Steel demand to drop for a few months

Steel demand to drop for a few months

State projects to fuel recovery, says TSTH

Workers at a construction camp site in Bangkok's Phaya Thai district. Nutthawat Wicheanbut
Workers at a construction camp site in Bangkok's Phaya Thai district. Nutthawat Wicheanbut

The one-month shutdown of construction worker camps to contain the spread of Covid-19 is expected to decrease demand for steel in the construction sector by 30-40% as Tata Steel Thailand (TSTH) has already seen sales drop by 20-30% during the shutdown.

Domestic steel consumption will feel the impact in the next one to two months, according to TSTH, a business unit of India's largest steel maker.

"The pandemic is still a risk factor for businesses and the economy. We need to closely monitor how the outbreak will develop," said Rajiv Mangal, chief executive of TSTH.

The escalating Covid-19 situation had earlier caused the government to impose a shutdown on places where infections were found, including camps of construction workers in Bangkok and neighbouring provinces as well as in the four southernmost provinces of Pattani, Yala, Songkhla and Narathiwat.

The shutdown period for the camps lasted from June 28 until July 27.

TSTH on Thursday reported its business performance in the first quarter of the company's 2022 fiscal year.

In the three-month period, running from April to June in 2021, sales volume increased by 16% year-on-year to 346,000 tonnes, driven by sales of domestic special wire rods and export.

However, the sales volume decreased by 6% from the preceding quarter.

Revenue from sales and related services in the first quarter increased by 72% year-on-year to 7.89 billion baht and by 11% from the preceding quarter.

"These were a result of world economic recovery as well as an increase of raw material prices," Mr Mangal said.

Despite the impact of the shutdown measures, TSTH is still optimistic about steel consumption in Thailand. It expects the market will continue to grow during the pandemic as the government is investing in infrastructure projects.

The projects include new road constructions and road repairs in many provinces and a Thai-Chinese high-speed railway project, Mr Mangal said.

The company earlier expected state infrastructure projects to cause steel consumption to grow up to 18-18.5 million tonnes in 2021.

China has also reduced its steel exports and this will benefit the Thai steel industry, which is expected to see domestic demand for steel increase.

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