The Federation of Thai Industries (FTI) expects the US decision to impose anti-dumping duties (AD) on car tyres exported from Thailand to seriously affect Thai industries, including the automotive and agricultural sectors, as Thailand may end up missing export opportunities in the global market, says FTI vice-chairman Kriangkrai Tiannukul.
The FTI is concerned about manufacturers' loss of competitiveness in the global market as the pandemic is crippling businesses in many countries.
The AD, which is set at 13.25% to 22.21%, is believed to stem from the trade war between the US and China.
"Many Chinese tyre companies are using Thailand as their new production base, following the trade dispute," he said.
"The US is watching this and trying to use trade barriers against Chinese products. This is a political conflict."
The FTI said Thailand has 7-8 tyre factories, mostly located in the Eastern Economic Corridor. Five factories moved from China to Thailand.
It expects the AD will also affect raw material production for tyres, notably rubber latex.
Thailand is one of three major countries along with Malaysia and Indonesia that supply rubber to the global market.
The country exports more than 20 million tyres per year. The US is the largest market for Thailand's tyre industry.
Kasikorn Research Center (K- Research) projects car tyre exports for passenger cars and small pickups to decrease as a result of the AD duties.
Small pickups should face a greater impact because the tax will increase tyre prices compared with those set by competitors, especially Indonesia, Vietnam and Canada, said the think tank.
Between 18.5 and 19.2 million tyres are projected to be exported to the US during the first half this year.
The numbers reflect 1-5% growth, compared with a 13.7% contraction last year.
The lower numbers were the result of the pandemic, causing the US to import fewer tyres, the centre said.
K-Research is optimistic the impact of the duty will be temporary. Manufacturers in Thailand may be cleared of the tyre dumping allegation once the investigation is finished in the middle of this year.
Some companies may face a lower AD rate than the one imposed during the probe, said the research house.
In the long term, the centre suggested tyre manufacturers find ways to reduce costs by investing in automation and robotics, as the US and other countries may adopt similar trade barriers to protect their domestic businesses.
"This will allow manufacturers to set prices and compete with others in a sustainable manner," said the centre.
Three tyre manufacturers are listed on the Stock Exchange of Thailand: North East Rubber (NER), Inoue Rubber (Thailand) (IRC) and Hwa Fong Rubber (Thailand) (HFT).
NER shares closed at 4.64 baht, a daily gain of 0.14 baht, in trade worth 758 million baht.
Natapon Khamthakrue, vice-president at Yuanta Securities, said NER already started diversifying its customers to China last year in case the US decides to take action on Thai tyres.
IRC closed at 15.10 baht, a gain of 0.20 baht, in trade worth 400,000 baht, while HFT shares closed unchanged at 5.15 baht in trade worth 2.73 million baht.