Falling demand for steel amid high inflation and weak purchasing power has led Tata Steel Thailand Plc (TSTH), a unit of India's largest steelmaker, to consider revising down its 2022 sales target.
From January to June this year, domestic steel consumption declined by 13% year-on-year to around 8.7 million tonnes, down from 10.1 million tonnes, according to TSTH.
Rajiv Mangal, chief executive of TSTH, said lower steel demand in the first six months posed a challenge to Thailand's steel consumption target for 2022.
"Earlier this year, we forecast domestic consumption would grow by 3-4% to around 19.5 million tonnes this year. Now it looks like the country will miss the target," he said.
The Iron and Steel Institute of Thailand, under the Ministry of Industry, earlier said it expected steel consumption to grow by 3-4% this year.
Now TSTH expects 18.5-18.6 million tonnes of steel to be consumed in Thailand in 2022.
TSTH is considering revising down its sales target, following current economic conditions. It also plans to increase steel exports by 13-15%, up from a target of 10%.
The company believes more imports of steel from China will only affect the domestic market for a short time. Chinese steel manufacturers are trying to export steel products to Thailand and Asean, following sluggish sales in their own country as a result of the economic impact of Beijing's zero-Covid policy that imposes lockdown measures to contain the spread of the virus.
TSTH recorded 1.33 million tonnes of steel sales in its fiscal 2022, which ran from April 2021 to March 2022, a slight increase from 1.3 million tonnes in fiscal 2021.
In the current fiscal 2023, which will end in March next year, TSTH believes sales volumes will be close to the previous year.
"We maintain our sales target as we want to see the steel situation in the next few months first," said Mr Mangal.
TSTH said its sales volumes in the first quarter of fiscal 2023, which ran from April to June this year, decreased by 11% year-on-year to 308,000 tonnes due to weak domestic demand.
The company's first-quarter revenue from steel sales, together with other related services, increased by 11% year-on-year to 8.72 billion baht.