Indian-owned Global Steel Philippines Inc. (GSPI) must show proof it has the financial muscle to sustain commercial operation if it wants the government to revoke the order removing the 7 percent tariff on imported steel products, the Department of Trade and Industry (DTI) said.

DTI undersecretary for consumer welfare Zenaida C. Maglaya said that DTI would in effect conduct a financial audit on GSPI, the country’s lone producer of HRC/CRC (hot rolled/cold rolled) coils, because a good fiscal position is necessary to enable a company to be in commercial operation.

“If they want the government to have this order revoked then they have to show evidence,” Maglaya said. GSPI is alleged to have suffered from financial difficulties such that it could not even pay its power bill. Maglaya said that payments to their suppliers are proof of GSPI’s financial stability.

Since Malacañang has already approved an executive order removing the 7 percent on HRC/CRC (hot rolled and cold rolled) coils effective immediately upon publication, Maglaya said that it is in the interest of GSPI to initiate that it is back in commercial operation already.

“GSPI should initiate and we will for them show proof that their operation is sustaining. The burden of proof is with them because it is they who will benefit from the revocation of the order,” Maglaya said.

Maglaya even said that in determining whether GSPI is really back in commercial operation or not, they may ask for a proof of continuous regular CRC volume of production of at least six months based on orders from its customers.

According to Maglaya, GSPI made representations to the DTI that they are in commercial operation but since there is not enough demand from the local market they are now exporting their CRC production.

Most of the local galvanizers, however, have not been patronizing GSPI largely due to alleged quality and delivery issues.

“It is largely a reliability issue,” Maglaya said.

The DTI has been facilitating meetings between the two groups, the Filipino Galvanizers Institute and the GSPI, but they have not really come to terms with each other.

With the zero tariff on HRC and CRC, more local flat products fabricators, particularly GI sheet makers, are expected to just import their raw materials.

But with the zero tariff, prices of flat steel products are expected to remain stable. The 7 percent waived tariff would be sufficient to absorb the supposed 3 to 5 percent increase in local steel prices based on the $850 per metric ton price of CRC and even at the projected $900 per MT price of CRC in June this year.