Big steel or burro

The young administration of the motorbike-riding Duterte Harley seems to be warming up to the business sector.

Word in business has it that the new president sat down recently with executives of the country’s biggest steel bar maker, the 50-year-old firm named Steel Asia.

The company already invested more than P10 billion in the past seven years to build modern factories in Bulacan, Batangas, Cebu, Misamis Oriental and, of course, Davao City—the hometown of Duterte Harley.

Under construction are two more huge factories in Bulacan and Cebu, with investments in the two plants adding up to some P11 billion.

Companies like Steel Asia would have to build more factories for steel products, which would then buy the production of fully integrated steel mills, which could make steel from scratch—i.e. from iron ore.

Unfortunately, the viability of an integrated steel mill in this country has been elusive for so long, owing perhaps to the low market for steel products in the past.

Yet everybody knew all along that no country could ever hope to industrialize without an integrated steel industry.

And what did Duterte Harley say again in his first Sona about his dream of hastening our industrialization?

Anyway, in the audience with Duterte Harley, Steel Asia supposedly noted the invasion of cheap subsidized steel from China, with substandard quality, at that, sometimes undersized, and possibly even smuggled into the country.

Now the most popular steel product from China happens to be the so-called rebar, or reinforcing bar, used in construction to buttress concrete.
For some time now, the 12 surviving local rebar makers have been up in arms against such excessive importation.

Word went around in business that the Chinese company phonetically known as “Rizhao” recorded 1.4 million metric tons of shipment to the Philippines.

Surprise! There was no official record of a single ounce of importation from that Chinese steel company in the Bureau of Customs!

The locals insisted that the country did not have to import rebar, because with their total capacity of some 4.5 million metric tons a year, they could easily cover the demand of about four million metric tons a year.

But the thing is, well, the steel companies in China hardly played fair.

Reports abroad indicated that China has been hounded by its huge overcapacity in steel making of about 300 million metric tons a year.

The steel companies dumped the excess onto the world market to attract buyers with low prices, thanks to the subsidy from the Chinese government.
In fact, other countries already imposed punitive tariffs on steel from China, with even the European Union slapping the stiff 20-percent tariff.

Except the Philippines, of course!

News media also uncovered recently some controversies surrounding the shipment of some 5,000 metric tons of rebar from China.

While it was a relatively small batch, the Bureau of Customs red flagged it, fearing that it could only be a “test” shipment—you know, just the start of floods of rebar from China!

According to reports, two Chinese nationals that neither spoke nor understood a word of English came forward to claim the shipment, with the help of local groups that moved heaven and earth for its release by BOC.

But the issue centered on the ICC, the import commodity clearance, a BOC requirement to assure the quality of the imported item, issued by the Bureau of Product Standards, or BPS.

Guess who issued the ICC for the shipment! None other than the DTI office in Zambales that had absolutely nothing to do with BPS functions!
The supposedly fake ICC even had a footnote that said that the rebar could only be sold in the local market after testing by the BPS.

There—the BOC could release it, but the importers could not sell it, which was the only reason for the importation in the first place—was that it?
Still, word went around that, because of the strong connection of the syndicate, the release of the 5,000 metric tons of rehab from China would only be a matter of time.

Another 40,000 metric tons would be coming from China, at the same subsidized price, with the same suspicion for being substandard.
Do you really think that Duterte Harley would have to step into this mess with guns a-blazing?