Better prospects for the construction industry are expected to further push up the Construction Materials Price Index (CMI) in the second quarter, following its rise the first three months this year, driven by higher steel prices.
The index, which indicates price changes in 134 construction materials in 12 provinces, increased by 5.4% year-on-year to 110.2 points in March, said Trade Policy and Strategy Office chief Phusit Ratanakul Sereroengrit.
In the first quarter, CMI rose by 4.4% year-on-year as prices of steel and its products increased by 21.2 % from the same quarter last year.
Mr Phusit said global steel prices continued to increase due mainly to China's policy to restrict steel exports and reduce steel production under its plan to reduce the impact manufacturing may have on the environment.
Global demand for steel also increased due to gradual economic recovery.
"CMI in the second quarter is likely to keep increasing as prices of construction materials, especially steel, will rise," said Mr Phusit, referring to the domestic situation.
The trend corresponds with a better outlook for the construction business, reflected by more sales of steel and cement products as well as higher tax collection in the real estate development segment.
State infrastructure investments are also stimulating demand for construction materials.
Chaichalerm Bunyanuwat, Tata Steel Thailand's vice-president for marketing and sales, said on Monday he expects the Thai-Chinese high-speed train project to require around 600,000 tonnes of steel, including premium rebar steel.
The government's "Made-in-Thailand" campaign is also admired for helping boost steel demand, said Mr Phusit.
Under the campaign, state agencies are required to use at least 90% of locally-made steel in construction projects.
The government believes the campaign, which promotes the use of locally-made products in state projects, can create domestic economic value of 1.77 trillion baht.
Officials need to keep a close watch on domestic steel prices to make sure high prices will not have an unpleasant impact, said Mr Phusit.