The Iron and Steel Industry Club under the Federation of Thai Industries (FTI) is concerned cheap Chinese steel imports being dumped in the domestic market could jeopardise the local steel industry.
The club said the risk of oversupply and a slowdown in demand in China is causing Chinese steel producers to look for new markets for excess product.
Korakod Padungjitt, secretary-general of the club, said Thailand has become a target for Chinese steel exporters after the Covid-19 outbreak reduced domestic demand.
"China continues to dump cheap steel throughout the world since their government opened cities for business again," he said.
The Chinese government implemented measures to support exports such as additional subsidies by increasing the export tax rebate from 10% to 13% in March.
At the end of March, China's total inventory of steel amounted to 100 million tonnes, up from 49.3 million tonnes during the same period last year, a gain of 103%.
FTI said data from China's Customs Department showed steel exports in March to Thailand increased 53% year-on-year.
"In March zinc-coated steel imports from China increased by 153% year-on-year," Mr Korakod said.
The club expects domestic steel consumption to drop by 16 million tonnes this year due to the economic slowdown and downstream industries affecting capacity utilisation, which has been declining for some time.
Downstream industries such as automotive, home appliances and construction have continually slowed production and demand has dipped because of the outbreak.
Domestic steel producers have had to respond by cutting production, he said. Earlier this year, FTI forecast steel consumption in 2020 would increase 3-4% from last year, with consumption of 18.9 million tonnes.
"Thailand steel's utilisation capacity in March was 36%," said Mr Korakod. "However, the utilisation capacity has continued to fall from 43% in 2018 to 37% in 2019."
FTI is calling on the government to support the domestic steel industry with relief measures like low-interest loans for working capital with an interest rate of 1% and a credit limit of US$100 million.
Reducing production costs and electricity costs by 20% and measures to help entrepreneurs or companies affected by missing income could prevent layoffs, said the group.
The club is requesting the government reserve demand for steel for state construction projects in the Eastern Economic Corridor, as well as for electric trains in Bangkok and high-speed trains, in line with the local economy scheme.