Steel industry faces shortage of raw materials

The price and supply of construction materials especially of GI sheets and pre-painted roofing materials may be drastically affected owing to the scarcity of sources for flat steel raw materials, particularly hot rolled coils and cold rolled coils.

Alberto M. Albano, president of the Philippine Iron and Steel Institute (PISI), the umbrella organization of local steel producers and traders, said that aside from GI sheets, other sectors to be affected are the fabricators of steel plates, tubes, pipes, steel purlins and frames and studs.

"This situation may lead to increase in prices of steel construction materials, especially roofing sheets and even of outright shortages at a time when the construction season is gaining momentum," Albano said.

PISI sources have observed that the prices of hot rolled coils have increased by almost $60 per ton during the past three months alone, while that of cold rolled coils by $100 per ton during the same period.

These materials are almost 100 percent imported because of the closure and continuing non-operation of the National Steel Corp. (NSC).

"What is most disturbing is that traditional sources of these materials have been refusing to make firm offers during the past week," Albano lamented.

Albano said the current instability in the steel supply in the region started when President George Bush ordered a 30-percent tariff surcharge on its import of flat steel products early in March.

In reaction to this, most mills in the region notably Japanese and Korean mills drastically scaled down their production. But what was not anticipated was the abrupt jump in the purchasing of finished steel products, including hot and cold rolled coils by China.

China now accounts for the world’s highest steel consumption which is in excess of 120 million metric tons per year. Since its production capacity has not kept up with its demand, it has to import about 20 million metric tons per year and these are mainly in finished products including hot and cold coils, stainless steel and coated products, Albano explained.