Tata expects sales growth on demand
SET-listed Tata Steel Thailand Plc (TSTH), a Thai unit of the Indian steel producer, expects its total sales volume in 2016 to grow 8%-10% to 1.22-1.25 million tonnes due to robust demand, says chief executive Rajiv Mangal.
The target is slightly above last year's sales volume of 1.12-1.13 million tonnes.
Mr Mangal said the company is still focused on the domestic market, where demand is expected to grow substantially as the government continues to invest in developing infrastructure, pushing steel consumption higher.
"Demand for Thai domestic steel started rising in April this year, when the government accelerated its huge infrastructure projects," he said.
The company also continues to increase exports, especially to India and the regional group of Cambodia, Laos, Myanmar and Vietnam.
Exports make up 10%-12% of the company's total sales. The export volume this year will be around 100,000 tonnes, said Mr Mangal.
"We see Vietnam as a major factor in helping to increase the company's export volume because its economy continues to grow as foreign direct investment comes in," he said.
The Vietnamese government has also invested a lot in infrastructure, which will push up demand for steel eventually, said Mr Mangal. Vietnamese steel demand is expected to grow by 10% this year to 23.5 million tonnes.
For the overall Thai steel market, Mr Mangal expects demand to grow by 4.8% this year to around 17.5 million tonnes, then rising 1.5% to 17.8 million tonnes in 2017.
He projects steel demand in Asean to grow by 8.3% this year to 70.5 million tonnes and then 6.3% to 75 million tonnes in 2017.
The World Steel Association forecasts global demand to grow by 0.5% in 2016 to 1,509 million tonnes.
"The Chinese government plans to cut its steel production by around 45 million tonnes this year, helping Thai steelmakers," said Mr Mangal.
TSTH reported its total revenue at 4.6 billion baht in the second quarter (July-September), up 10% from the same period last year. Sales volume tallied 314,000 tonnes, up 1% from last year.
Its domestic production capacity is 1.7 million tonnes a year.