Thailand’s steel industry suffers as cheap imports from China flood market
Steel industry capacity utilisation in Thailand is on a downward spiral, with Tata Steel Thailand Plc (TSTH), a subsidiary of India’s largest steelmaker, attributing this trend to the sluggish economic recovery and the influx of inexpensive steel from China.
The postponement of the fiscal 2024 state budget planning as a consequence of the 2023 general elections and the protracted process of forming a coalition government has further resulted in a downturn in the country’s steel production.
With a call to action for the government, Tarun Kuma Daga, president and chief executive of TSTH, stated he is confident in the turnaround.
“We hope the government will speed up its budget distribution via infrastructure development projects to drive domestic steel demand.”
In the previous year, Thailand’s steel consumption witnessed a year-on-year decrease of 9.1%. Compounding this issue, Daga expressed concerns over the increasing imports from China, which are undermining the local steel market, reported Bangkok Post.
In the period from January to November last year, China exported 85.2 million tonnes of steel globally, marking a 35.4% year-on-year increase and hitting a seven-year peak. The surge of steel wire rods on the Thai market is partly responsible for causing a slump in capacity utilisation to 28% in 2023, a decline from 33% in 2022, as per TSTH’s records.
The company asserted its lack of concern regarding Russia’s interest in promoting its steel products in Thailand, stating that competition is a standard market phenomenon. However, it has appealed to the Thai government to ensure that imported steel is priced fairly without jeopardising domestic steel manufacturers.
During the third quarter of TSTH’s fiscal 2024, stretching from October to December last year, the company experienced a 12% year-on-year drop in sales to 253,000 tonnes. This was due to decreased domestic sales of steel wire rods and lower exports. The company’s revenue fell by 20.4% year-on-year to 5.4 billion baht (US$152,029,164) during this period, resulting in a loss of 96 million baht (US$2,702,740).
From April to December 2023, the firm’s sales declined by 11% year-on-year to 800,000 tonnes, largely as a result of flagging demand in Thailand and abroad, as well as the import of low-cost steel wire rods. Over this period, the company’s revenue fell by 24% year-on-year to 17.7 billion baht (US$498,317,817), leading to a loss of 104 billion baht (US$2,927,927,912).
