The Grey Chronicles


Red Hot Steels

The following would have been part of my master’s thesis, but it was excised because my thesis adviser was adamant on keeping the paper to a certain length. Although a shorter version was included in the thesis Introduction, this post explains why dumping suits filed by NSC before the Tariff Commission were sacked.

For Hot-Rolled Coils [HRC] from Russia, (TC, 2000) dismissed for lack of merit.

“ Dumping, per se, of HRC from Russia during the POI did not cause material injury to the domestic industry but a host of factors other than dumping, i.e., competition from normal imports, transfer of HRC production for its own cold mill (captive production), market contraction, high cost to produce, foreign exchange losses, high interest on its loan obligations and difficulty in opening Letter of Credit (LC) for its raw materials led to the overall impairment in the financial position of the company.
Normal HRC imports posed stiff competition to the domestic industry as evidenced by their market performance from 1996 to 1998. The market share of HRC from Russia declined from 43% in 1997 to 30% in 1998. Despite the market slump in 1998, however imports from countries other than Russia managed to capture a 46% share of the Philippine market against dumped imports at 18%. Taiwan, Korea and Japan’s share of total imports is at 18%, 16% and 14%, respectively. Under EO 465 which took effect on 22 January 1998, the tariff duty on HRC was lowered from 10% to 7%. Lower tariffs on HRC reduced its landed cost. To maintain parity or competitiveness, NSC has to adjust its prices accordingly.
The bulk of HRC production was transferred to its cold mill for further processing to cold-rolled steel coils (CRC). The competition from imported CRC, coupled by the contracting CRC market adversely affected the operations of its hot mill. NSC’s cold mill production declined by 37% from P408,000 in 1997 to P259,000 in 1998.
With the Asian financial crisis in mid-1997, the peso devaluation commenced. All countries in Asia had to brace from the economic crisis that resulted to a drastic reduction in steel consumption. Philippine steel market was no exception from that regional market contraction. The Philippine market for HRC contracted by 14% from 1996 to 1997 and by 36% from 1997 to 1998.
The cost to produce HRC was relatively higher than its imported counterpart because NSC had to import its slab requirement.
The slow-down in the Philippine economy had significantly affected the company in terms of higher financing costs and reduced sales and production volume. NSC’s total operation in 1998 incurred its biggest deficit prior to the shutdown of its operations in November 1999. In 1996, NSC incurred a loss of P2.032 billion on its operation (EBIT) due to revaluation of assets as required by the incoming investor Hottick, resulting to a negative return on sales, assets and stockholder’s equity. In 1997 EBIT improved to P780 million or an increase of 62% compared to previous years. However, in 1998 NSC incurred a loss of P1.79 billion on its operation (EBIT). It may be noted that 1998 net sales of P8.58 billion is 28.74% lower than in 1997 of P12.04 billion.
As of 31 December 1997, the company had total foreign currency losses of P2.5 billion which went down to P154.9 million in 1998. Though the 1998 figure is much lower, the high cost of money for the servicing of NSC’s dollar denominated loans as a result of the peso devaluation had major adverse impact on the company’s financial position.”

For Cold-Rolled Coils [CRC] from Taiwan, (TC, 2001) dismissed for lack of merit.

“NSC suffered injury as evidenced by declining market share arising from low levels of production and sales, and resulting in poor financial performance. The problem basically stemmed from high manufacturing cost due to inefficient production technology and vulnerability to fluctuations in the cost of imported slabs.
The financial crisis exacerbated the company’s financial condition. The crisis brought more intensive competition in the local market because of the global steel market contraction. Countries with excess capacities were exporting CRCs to the Philippines at low prices. Thus, NSC was experiencing contracting market share because of the pressure brought about by the crisis, on one hand, and the pressure of limited funds to support operations, on the other.
The market contraction not only affected NSC’s share but that of dumped imports as well. During the POI, we see evidence that NSC was losing market share to other imports rather than to dumped imports.
The currency depreciation that accompanied the crisis put further pressure on the company. The peso cost of raw materials increased, but more significantly, the peso cost of debt servicing surged.
The magnitude of injury suffered by the company cannot be attributed to dumping from Taiwan. NSC’s inability to support operations because of its limited ability to generate funds internally compromised the viability of the company. It severely lacked funds to bring operations to a profitable level, and to service its mounting debt. Thus, it is hardly surprising that the debt restructuring effort undertaken in 1998 did little to improve the financial position of NSC and that the company finally shutdown its operations in November 1999.”

For Tinplates (ETP) from South Korea, (TC, 1999) dismissed:

“Price differences exist between the Formal values and export prices of ETP imported from Dongbu and Posteel of South Korea, indicating dumping. However, material injury suffered by NSC was not caused by dumping. The company suffered injury because of loss in market share arising from a decline in purchases as local can manufacturers had excess inventory, and shift in demand from ETP in sheets to ETP in coils and tin tree steel (TFS). This resulted in loss in sales, decline in production and capacity utilization, increase in inventories, and decrease in employment. Simultaneous with loss in sales, the increase in cost to produce and sell, arising partly from the company’s decision to stock-up on high cost raw materials, led to net loss, and negative return on profits and assets. Moreover, changes in technology as well as the company’s import parity pricing policy adversely affected sales and profits.
The Philippine market for ETP contracted by 17.19% in 1996 because of the unusual high ending inventory level of ETP accumulated in 1995, as well as a shift in demand from ETP in sheets to ETP in coils and to tin tree steel (TFS). The contraction in market size primarily affected dumped imports, whose share decreased to 4.50%. Other imports retained market dominance with 57.89% share. NSC’s share aggregated to 37.61%. Thus, the domestic industry faced stiff competition from normal imports in 1995 and 1996, while competition from dumped imports diminished over the same period. (TC Report pp.33-35)
Technology advances dictated the shift from ETP in sheets to ETP in coils and to TFS for the manufacture of cans, crowns and caps. Further, industry shifted from ETP to the use of plastics, aluminum, paper, or a combination of all three, in the manufacture of packages. (TC Report p. 39)
NSC’s import parity pricing scheme was implemented at the cost of profits, especially in 1996 when world prices plunged but the company’s production cost increased. The lowering of duties from 15% in 1995 to 10% in 1996 exacerbated this. The landed cost of ETP was lower resulting in NSC having to accept small margins on its sales. (TC Report p. 40)
In 1995, NSC decided to stack up on TMBP, despite its high price, anticipating that it can recover the cost as world price of ETP was increasing. Unfortunately, the price of ETP plunged in 1996, adversely affecting company profits. (TC Report p. 40)”

All these three cases, excerpted here as definitive examples, concluded that there was a market contraction with high inventory or loss of market share, high manufacturing cost, as well as rising material costs, foreign exchange losses, and high interest. It does not negate, however, the effect of the Asian financial crises or competition from normal imports. Moreover, the import parity pricing scheme of NSC might have also played some role on its diminishing market share.

I should have included a financial or economic analysis of NSC in my thesis, but the proposal panel advisers believed that my thesis might become too lengthy and to difficult for me to finish. Also, they pointed out that I was majoring in Production Management and not in Financial Management or Economics. I’m still wondering, even now, whether I should have majored in Finance or take a course in Economics and make another thesis about it.


Tariff Commission (TC, 2000). Anti-Dumping Inv. No. 99-02: “Report on Findings on the Dumping Protest against the Importation of Hot-Rolled Steel Coils/Sheets from Russia,” Manila: Tariff Commission, 30 Aug 2000. back to text

Tariff Commission (TC, 2001). Anti-Dumping Investigation No. 00-02: “Report on Findings on the Anti-Dumping Protest against the Importation of Cold Rolled Coils/Sheets from Taiwan.” Manila: Tariff Commission, 24 April 2001. back to text

Tariff Commission (TC, 1999). Anti-Dumping Case No. 1-2000: “The Matter of Protest against the Importation of Electrolytic Tinplates (ETP) from South Korea,” Manila: Tariff Commission, 18 October 1999. back to text

Disclaimer : The posts on this site are my own and doesn’t necessarily represent any organization’s positions, strategies or opinions.



  1. Dear Sir,

    We know your company through Internet.
    We need to buy hot rolles steel coil
    Standard: 08KB
    Thickness: 2.7-3 mm
    Width: 1200 mm
    Quantity: 500 MT
    Quality: prime/ secondary
    Destination: Ho Chi Minh port , Viet Nam
    Pls send me the list detail, photos, dimension, and CIF HoChiMinh Port price
    We hope to establish business relationship with your company.
    Waiting for your earlist reply
    Best regards,
    Ms Thuy

    Comment by Thuy Nguyen — 2009.June.9 @ 07:25 | Reply

    • This is a personal blog, thus I am not selling any steel products. But I have referred your request to the Marketing department.

      Comment by reyadel — 2009.June.10 @ 15:23 | Reply

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at

%d bloggers like this: