Among the firms aspiring to raise funds from an initial public offering, SteelAsia Manufacturing Corporation looks like a very good prospect for stock market investors.

Two major developments have emerged about SteelAsia: A P65-billion expansion program; and export of its products to Canada.

Steel Asia is positioning itself to supply 70 percent of the country’s steel needs, said company Chairman and Chief Executive Officer Benjamin Yao. While this may be a tall order, it is worth noting that SteelAsia has the potential to supply steel products with better quality compared to those imported or smuggled from China that allegedly have poor quality.

The Philippines currently imports 86 percent of its steel needs mostly from Vietnam. Meanwhile, SteelAsia only makes reinforcement bars (rebars), which are critical in building high-rise structures and various infrastructure like bridges, as these provide tensile strength and increase the load-bearing capacity of structures.

With its reputation of providing quality steel products, SteelAsia said it is investing P65 billion to build four new production facilities in Luzon and Mindanao that will create 3,000 direct jobs in the next three to four years.

The new facilities of the country’s largest steel firm will produce products not yet manufactured in the country, such as H-beams, I-beams, wire rods, sheet piles, and billets.

“It’s never too late. We will catch up in the next three years,” Yao said, emphasizing that the Philippines must establish its own steel industry and reduce its reliance on imported steel products.

SteelAsia senior vice president for business development Rafael Hidalgo said that the four new plants will be in Candelaria in Quezon Province and Davao, and two in Concepcion, Tarlac. The Candelaria plant will manufacture heavy sections like H-beams and I-beams with a rolling capacity of 750,000 metric tons (MT).

Meanwhile, the Davao Meltshop will be manufacturing 500,000 MT of billets, a semi-finished material used in steel production. Both factories are targeted for commissioning by 2026.

The two production lines in Concepcion will increase SteelAsia’s rebar output by another 1.2 million MT and will manufacture 500,000 MT of wire rod, with operations being eyed in 2027.

SteelAsia said earlier it was investing P18 billion for its Lemery, Batangas plant with 500,000 MT production capacity of medium section steel products, which is set for commissioning by end of next year.

The new plants coming online will increase SteelAsia’s current capacity of 3 million MT to nearly 6 million MT, adding about 2.95 million MT of production.

Its latest facility is the Compostela plant in Cebu with a production capacity of 1 million tons annually.

Yao said the Compostela plant is SteelAsia’s largest and most modern steelmaking facility, not only in the country but also in the region.

NEED TO LESSEN STEEL IMPORTS

Hidalgo said that increasing the capacity of SteelAsia will make the Philippines less dependent on imports.

“With this, we will have 70 percent self-sufficiency in steel. I think, we can say that we’ll have a steel industry already,” Hidalgo said.

“We have to import 66 percent of our good steel requirements or billets. The Philippines has zero production of sections as of today, zero production of wire rod and we import 800,000 tons of wire rod every year. We have zero production in plate, when the National Steel Corp. (NSC) closed down. Zero production of hot roll coil also, which NSC used to produce,” he said.

He cited that 92 percent of the country’s roofing demand is imported. Steel cables, pipes, gas cylinders, appliance body, and even the smaller steel products like springs as well as spoons and forks are imported.

“We are import dependent,” Hidalgo said, adding, however, that Yao believes it is not too late for the Philippines to establish its own steel industry.

SteelAsia Manufacturing Corp. also recently announced that it has made six shipments to Canada worth P1.5 billion since 2023 made up of 41,148 tons of high strength steel for the North American country’s subway system.

The shipment to Canda clearly demonstrates that SteelAsia can manufacture world-class product.

Yao said that SteelAsia’s partnership with Acciona for the Cebu-Cordova Link Expressway opened the opportunity for the company to export to the North American country.

“This is all because we supplied the bar for the Cordova Bridge, and the contractor was Acciona. And Acciona is also the contractor for the Vancouver, Canada, South Coast region,” he added.

As for its IPO, Yao said in February this year said that is still under consideration and forms part of the company’s future strategic plan.

“Right now, it’s (IPO) at the back of our mind. But we’re focused now on expansion first,” he said in a media interview that month.

(photo from SteelAsia website)