Thailand’s steel sector is showing signs of slowing down in line with the country’s weakening economy, with exports, production and domestic consumption all posting declines in latest data.
The country’s production of finished steel fell down 18.7% year on year over January-September to 5.74 million mt, Iron and Steel Institute of Thailand data showed.
Exports of finished steel fell 15.3% over the same period to 1.11 million mt, the institute’s data showed.
Exports comprise around two-thirds of Thailand’s gross domestic product, and in its latest data for the third quarter, the National Economic and Social Development Council said it saw drops in major products such as “refined fuels, passenger cars and pick-up trucks, chemicals and petrochemicals.”
Thailand’s GDP rose 2.4% in Q3, edging up from 2.3% in Q2 — the lowest since Q3 2018 — council data showed, but prompting a downgrading of its full year 2019 forecast to 2.6% from 2.7%-3.2% earlier.
Amid this, Thailand’s consumption of finished steel fell 5.1% year on year to 14.01 million mt over January-September. Notably, consumption of long finished steel fell 9.5% over the same period to 5.22 million mt, which can be attributed to weakening demand for steel bar and structural steel used in construction.
The Thai construction sector grew 2.8% on year in Q3, slowing from 3.5% growth in Q2 and 4.6% in Q3 2018.
In line with the slowing economic growth, the Federation of Thai Industries or FTI has revised down its projection for the country’s vehicle production in 2019 to 2 million units from 2.15 million units earlier, citing both lower domestic sales and exports.
For vehicle exports, the FTI cut its full-year outlook to 1 million units from 1.1 million units.
“The US-China trade war is the main factor lowering the country’s exports, while overall economic sentiment pulled down GDP growth,” Mazda Sales Thailand president Chanchai Trakarnudomsuk said.
FTI data showed vehicle production fell 2% year on year over January-September to 1.57 million units, while exports fell 4.4% to 821,101 units.
Commenting on the slowdown, the Bank of Thailand’s monetary policy committee said in a Q4 outlook: “The Thai economy would face higher risks in the following period, especially external risks from trade tensions, the economic outlook of China and advanced economies that could affect domestic demand, as well as geopolitical risks.”
“In the short term, we are ready to use monetary policy if needed. We are ready to act if growth fails to meet our expectations,” the bank’s governor, Veerathai Santiprabhob,said November 23.