Steel prices seen going down by 5%

MANILA, Philippines - Prices of steel products are expected to go down by as much as five percent once the Executive Order (EO) which removed the tariff on imported hot rolled coil (HRC) and cold rolled coil (HRC) is lifted, the government said.

In an interview, Bureau of Trade Regulation and Consumer Protection (BTRCP) Executive Director Victorio Dimagiba said that EO 898 which was signed last June 22 will help reduce the price of steel products.

However, the EO is under review by the Department of Finance (DOF) because it was classified as a midnight EO.

“It may be revoked but we are hoping that it will not be withdrawn,” Dimagiba said. If ever the EO is revoked, Dimagiba said the price will not go up given the stable prices in the world market.

The EO is expected to be effective by July 15. DTI is expected to come out with a new suggested retail price (SRP) for steel products after July 15. “The price must go down by three percent to five percent,” Dimagiba said.

Earlier, Global Steel has admitted they have been having problems with their operations for years and the lifting of the seven percent tariff on steel has endangered their already precarious operations.

“Our existence is in danger,” Global Steel managing director Lalit K. Sehgal said. However, he stressed they have not recommended the closing of the Philippine operations to the head office.

Sehgal said they have power availability problems after failing to pay their electricity bills some years back. He said their debt is now being restructured because they are questioning the interest rates that were imposed to them.

When asked how they are able to produce HRC and CRC given their power problems, Sehgal said they are not operating regularly.

Sehgal said they are operating at a loss ever since the global financial crisis has reduced the demand for steel. He noted that the domestic demand is currently at 7,000 to 8,000 tons per month only. In order to break even or to not incur losses, Sehgal said they should sell 60,000 to 70,000 tons per month.