Thailand’s steel industry faces sluggish sales in first five months of the year

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

Consumption of long steel products fell by 8.7% year-on-year to 2.47 million tons reported Tarun Kuma Daga, president and chief executive of TSTH. Overall steel consumption also dropped by 6.9% during the period from January to May.

The company forecasts that total steel consumption in 2024 will remain flat at 16.3 million tons, mirroring the previous year's levels. This expectation is primarily due to delays in the government's budget allocation for fiscal year 2024 and a slowdown in the construction sector. The budget spending plan, which was intended to stimulate the economy, was approved by the House of Representatives in March after significant delays in budget planning for the fiscal year starting on October 1, 2023.

Mr. Daga anticipates an increase in government spending on construction and infrastructure projects in the third quarter of 2024. From January to May, China's steel exports to ASEAN countries, including Thailand, increased by 20.3% year-on-year, reaching 45.5 million tonnes. Chinese firms have been exporting steel directly to Thailand or initially to neighboring countries, from where the products are then reportedly re-exported to Thailand.

Specifically, Thailand's imports of wire rod steel from China rose by 10% year-on-year to 566,000 tonnes during the first five months of 2024. In 2023, Thailand's import of wire rod steel from China increased by 9% year-on-year, totaling 1.22 million tons

In response to the domestic sales decline, TSTH is increasingly focusing on exports, particularly targeting new and emerging markets. Mr. Daga noted that the steel export sector remains robust and is expected to drive revenue growth for the company.

For the April to June period of this year, TSTH reported a 10% increase in revenue year-on-year, reaching 6.83 billion baht (around USD 197 million), with profits totaling 93 million baht (around USD 2.7 million).