Cement import surge continues

Vietnam remains the largest supplier of imported cement for the Philippine market, accounting for 93 percent of total imports during the January to June 2024 period.

According to the Department of Trade and Industry, from 2019 to the first half of this year, Vietnam accounted for the largest share of Philippine cement imports. From 79 percent market share in 2019 or around 4.23 million metric tons, its share increased to 91 percent in 2020, 93 percent in 2021, 95 percent in 2022, 98 percent in 2023 with a total volume of 6.88 million metric tons, and then 93 percent during the first half of this year.

Alarmed by rising cement imports, the DTI has just found prima facie evidence to motu proprio or on its own initiate and conduct a preliminary safeguards investigation to determine whether cement is being imported into the Philippines in increased quantities and is causing serious injury to the domestic industry. Such investigation can result in the DTI ordering the imposition of provisional safeguard duties on imported cement, which will be on top of regular import duties.

It said that there are indications that increased imports of cement are the substantial cause of serious injury to the domestic cement industry in terms of declining market share, production, sales, capacity utilization, profitability, price depression, suppression and undercutting.

The implementing rules of Republic Act 8800 or the Safeguard Measures Act provide that in the absence of a petition, the DTI Secretary may, motu proprio, initiate a preliminary safeguard investigation, if there is evidence that increased imports of the product under consideration are a substantial cause of, or are threatening to substantially cause, serious injury to the domestic industry.

In a report, the department said that it was able to record a sharp and significant surge in cement imports of combined Portland and blended cement for the period 2019 to June 2024 from several countries.

Data from the Bureau of Customs showed that from 5.33 million metric tons in 2019, cement imports increased to 5.88 million tons in 2020, 6.89 million in 2021, dropped slightly to 6.69 million in 2022, then went up again to 7.013 million in 2023. From January to June this year, cement imports already reached 3.68 million tons and is projected to reach 7.36 million by yearend.

China’s share of Philippine cement imports declined from 18 percent in 2019 to five percent in 2020 and now, less than one percent. Indonesia’s share was two percent in the first semester of 2024 while Japan accounted for five percent.

The department also revealed that relative to domestic production, the volume of imports of cement increased from 30 percent in 2019 to 35 percent in 2020, 36 percent in 2021, 41 percent in 2022, 47 percent in 2023, and then 51 percent as of June 2024 as domestic production declined.

The Philippine cement market declined by five percent in 2020 due to a nine percent drop in domestic industry sales and a 10 percent increase in imports. In 2022, the market shrank by 11 percent and further declined by six percent in 2023 as imports increased by five percent while domestic sales dropped by 10 percent.

During the same period, the share of domestic cement exhibited a declining trend, from 78 percent market share in 2019 to 68 percent in 2023 and 66 percent in January to June 2024, while the share of imported cement recorded an increasing trend.

The cement industry’s domestic sales volume also declined except in 2021. From a nine percent decline in 2020 due to the pandemic, sales volume increased by 12 percent in 2021 but again dropped by 14 percent in 2022 and by 10 percent in 2023. In the first half of 2024, sales volume was less than half of the 2023 level.

Meanwhile, sales value followed a similar trend, declining by 15 percent in 2020, increasing by 10 percent in 2021 before going down again by three percent in 2022 and further by 9 percent in 2023.

The domestic industry’s production volume declined by six percent in 2020, increased by 14 percent in 2021, dropped by 14 percent in 2022 and further by 10 percent in 2023. Production recorded its highest level in 2021 and the lowest in 2023, while the first half 2024 production is less than half compared to the 2023 level, the DTI said.

Operating profits of the local cement industry also suffered, declining by 11 percent in 2020, increasing by 12 percent in 2021, significantly declining by 69 percent in 2022 and dropping further by 137 percent in 2023 to record its first operating loss.

Increased imports also took their toll on employment in the local cement industry. Total employment in 2020 went down by 22 percent, increased by seven percent in 2021, declined by four percent in 2022 and six percent in 2023 and dropped by eight percent during the first half of 2024.

The DTI further observed significant price undercutting which is the extent at which imported cement is consistently sold at a price below the domestic selling price of the like product at a rate of 24 percent in 2023 and 12 percent in 2024. This has forced domestic producers to decrease their prices to compete with imported cement.

It concluded that serious injury to the domestic industry was caused by increased imports.

A number of Vietnamese suppliers have been found to be selling imported cement here at dumped prices, meaning they are being sold here at a price lower than their normal value, which is why anti-dumping duties were imposed for five years beginning last year on certain cement imports from Vietnam.

Despite this, the deluge of cheap cement imports mostly from Vietnam continues, threatening the future if not the very existence of the Philippine cement industry.

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