THE Department of Trade and Industry (DTI) is imposing a provisional anti-dumping duty on certain Vietnam cement imports, which were found to be flooding the Philippine market—and hurting local players—due to their much lower price tag.
In its report on the preliminary investigation on the anti-dumping case against Vietnam cement imports, the trade department said the collection of duties in the form of a cash bond will cover the importations of Type-1 and Type-1P cement from Vietnam for four months beginning the issuance of relevant memorandum order.
“The imported Type 1 and Type 1P cement from Vietnam are being dumped; and by reason thereof, the dumped imports have caused material injury to the domestic cement industry,” the report said.
The DTI said in a statement issued last Sunday that 9 out of 16 Vietnamese Type-1 cement exporters and that 4 out of 12 Type-1P exporters have been dumping in the country.
The provisional measure, as such, is seen as a “necessary” move to protect the local sector moving forward.
For Type-1 cement, the provisional anti-dumping duty will range from $1.02 per metric ton (MT) to $10.53/MT, which is equivalent to 2.69 percent to 31.87 percent of the export price. The computed duties for Type 1P cement, meanwhile, are from $1.16 per MT to $12.79 per MT or 3.80 percent to 29.20 percent of the export price.
The provisional duties are estimated to hike the import cost of a 40-kilogram bag of cement by P2.01 to P25.08.
“We do not anticipate that these duties will result in an increase in the retail price of cement because its effect on landed cost is minimal,” Trade Secretary Ramon M. Lopez said. “Any price increases in imported cement will be discouraged by competition from domestic cement producers.”
Based on the electronic Bureau of Customs-Single Administrative Documents, the computed volume of dumped cement reached 4.26 million MT or 55 percent of the total Philippine imports from July 2019 to December 2020. This is much higher than the de minimis volume requirement of 3 percent.
Cement imports from Vietnam, in addition, comprise nearly 90 percent of the Philippines’s total import of said construction material, the DTI noted.
The local manufacturers, the report noted, were “not able to take advantage of the growth in demand for cement during the period of investigation (POI).”
Their market share, for one, decreased to 74 percent in 2020 from 85 percent in 2017. This, as the share of cement imports from Vietnam rose to 23 percent in 2020 from 18 percent the previous year.
Domestic sales volume and value increased in 2018 but declined by 5 percent and 6 percent, respectively, the year after. This, despite the imposition of safeguard duty on imported cements.
In 2019, the DTI imposed a 3-year safeguard measure on cement based on the findings of the Tariff Commission that imports on said products are seen to inflict serious injury to the domestic industry.
The amount of the safeguard placed for the first year is P250 per MT (or P10 per 40-kilogram bag), for the second year P225 per MT (P9 per bag) and for the third year P200 per MT (P8 per bag).
The investigation also observed the decline in production and capacity utilization of the local producers. With fewer sales volume, inventories also increased by 14 percent in 2019.
“Proliferation of dumped imports makes it difficult to raise capital as volatile market conditions result in uncertainty over future cash flows,” the DTI said. “The decline in Ebitda [earnings before interest, tax, depreciation and amortization] is impacting the company’s cash generation and the ability to generate an acceptable return on new investments.”
The investigation began after the DTI found enough grounds to look into the anti-dumping case filed by Cemex Philippines, Holcim Philippines Inc. and Republic Cement Builders and Building Materials Inc. in April.
The trade department noted that the POI for dumping is from July 2019 to June 2020. The POI for injury is from 2017 to June 2020.
The documents will be sent to the Tariff Commission for formal investigation to know if there is a need for definitive anti-dumping duties.
The Anti-Dumping Act of 1999 (Republic Act 8752) is in place to protect the local industry from being materially injured by the dumping of articles imported into the country. The trade department said that the Philippines, being a member of the World Trade Organization (WTO), adheres to rights and obligations identified in the WTO Agreement on anti-dumping practices.
The cement products under investigation are used for high strength concrete designs, including roads, dams, bridges, railway structures, mega-structures, high-rise buildings and condominiums.