Posted on 25 May 2023
Steel smuggling into the Philippines continues to hurt the local industry, Kallanish learns. While the situation is a perennial one, the situation is worse when steel prices are high because then there is motivation to take such risk for higher profits, local participants said on the sidelines of the SEAISI 2023 conference in Manila this week.
The smuggling of steel products, mostly from China, can come in the form of the under-declaration of the true value of imports, importing steel without payment of the 12% VAT or technical smuggling when there is deliberate misdeclaration of the product.
A Manila trader says smuggling is taking place for all downstream steel products including angles, channels, wire, wire rod and nails. “It can be very convenient for the smaller steel products, when one can ship 1,000 tonnes or less of smuggled steel door-to-door,” a Manila trader says. "It is hurting producers and traders.”
“We are in regular dialogue with the Department of Trade and the Bureau of Customs about the issues relating to prices and clearance of such steel products,” Ronald Magsajo, Philippine Iron & Steel Institute (PISI) president, told Kallanish at the event. The Philippines faces more difficulties tracking imports because of its numerous islands and entry ports.
He has seen a case when cold rolled coil in container was declared as hot rolled coil to pass off as lesser-value cargo to under pay VAT. Smuggling can be detected when steel prices of finished steel products are abnormally low. In one case, a steel product was declared as $200/tonne, which is below scrap prices.
“Bulk cargoes such as billet are easier to monitor but it is harder to detect for containerised shipments,” Magsajo observed. “There could be 10-15% under-reporting of steel import volumes.” But he acknowledges it was hard to say because the smuggled steel is not visible.
Local producers are being hurt by the under-pricing of smuggled steel as they are unable to compete. “Smuggling makes it harder for legitimate traders and manufacturers to compete,” Magsajo noted. “There should be a level playing field where there is no price undercutting for legitimate businesses.”
Source:Kallanish
