Thailand’s steel sales drop 8.7% amid cheap Chinese imports

Thailand’s steel industry faced sluggish sales in the first five months of this year due to reduced spending on construction projects and the influx of cheap imports from China, according to Tata Steel (Thailand) Plc (TSTH), a subsidiary of India’s largest steelmaker.

Long steel product consumption fell by 8.7% year-on-year to 2.47 million tonnes as stated by Tarun Kuma Daga, president and chief executive of TSTH. Total steel consumption also decreased by 6.9% between January and May as he noted.

The company predicts that total steel consumption this year will remain steady at 16.3 million tonnes, mirroring the previous year’s figures. This outlook is primarily influenced by delays in the government’s budget allocation for fiscal 2024 and a slowdown in the construction sector.

The House of Representatives approved the budget spending allocation plan in March, aimed at bolstering the overall economy. This came after a prolonged delay in budget planning for fiscal 2024, which started on October 1 last year.

Daga anticipates an increase in government spending on construction and infrastructure projects in the third quarter of this year.

Despite the potential for improvement in the steel market, the company remains cautious due to the intense competition resulting from the influx of low-cost steel into ASEAN.

China’s steel exports to ASEAN countries, including Thailand, surged by 20.3% year-on-year during the first five months, reaching 45.5 million tonnes.

Chinese firms have been exporting steel directly to Thailand or rerouting it through neighbouring countries for re-export to Thailand, Daga explained.

From January to May, Thailand’s import of wire rod steel from China rose by 10% year-on-year to 566,000 tonnes.

In 2023, Thailand’s wire rod steel imports from China increased by 9% year-on-year, totalling 1.22 million tonnes.

TSTH is pivoting towards steel exports, particularly in emerging markets, to counteract the decline in domestic sales, said Daga.

“The steel export sector is still healthy and is expected to drive up our revenue.”

TSTH reported its operating results for the period between April and June, showing a 10% increase in revenue year-on-year, reaching 6.83 billion baht, with profits amounting to 93 million baht, reported Bangkok Post.