The Department of Trade and Industry has just announced the impending imposition of definitive safeguard duties on cement imports in a bid to ensure a level playing field and protect the local cement industry.
According to the DTI, imported cement will be levied a safeguard duty of P14 per 40-kilo bag of Ordinary Portland Cement 1 and Blended Cement, equivalent to P349 per metric ton and to be in place for three years, basically adopting the recommendation of the Tariff Commission which conducted a formal investigation on the imposition of these duties on importations of these two types of cement.
This is on top of the definitive anti-dumping duties imposed by the DTI on specific Vietnamese exports of Type 1 and Type 1P cement for a period of five years beginning in March 2023.
The Tariff Commission (TC) on Sept. 30 recommended the application of the appropriate definitive general safeguard measures in the form of a duty on importations of cement for a period of three years to redress the serious injury directly attributed to the importation of cement into the Philippines in increased quantities, by providing temporary relief and giving the local cement industry a reasonable period to adjust to increased import competition.
The commission further recommended a specific duty of P349 per metric ton (MT) or P14 per 40-kilo bag, corresponding to the difference between the weighted average on ex-importers’ store price of imported cement and the weighted average domestic ex-plant selling price of the local cement industry for 2024.
It clarified that although the proposed specific duty shall be applied equally on all cement imports regardless of source, the equivalent ad valorem rate will vary depending on the value of the shipment so that the safeguard measure will have a greater impact on lower-priced cement imports.
In October last year, the DTI initiated a motu proprio preliminary safeguard investigation on the importation of cement from various countries to determine if there is evidence that increased imports of cement are a substantial cause of, or are threatening to substantially cause serious injury to the domestic industry. The period of investigation (POI) was 2019 to June 2024.
Last February, the DTI, in a report, said that it has established the existence of a causal link between the increased cement imports and serious injury to the domestic industry and that the imposition of a provisional measure to prevent further injury to the local industry is justified. It then imposed a provisional safeguard measure in the form of a cash bond of P400 per MT or P16 per 40-kilo bag on importations of cement. The provisional measure was effective for 200 days.
The DTI subsequently endorsed the case to the TC and requested the conduct of a formal investigation to determine the merits of imposing a definitive safeguard measure.
In a position paper submitted to the TC, the Cement Manufacturers’ Association of the Philippines (CeMAP) noted the consistent increasing trend of cement imports since 2014. From a mere 4,000 tons in 2014, traders’ imports are now at an all-time high of 7.637 million tons and this is expected to continue increasing in the coming years. On the other hand, there is a significant decline in the market share of the domestic cement industry with imports consuming more than seven percentage points of the domestic industry’s market share by the end of the POI.
It emphasized that as a result of the import surge, domestic manufacturers currently suffer from serious injury as shown by the declines in their market share, sales, production, profits and employment.
Meanwhile, cement importers, including Cohaco Merchandising, Fortem Cement Corp., NGC Land Corp., Pabaza Import and Export, Lemery Cement Silo Tank Corp. and Philcement Corp., opposed the imposition of safeguard measures on cement imports. They said the rise in imports is primarily driven by the reduction in domestic production combined with the need to satisfy that ongoing market demand.
They said that in terms of market supply deficit, the local cement industry produced around 27 million metric tons annually, falling short of the estimated demand of 32 million tons, adding that the growth rate of imports remained at an annual average of less than five percent, hardly to be considered as a surge necessitating an imposition of safeguard measures under WTO standards.
They added that the domestic industry continues to dominate market share and that the four major industry players namely Lafarge Holcim, Republic Cement, Cemex and Eagle Cement, all domestic manufacturers, collectively control 85 to 90 percent of the country’s total cement capacity.
Vietnam Trading Services, for its part, said that local supply cannot meet the huge Philippine demand for cement due to infrastructure projects and that this could lead to postponed projects and high prices.
The TC, in its final report, said that around 81 percent of the country’s total cement supply during the POI came from domestic local production and that the remaining 19 percent came from imports. The primary user of cement is the construction industry.
From 28.58 million metric tons in 2019, the volume of domestic cement production increased to 32.7 million tons in 2023 but dropped to 26.69 million tons last year. CeMAP members accounted for 66 percent of local output.
Imports by traders, meanwhile, increased by an average of eight percent yearly, growing from 5.18 million tons in 2019 to 7.55 million tons in 2024. Traders accounted for 95 percent of imports.
The bulk of imports came from Vietnam, China, Indonesia and Japan. Philcement Corp. accounted for 24 percent of total imports followed by Fortem Cement with 19 percent and Dvao Trading with nine percent. Last year, Philcement imported 1.82 million tons while Fortem, Zaenna Trading and NGC Marketing brought in around a million tons each, the TC revealed.
From 2019 to 2024, Philcement brought in 9.359 million tons of cement from Vietnam and Japan while Fortem imported 7.45 million tons from China, Indonesia and Vietnam. Others in the top ten are Dvao Trading, NGC Marketing, NGC Land, Newgate Import Export, Marlusa Construction Supply, Davao Multibuild Corp., Saygin Construction, all of which sources their imports from Vietnam, and Zaenna Trading which brought in cement from Pakistan and Vietnam.
The TC found that OPC Type 1 and blended cement are being imported to the Philippines in increased quantities starting 2023 and that the increase in volume of imports was recent, sudden, sharp and significant.
Vietnam accounted for 92 percent of imports from 2019 to 2024 followed by China with three percent, and Indonesia and Japan both with two percent share.
Imported cement sellers have found an ally in the United Filipino Consumers and Commuters Inc. led by RJ Ledesma, which said that cement users should not be on the losing end by paying the brunt of this battle between local manufacturers and cement importers and that small importers are facing overwhelming pressure from dominant local manufacturers.
Unfortunately, it is not a David vs Goliath fight. It is about fighting fairly and on equal footing.
The domestic cement industry should take this five-year reprieve period as a time to improve efficiency, boost production, find ways to bring down costs and prices and give us the best quality products in order to compete head-on with cheap imports mostly coming from Vietnam.