The government has been considering certain options as the industry’s capacity utilization hit a critical low due to the continued slump in the construction sector aggravated by the dumping of cheap cement from Taiwan and Japan.
Documents obtained from the Department of Trade and Industry (DTI) show that there are moves to restrict imports by not allowing importers to expand the existing capacities of their import terminals.
According to the documents, the policy will also cover local cement manufacturers who will not be allowed to expand their production capacities. However, this will have no impact since the industry had been operating at 50 percent of existing capacity since the beginning of the year and has since slid further down to 45 percent as sales continue to go down along with prices.
According to the documents, "price recovery and a stop to dumping" is the key to the industry’s survival as well as the strict implementation of quality rules and regulations that are often used by other countries as non-tariff trade barriers.
The documents also said government could stop issuing permits for "additional capacity or import terminals," a policy that could be implemented simply by withholding business permits for the construction of new facilities.
Although not a direct import restriction, this would effectively limit the volume of cement entering the Philippines.
According to the DTI source, the government no longer has any policy that would directly restrict cement importation but it could still do so by preventing the construction of facilities such as import terminals and silos.
At present, imported cement is being brought in by Taehiyo Cement Corp. of Japan and Taiwan Cement Corp. (TCC) which has an import terminal with a storage silo with the capacity to store enough cement to account for 10 percent of the market.
TCC had earlier reasoned that even if it wanted to, it could not possibly increase its market share beyond eight to nine percent since its existing terminal at the RII facility in Novaliches could only accommodate that much.
According to an official of the Philippine Cement Manufacturers Corp. (Philcemcor), however, TCC’s total capacity has little to do with its total market share especially if its turnaround time is fast enough to unload thrice its total storage capacity into the local market.
Because of its pricing strategy, the official said TCC has been able to achieve a high turnover that allows it to corner at least 15 percent of the total market and 45 percent of Metro Manila cement market.
Another industry source earlier revealed that TCC is already expanding by setting up another import terminal at the Batangas Port but TCC officials have repeatedly denied the construction of a second silo.
The Batangas silo will allow TCC to access the markets in Visayas and Mindanao which have thus far remained the stronghold of the so-called Big Four composed of Holderbank, La Farge, Cemex and Blue Circle. All four are among the world’s biggest cement manufacturers and they account for over 90 percent of the market until TCC started importing cement from Taiwan.