Steel producers brace for demand dip
Steel manufacturers expect domestic steel consumption in 2020 will decrease to 15-16 million tonnes from 17-18 million tonnes last year, mainly because of lower economic activity because of the Covid-19 outbreak and the drought.
Pravit Horungruang, committee member of the Standard Long Steel Product Trade Association, said Thais have less money to spend on construction materials and equipment to repair their houses, or for new construction projects, while lower confidence in the economic outlook is making people more cautious about spending.
“Normally November to April is the high season for domestic steel sales, when folks like provincial farmers will spend their money on home repairs,” he said.
The association said the government’s infrastructure investment projects in the Eastern Economic Corridor (EEC) have been delayed, failing to help boost the private construction industry.
“Business operators hope the EEC scheme will stimulate growth in private investment, and the government should speed up budget disbursement for this fiscal year,” said Mr Pravit.
He said domestic steel also supplies the automotive industry, as it uses speciality steel and steel parts, which are higher quality products, but this year the domestic and global economic slowdown have dented the automotive industry.
The association has discussed the situation with domestic car manufacturers, who expect the automotive industry to shrink by as much as 30% this year due to weak purchasing power and a slowing economy.
“This is the hardest year for the domestic steel industry for some time,” said Mr Pravit.
According to the Thai Iron and Steel Industry Club under the Federation of Thai Industries, the automotive sector including the agriculture machinery in Thailand will use 40% or 7.6 million tonnes of total production capacity of premium and commodity steel for car manufacturing.
General Motors recently announced it is pulling out of Thailand and its factory in Rayong is being bought by Great Wall Motors Co, a Chinese automobile manufacturer.
The association is concerned Chinese automobiles will only use steel from China to supply its plant in Thailand, which intends to export much of its supply overseas.