17 Mar 2020 | 05:22 UTC — Singapore

Philippine rebar makers shut steelworks as president widens virus lockdown

Singapore — Major Philippine rebar producers Steel Asia and Pag-asa Steel Works shut re-rolling mills on Tuesday, after the country's president expanded an order for quarantine measures to cover the entire northern island of Luzon, company officials said.

Steel Asia, Philippine's top rebar maker by output, has two out of its five works located on Luzon. The Meycauayan Works in Central Luzon has a capacity of 450,000 mt/year, while its Calaca Works in Southern Luzon can produce 500,000 mt/year. Both works account for nearly half of the 2.3 million mt/year capacity that the company has across the archipelago.
"Yes, we have shut down until further notice in Luzon," a company source told S&P Global Platts. "Our warehouses have stocks and we'll be able to deliver immediately upon lifting of the transport restrictions."
The Meycauayan Works consumes billet as raw material, while the Calaca Works converts scrap into steel via an electric arc furnace, according to the company's website.
"The lockdown is less than one day old, so we can't speculate if it will have either short-term or lasting effects on demand," the source said. "Personally, I believe any effect will be temporary on the Philippine market."
Pag-asa Steel Works also shut its re-rolling mill in Pasig City Tuesday after lockdown measures prevented workers from commuting to work, as public transportation was brought to a standstill, a company official said.
Pag-asa's works comprises two re-rolling mills with a total capacity of 800,000 mt/year of rebar. It imports all of the billet it needs as raw material.
The company has contingency measures in place, and would seek to defer shipments of billet contracted earlier, the official told Platts.
"We have shipping contracts that are scheduled to be shipped and we're trying to ask them to defer," he said. "You might not have enough people working at the port and the customs; how are you going to release the cargo?"
Shipments due to arrive in Manila in mid-March would have been booked in February and comprised mainly material from Vietnam and Russia, with fewer cargoes of Japanese and Korean origin, according to spot market data compiled by Platts.
"Our vessel is due to arrive [in Manila] today," a Vietnamese trader said. "I'm not sure if they would be able to release it at the port at this point."
Filipino Metals, which can produce 80,000 mt/year of rebar, has also stopped operations as a result of the quarantine measures, a company source said.
"Major highways are closed. We cannot get our billet out from the ports at all now. So how can we continue producing," the source said. "Everything's in a standstill now. I doubt anyone will dare to buy import contracts this week because of all the bottlenecks [caused] by the lockdown. Guidelines are unclear too, and production is grinding to a halt. We're all trying to get more information too."
Guidelines released by the president's office have stated that the movement of cargoes within, to and from Luzon "shall be unhampered," although the formulation of specific policies on the people handling the cargoes was left in the hands of the Department of Transportation.
General quarantine measures went into effect Monday in Metropolitan Manila, where Pasig City is located, which President Rodrigo Duterte has now widened to the whole island of Luzon, the Philippine Daily Inquirer newspaper reported Tuesday.
A spokesman for the president did not say how long the enhanced quarantine measures would be in force, although the original order was effective until April 12, according to the report.
The Philippines has reported a total of 187 cases of COVID-19 infections as of March 17, an increase of 45 on the day.

Editor:

Barbara Lorenzo Caluag