Philippine steel use seen at record high

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construction worker steel bar

STEEL CONSUMPTION in the Philippines is likely to rise by 5-6% this year to a record 11.1 million tons as the country’s economy continues to grow, the head of an industry group told Reuters on Monday.

After rising just two percent in 2017 due to high prices, the nation’s steel consumption jumped about 9% last year to a record 10.5 million tons, driven by public and private construction projects, Roberto M. Cola, president of the Philippine Iron and Steel Institute, said in an interview.

The Philippines imports about 70% of its steel, with half of that coming from the world’s top producer and exporter China.

Domestic steel demand will be supported in the next few years by President Rodrigo R. Duterte’s “Build, Build, Build” infrastructure program, under which the country is set to build more roads, bridges, railways and airports and upgrade existing ones.

“(Steel demand) will track GDP growth,” said Mr. Cola, who is also vice-president at Steel Asia Manufacturing Corp., one of the Philippines’ top steelmakers.

The government is targeting 6-7% gross domestic product growth this year.

China’s steel shipments to the Philippines last year accounted for seven percent of its total steel exports at 66.9 million tons. About a third of China’s steel exports go to Southeast Asian nations, according to data from the US Department of Commerce.

Mr. Cola said the country’s heavy dependence on steel imports would drop significantly if the Philippines’ first integrated steel complex — a $4.4 billion project by China’s second-biggest steelmaker, HBIS Group, and three other parties including Steel Asia — begins production.

However, that project in the southern Philippines, with a planned capacity of 8 million tons per year, is undergoing feasibility studies, with no definite timeline yet for its completion, he said.

HBIS, based in China’s biggest steel province of Hebei, has been forced to look for overseas opportunities to boost production as the Chinese government seeks to reduce the country’s steelmaking overcapacity.

As its demand for steel has risen, the Philippines has seen an influx of induction furnaces which were banned in China but made their way to parts of Southeast Asia, hitting domestic steelmakers and fueling safety and environmental concerns.

“That is half of the market,” Mr. Cola said, referring to substandard steel products produced by such equipment in the Philippines. “I don’t know if the government is still monitoring them.” — Reuters