New line to further squeeze imports to the Philippines

Cement imports to the Philippines are expected to come under increased pressure after the start-up of Taiheiyo Cement Philippines Inc's (TCPI) PHP12.8bn (US$219.25) brownfield line last week. The plant modernisation is just one of several new capacity projects that have seen the country's cement capacity rise by 13Mta over the last five years to approximately 53Mta, according to the Cement Manufacturers Association (CEMAP). The aim is for domestic infrastructure projects to be supplied by local producers, encouraging local employment and safeguarding jobs in the Philippines' cement sector. 

"Taiheiyo’s new plant in San Fernando, Cebu, will bolster the Philippines' cement production by 3Mta, reducing our reliance on imports. This investment aligns perfectly with our government’s Build Better More Infrastructure Program,” stated Department of Trade and Industry (DTI) Secretary, Alfredo Pascual.

Support for local cement producers

The push for locally-produced cement has been further bolstered by the Tatak Pinoy Law, which aims to empower Philippine industries with finances and incentives for the manufacture of quality goods. The swift passing of the law authored by Senator Sonny Angara was the result of close collaboration between the Senate, House of Representatives and the President, which had listed it on the priority measure of his administration. A key provision of the Act is that Philippine Products will be given priority and preference in all government procurement activities for a period of 10 years.

The added protection of the Tatak Pinoy Law is expected to give cement producers and other local industries the confidence to invest and improve the quality of their products. The new San Fernando plant, for example, will cut CO₂ emissions by 10 per cent compared to older lines. The plant will now produce an additional 100,000 bags of cement per day and will raise the company's market share from seven to 10 per cent by 2025. TCPI has also invested PHP3.2bn in the Jetty and Marine Belt Conveyor and the PHP1.4bn San Fernando port area projects. Furthermore, the Luzon Distribution Terminal has been modernised with an investment of PHP3.7bn.

Ramping up pressure on imports

The increases in domestic capacity could finally result in a sharp fall in imports. Earlier, in February 2024, CEMAP called the DTI to help curb the influx of imported cement that had evaded proper inspection. CEMAP claimed that cement products in Western Visayas, Central Luzon and parts of Mindanao, appeared to have been directly sold from vessels, at ex-vessel price, possibly even before the necessary inspection and sampling. CEMAP argues that imported cement should be mandated to undergo both chemical and seven-day physical strength testing before distribution or use.

Vietnam is the largest source of cement and clinker imports for the Philippines' cement market, accounting for approximately 2Mt of cement sales in the 1Q24 or US$81.56m, reports the General Department of Customs.

A brighter future?

The International Monetary Fund (IMF) and the Asian Development Bank (ADB) forecast a six per cent growth in the Philippines’ GDP in 2024 and 6.2 per cent in 2025. The government also seeks to maintain infrastructure spending at the 5-6 per cent level with its BBM Infrastructure programme. The government-initiated Philippine Construction Industry Road Map also envisions PHP130trn of business will be generated between 2020-30 in the country.