Domestic steel consumption in Thailand is likely to stay weak for the next one to two months, reported local media citing Rajiv Mangal, chief executive, Tata Steel Thailand (TSTH). Amid increasing COVID cases, Thailand extended tighter containment measures in the capital and high-risk provinces until the end of August.
Tata Steel Thailand’s steel sales volume increased by 16pc from the prior year to 346,000mt in Q1 FY2022 (April-June), however, demand is likely to stay bearish amid a resurgence of COVID cases and related measures. During the lockdown, Tata Steel Thailand witnessed a dip in steel product sales by 20-30pc. It is expected that demand for steel used in the construction sector could be lowered by 30-40pc.
In Q1, steel sales were driven by domestic special wire rods and export demand. However, the sales volume decreased by 6pc from the prior quarter (Jan-March).
On Sunday, Thailand extended containment measures in Bangkok and other high-risk provinces in an effort to slow down the spread of the pandemic. These restrictions which started in July have weakened domestic steel demand and consumption is likely to stay weak for the next one to two months, noted Mangal. Earlier government had shutdowns camps of construction workers in Bangkok and several other provinces.
Tata Steel Thailand’s revenue from sales in Q1 increased by 72pc from the prior year to THB7.89bn ($239mn) and by 11pc from the Jan-March quarter. During the April-June quarter, global raw material prices remained elevated boosting steel prices.
Opportunities for steel industry
Steel consumption in Thailand is likely to be supported by the government’s push for infrastructure projects. The government is investing in new road constructions and road repairs in many provinces and a Thai Chinese high-speed railway project.
China has canceled export rebates on steel products in May, and effective Aug 1, removed rebates on some more products. Following this move, Chinese steel exports are likely to drop further. In absence of China imports, Thailand mills are optimistic about seizing export opportunities for billet, wire rods and HRC.