Posted on 21 Aug 2024
The Thai steel market has seen a serious downturn this year, due to imports of low-priced Chinese steel products and the expansion of Chinese capacity in the country.
The Federation of Thai Industries (FTI) has reported that over 12 million tonnes/year of steel capacity, financed by Chinese firms, is currently under development in Thailand, Kallanish notes.
However, local steel producers in Thailand have had to stop production due to the impact of Chinese steel product imports. FTI has therefore called on relevant departments to restrict the construction of China-backed steel mills because this will directly affect the operations of domestic manufacturers.
The significant new investments include a 5.6m t/y hot-rolled flat steel plant and a 2.28m t/y wire rod plant, both being established by Sinke Yuan (Xinkeyuan) Company in Pluak Daeng City, Rayong Province. Sinke Yuan's projects also include several additional facilities approved by Thailand's Board of Investment (BOI), such as a 2.03m t/y coated steel plate plant, a 1.7m t/y steel pipe plant, a 450,000 t/y cold-rolled flat steel plant, and a 30,000 t/y section steel plant.
Furthermore, China's Yongjin Metal Technology Group is also expanding its footprint in Thailand with plans to establish a 330,000 t/y stainless steel production capacity, which has received BOI approval.
The FTI has expressed concerns that these new capacities may surpass Thailand's existing domestic steel demand, potentially leading to oversupply that could further deteriorate market conditions. The Iron & Steel Institute of Thailand (ISIT) projects a modest increase in Thai finished steel consumption, with a 2.5% rise anticipated for 2024 to 16.7 million tonnes, and a further 2% increase to 17.1mt in 2025.
Currently, the steel industry's capacity utilisation in Thailand is at a historic low, dipping below 30%. Industry insiders attribute this decline not only to sluggish local demand but also to the impact of ultra-low-priced Chinese imports, which they believe constitute market dumping. In response, Thailand has heightened its standards for imported steel and is considering additional trade protection measures to shield the domestic industry from adverse effects (see Kallanish passim).
Source:Kallanish
