According to the latest reports, Philippines’ largest steelmaker, SteelAsia Manufacturing Corp., has signed a memorandum of understanding (MOU) with China’s HBIS Group Limited for their first integrated iron and steel facility in Lemery, Batangas, Philippines.
Under the MOU, SteelAsia and HBIS will invest around USD1 billion for phase one of the Lemery plant. The MoU has been signed in pursuance of Philippine’s President Duterte vision to establish the first integrated iron and steel plant during his term, which will allow the country to produce basic iron and steel products, including flat products as these are currently not being produced in the country.
In Dec’18, HBIS Steel, SteelAsia and Huili Investment Fund Management Co. Ltd had also signed a MoU to build an integrated steel complex worth USD 4.4 billion in Mindanao island in Philippines.
The project will be located in Park 5 of PHIVIDEC Industrial Estate in Misamis Oriental covering 305 hectares of land. This will be in two phases, the first phase of which is expected to cost USD3 billion and create 6,000 new jobs. The second phase of the project will amount USD1.4 billion. The facility is expected to produce three million to five million metric tons of different steel products every year. At present, the feasibility study of the project is going on with no definite timeline of its completion.
The growing steel demand in Philippines
As per the industry reports, steel consumption in Philippines is likely to rise by 5-6% this year to a record 11.1 MnT as the country’s economy continues to grow. After rising just two percent in 2017 due to high prices, the nation’s steel consumption jumped about 9% last year to a record 10.5 MnT, driven by public and private construction projects.
The Philippines imports about 70% of its steel, with half of that coming from China. The country’s steel shipments to the Philippines last year accounted for 7% of its total steel exports at 66.9 MnT. About a third of China’s steel exports go to Southeast Asian nations, according to data from the US Department of Commerce.
With the escalating trade war between China and U.S., Chinese steel companies that are being affected by higher tariffs and looking out options to set up their manufacturing facilities elsewhere. Apart from this, HBIS which is based in China’s biggest steel province of Hebei, has been forced to look overseas for production growth as the Chinese government clamps down on new capacity in China for environmental reasons.
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