTI) will conduct a preliminary investigation into whether safeguard duties are needed on imports of liquefied petroleum gas (LPG) steel cylinders.
In a March 29 notice signed by Trade Secretary Alfredo Pascual, DTI said it received an application from Ferrotech Steel Corp. for the initiation of a preliminary investigation on the application of such safeguard measures. The company alleged increased LPG tank imports is seriously hurting the local industry.
Ferrotech manufactures LPG steel cylinders in various sizes for industrial, commercial and household uses, both for the domestic and Southeast Asian markets. Other producers are Asian Unicorn Trading Ventures Corp. and FSC Metal Corp., with the latter supporting the petition/application for safeguard measure.
Acting under Section 6 of Republic Act No. 8800, or the Safeguard Measures Act, DTI evaluated the application and found the existence of a prima facie case that will justify the investigation covering the years 2017 to 2021.
RA 8800 provides for the imposition of duty “in critical circumstances where a delay would cause damage that would be difficult to repair, and pursuant to a preliminary determination that increased imports are the substantial cause of serious injury to the domestic industry.”
In a separate evaluation report dated March 29, DTI said it received Ferrotech’s application on May 5, 2022, and subsequently a revised application on August 31, 2022, to include additional information sought by DTI.
According to the report, imports of LPG steel cylinders reached more than 13,000 metric tons in 2017 and declined to about 3% in 2018. The next year, the rate of increase grew 24% over the 2018 level. Imports rose sharply by 45% in 2020.
In 2021, imports fell 13% but were still higher than the pre-surge level. The most recent data available (January to July 2022) indicates that imports into the Philippines reached around 11,000 MT, or 54% of the 2021 level.
Relative to domestic production, the share of imports of the steel cylinders in question increased significantly during the period of the previous investigation.
As a result, DTI concluded there was a recent, sudden, and sharp increase in LPG tank imports in both absolute and relative terms.
Moreover, DTI said the share of domestic sales to the Philippine market contracted during the period of previous investigation. Imports continued to displace the domestic market and cut the industry’s sales and market share from 30% in 2018 to 10% in 2021.
The loss of market share was taken by imports during the period of investigation and this persisted in 2020 and 2021 notwithstanding the COVID-19 pandemic.
The domestic industry also recorded in 2020 its first operating loss, which more than doubled in 2021. The highest recorded operating profit was in 2018, followed by profit in 2019. In the first quarter of 2022, the domestic industry recorded also an operating loss.
According to the domestic industry, gross and operating profits were greatly affected as they sold almost at cost just to stay afloat.
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