February 26, 2001 

GRADE 40/60 PRICES STABLE
(Appreciating Peso Helps)

For the month of February prices have stabilized to around less 16% from the May 5, 2000 Price List with slightly better discounts for larger volumes. This was in contrast to the prices in January which was hovering around less 12% - less14%.

The main reason for the relatively lower prices is the appreciating peso which is now at P47.58 to the dollar compared to the P49 - P55 range in January prior to the change in administration.

This is also due to the tariff reduction for billets starting Januray 2001 by virtue of an Executive Order No. 334 issued by Pres. Estrada. The tariff reduction of billets from 5% duty to 3% duty was a welcome surprise. This translates to roughly a 0.5% savings for end users. Given that most steel mills have inventory on hand, the impact of the savings, albeit small, will be felt on the latter part of February or early March.

For the Grade 33 market, prices have been ranging from a high of less 12% - less 14% from the May 5, 2000 Price List depending on the volume involved (some extremely big distributors have been able to eke out additional 1% - 2% discount on cash prepaid basis). The uptick in prices is due to the shortage in raw materials since many delayed their purchase of billets because of the uncertainty and because of the declining billet prices. However, many were caught flat-footed by the relatively strong demand during the month of January most likely due to renewed optimism.

Billet prices, which have been tracing a downward trend last December to early January, have started to increase after the Chinese New Year last January 24. Traditionally, China and Taiwan-- two big buyers of billets in the global market-- take their positions after the Chinese New Year. Billet prices which went down toas low as USD169/mt have steadily increased to USD 177/mt coming from the Black Sea ports and USD183/mt to USD185/mt coming from the Far East ports. However, whether the billet price increase will be sustained remains to be seen. For the meantime, it remains firm.

Hanging over the head of local rolling mills is the impending filing of anti-surge safeguard measures against billet importers. This will be discussed further once the case is actually filed.