The Department of Trade and Industry has initiated a preliminary investigation on imported cement from Vietnam after data showed “dumping” of cement prices to the Philippines is causing material injury to the domestic industry. The move is seen to cause a double whammy effect on Vietnam’s cement export to the country, which is currently being slapped with a permanent safeguard duty.
In a notice, DTI Secretary Ramon M. Lopez said the probe stemmed from “properly documented applications” from local cement manufacturers — Cemex Philippines, Holcim Philippines Inc., and Republic Cement Builders and Building Materials Inc.
The country’s three largest foreign-owned cement producers, which submitted individual documents in September and October 2020, alleged that cement products are being imported from Vietnam at dumped prices which caused “material injury” to the local industry resulting in lower profitability as revenues continue to decline. With declining prices and declining profit margins, the cement firms said the local industry reduced its sales to price-sensitive customers as it was unable to match the unsustainably low prices offered by importers.
The products covered in the probe are cement classified under AHTN Codes 2523.2990 and 2523.9000. The period of investigation (POI) for dumping is from July 2019 to June 2020, while the POI for injury is from 2017 to June 2020.
Based on the data, the DTI found that since 2019, despite the safeguard duty on imported cement, the volume of dumped imports to the Philippines from Vietnam accounted for 31 percent in 2019 (July to Dec) and 62 percent in 2020 (Jan-June).
A comparison between the export price and normal value of cement from Vietnam for July to December 2019 indicated a dumping margin ranging from $1.75/MT to $5.36/MT or 3.49 percent to 10.66 percent.
For January to June 2020, DTI said that dumping margins ranged from $1.66/MT to $6.54/MT or 3.31 percent to 14.46 percent. Another factor that contributed to the material injury suffered by the local industry is price undercutting which was determined at 23 percent in 2019 and 24 percent in 2020 (Jan-June), DTI said.
Price undercutting was computed based on the difference between the weighted average landed cost per MT of the imported product versus the ex-work price per MT of locally produced cement. Price depression was also recorded during the POI.
The DTI further said that the domestic producer was not able to take advantage of the growth in demand during the POI. Based on its findings, market share of domestic product decreased during the POI from 85 percent in 2017 to 78 percent in 2019, as imports displaced share of domestic industry.
“The industry suffered loss of market share, declining domestic sales, production, utilization rate, reduction in employment, increased cost of production and inventory,” the DTI said.
On the basis of the information and documents submitted by the cement industry, DTI said said “There are indications that cement from Vietnam is being dumped in the Philippines and, as a consequence thereof, the domestic cement industry suffered injury in terms of actual decline in market share, domestic sales, production, capacity utilization, employment, and profits.”
“DTI reviewed the evidence adduced in the applications and has determined the existence of sufficient evidence to justify the initiation of an investigation,” said Lopez in the notice posted in the website on April 20, 2021.
Section 3(a) of RA 8752 or the Philippine Anti-Dumping Act of 1999 provides that it is the policy of the State to protect domestic enterprises against unfair foreign competition and trade practices.
Should an anti-dumping duty is slapped on Vietnam’s cement imports, this would be its second blow as the ASEAN country is among several countries where cement imports are currently imposed a safeguard duty of P9.80 per 40-kilogram bag because of surges in exports had caused serious injury to the Philippine cement manufacturing industry?
An anti-dumping duty is determined on the basis of the price difference between the domestic selling price versus the export price of cement of the exporting country (Vietnam). This means the duty is based on the weighted average price of each exporter versus the domestic price in Vietnam. At present, there are 90 cement Philippine importers and 51 Vietnam exporters.
The order signed by Lopez on April 30 set the conduct of the preliminary investigation after the notice publication in two newspapers of general circulation and individual notices have been sent to all interested parties including the country member concerned.
The DTI has encouraged interested parties to submit their comments, evidences, and information or reply to the questionnaire to dispute the allegations contained in the applications to the Bureau of Import Services of the DTI.