Steel consumption in Thailand dropped by 14.3% year-on-year to 2.54 million tonnes between January and February due to a surge in Covid-19 infections, a shortage of construction workers and weak business sentiment, says Tata Steel Thailand Plc (TSTH), a unit of India's largest steelmaker.
The Russia-Ukraine war is also feared to affect global steel prices, eventually dealing a further blow to the steel industry, said chief executive Rajiv Mangal.
Domestic steel consumption stood at 2.97 million tonnes in the same two-month period last year.
"The company remains positive about steel consumption in Thai and global markets, hoping the war will end soon," said Mr Mangal.
The economy is expected to improve in the second half of 2022, driven partly by gradual recovery of the tourism industry, but factors like higher inflation caused by the war and supply chain disruptions as a result of measures against Covid-19 in China must be kept under close watch as they may impact conversion costs and demand higher working capital.
So far steel prices have increased, which slow demand for steel.
Steel prices in Thailand are expected to continue to rise, especially following the impact of the Russia-Ukraine war on prices of raw materials.
"Between April and May, domestic steel prices are expected to increase, but it's difficult to say how much they will increase, which will be determined mainly by the war situation," said Mr Mangal.
TSTH expects steel consumption in Thailand to stand at 18.5-18.6 million tonnes this year. The numbers are lower than the projection given by the Iron and Steel Institute of Thailand under the Ministry of Industry that earlier predicted consumption will grow by 3-4% to 19.5 million tonnes in 2022.
During the company's 2022 fiscal year, which ended in March, TSTH saw its sales increase to 1.33 million tonnes, up from 1.30 million tonnes in the previous fiscal year.
In the last quarter (January to March of its 2022 fiscal year), the company earned 32.59 billion baht, compared with 22.01 billion baht in the previous fiscal year.
"We increased our steel exports and received a good response," said Mr Mangal.