Print article
Malacañang has ordered the Department of Trade and Industry (DTI) to keep tabs on and prepare for the expected spike in global prices of iron ore and steel in the wake of a move by three major producers that could make prices change more frequently.
Price increases of these commodities expected from this development, in turn, would exert upward pressure on prices of construction materials.
So far, the rise in prices of select construction materials in Metro Manila that are monitored by the National Statistics Office picked up slightly by 1.4% year-on-year last February from 1.3% in January. But the February price hike was still slower than the 6.2% year-on-year rise recorded in the same month last year.
"[The President] has directed the DTI to look into the solutions, on how we resolve or counteract this," Dennis M. Arroyo, director for National Planning and Policy of the National Economic and Development Authority, told reporters in the Palace yesterday.
The directive, Mr. Arroyo said, was issued in response to Acting Socioeconomic Planning Secretary Augusto B. Santos' presentation at the Cabinet meeting yesterday which highlighted the expected hike in prices of iron ore and, consequently, of steel in the global market.
Mr. Arroyo noted that three of the world's largest iron ore miners – Australia-based BHP-Billiton, Brazil's Vale and the Rio Tinto Group, headquartered in UK and Australia – shifted last month to quarterly contract negotiations from annual, a move that could make prices of iron ore – a key ingredient in making steel – volatile.
"A hundred percent increase in iron ore prices will lead to a 30% increase in prices of steel. That will affect construction, both private and public, and therefore the real estate industry," he said.
Mr. Arroyo said the price hike could be felt later this month.
Al S. Tatel, a director of the Steel Angles, Shapes and Section Manufacturers Association of the Philippines, confirmed this outlook. "I do believe that world prices of steel will go up. At least, we know that, by this month, there will be an 86% increase [in prices of iron ore and other raw materials for steel]. We cannot do anything about that. It's under the control [of global producers.] I don't think prices will stabilize soon," Mr. Tatel said in a phone interview.
The country imported $83.57 million worth of iron ore and steel last January, official data show. Those commodities accounted for nearly 2% of total imports that month. While the January iron ore and steel import value was a 36.89% rise from the Dec. 2009 tally, it was still a 0.9% dip from the value a year ago.