The Grey Chronicles

2008.August.15

Philippine Steel Trade


In 1986, CB Circular 1005 liberalized iron and steel imports, subject to the required tariffs. Executive Order 470, known as the Tariff Reform Program, rationalized the structure from 24 August 1991 to 01 July 1995 (see Appendix S: Steel Industry Tariff Schedule, 1991-2000).


IISI, NSC, NSO)

Figure 23: Philippines Steel Trade vs. NSC Production, 1991-2004 (Data: IISI, NSC, NSO)


Figure 23: Philippines Steel Trade vs. NSC Production, 1991-2004
(Data: IISI, NSC, NSO)

Figure 23 shows that prior to the closure of NSC, the Philippine steel imports shadow that of NSC’s. NSC was the biggest Philippine importer of iron and steel raw materials#151;steel& slabs, hot-rolled coils, including tinplates. Refer to Appendix O: Philippine Steel Scenario in 1995. Imported steel abruptly increased without NSC, then hovered at 3,000 metric-tons-per-year level.

Paltry steel exports, which began when NSC exported the first ever steel products to United States and Europe in 1976 (NSC News, November 1976), remained small until the surge in 2002, brought by the lowering of export tariffs.

Table 12: Philippine Steel Imports, metric tons, 1991-2004

Philippine Steel Imports, metric tons, 1991-2004

Table 12: Philippine Steel Imports, metric tons, 1991-2004

Table 12 above shows the volume of Philippine steel imports. This table was used to generate Figure 24 below.

Between 1991 and 1999, NSC was the sole importer of slabs in the country. Philippine slab imports generally mimic the movement of NSC’s production, as shown in Figure 24 below. Until 1998, hot-rolled coil imports consistently about 200,000 metric tons per year dramatically rose to as much as 600,000 mtpy in 1999 and fluctuated within the 500,000 mtpy thereafter.


IISI, SEAISI, NSC)

Figure 24: Philippines Steel Imports per Type, 1991-2004 (Source: IISI, SEAISI, NSC)


Figure 24: Philippines Steel Imports per Type, 1991-2004
(Source: IISI, SEAISI, NSC)

For twenty years, NSC enjoyed considerable but dominant role in the domestic market. Before NSC’s privatization, it was entitled to a lot of incentives under Presidential Decree 1789 and the Iron & Steel Industry Act, such as: partial Value-Added Tax exemption—20% up to March 1994 and 10% from April 1994 to March 1997 for domestic sales and 100% for its export sales. Furthermore, the Act granted 100% tax credits for the purchase of domestic capital equipment and parts; 100% import tax and duty-free importation of capital equipment and parts for its upgrading and expansion program; and accelerated depreciation for the first ten years from the start of commercial operations of its expanded mills (R.A. 7103).


Notes:

NSC News (1976), NSC Exports Products, NSC News, Vol I: 1. Iligan City: NSC, 30 November 1976, p. 1. back to text

Congress of the Philippines (1991), Republic Act 7103, Iron and Steel Industry Act, Manila: Congress of the Philippines, 1991. back to text

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