SteelAsia to invest $600M in doubling rebar capacity

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Manufacturing Corp., the largest steel bar or rebar manufacturer in the Philippines, will spend $600 million in four steel mills to double its current rebar production capacity and produce new steel products to meet strong domestic demand amid a booming construction industry.

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In a press briefing on Friday, SteelAsia president Benjamin Yao said they are investing $600 million for four steel manufacturing mills over the next three to five years.

These four mills include two rebar manufacturing facilities: a $150-million facility in Plaridel, Bulacan and a $100-million facility in Compostela, Cebu, another $150-million facility in Candelaria, Quezon for wire rod manufacture, and a $200-million mill in Cagayan de Oro for the production of steel section materials and plates.

As of end-2015, SteelAsia produced 1.7 million tons of rebars, generating P27 billion of revenue and P1.5 billion of net income after tax.

For this year, Yao and SteelAsia’s vice president for corporate development Rafael Hidalgo said that the company targets to increase production to 2.1 million tons of rebars and they are expecting P29 billion sales and P1.6 billion net income.

With the $600 million investment, Yao said the two rebar facilities in Plaridel and Compostela will add two million tons in capacity, bringing up capacity to 4.1 million tons of rebar in as early as two years.

As of end-2015, domestic demand for rebars stood at 4 million tons, 42 percent or 1.7 million tons of which was supplied and produced by SteelAsia.

“The expansion in Plaridel in Bulacan and Compostela in Cebu are meant to address the planned PPP projects [public private partnership projects]and also the backlog in housing. Also, it is addressing the ongoing construction [boom]in the tourism and the BPO sector,” Hidalgo said

“We already launched these projects — the Plaridel and Compostela — additional 2 million tons so, total to 4.1 million tons. We expect to finish both projects in two years’ time,” he added.

The Candelaria facility is expected to produce 600,000 tons of wire rods annually after its completion by 2019. The country currently imports 100 percent of all its wire rod needs from China, which is priced at $350 per ton.

Yao said SteelAsia will be the first company in the Philippines to produce wire rods to supply the 700,000 to 800,000 tons domestic demand at present. With the production of local wire rods, Hidalgo said the Philippines may save $10 to $20 per ton in freight costs.

The Cagayan de Oro facility will produce 600,000 tons of steel sections and 300,000 tons of plates in the next three to four years. Like wire rods, the country is still sourcing its steel section and plates requirements from China, which are used in the construction and manufacturing sectors.

“Now it’s something imported 100 percent. It’s a question of how come nobody is doing it,” Yao said.

To proceed with their four-year expansion plan, Yao said the company is “talking to a lot of strategic partners” that can help them, mostly in technological know-how on the new steel products.

Established 50 years ago, SteelAsia is the leading steel bar manufacturer in the Philippines. It produces rebars in its six mills across the country: two in Meycauayan, Bulacan; one in Calaca, Batangas; one in Carcar, Cebu; one in Bunawan, Davao; and another in Misamis Oriental.

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