Thai steelmakers are concerned that Vietnam is dumping steel wire rod on the Thai market, and they expect overall prices in Southeast Asia to fall as a result.
Vietnam is a major exporter of steel wire rod in the region, while Thailand is the main buyer.
"We forecast that Vietnam will continue to increase its export volume for this product every single month," said Wanlert Kanwiwat, chief operating officer of Tata Steel Thailand. "Vietnam exports roughly 5,000 tonnes of steel wire rod per month to Thailand, and the supply is expected to increase in developing countries that are accelerating construction of infrastructure projects."
Mr Wanlert said Thailand's plans for many megaprojects should lift demand for steel products locally.
Vietnam can benefit from the boom because it has lower operating costs and sells steel products at cheaper prices than local producers.
The Vietnam steelmaker recently started operations under a joint venture with Taiwan's Formosa Plastics Group and Japan's JFE Holdings. The plant is located in Ha Tinh province, in the northern part of central Vietnam.
This is the first phase of the steel furnace plant, which has a capacity of 3.5 million tonnes. The second phase will double capacity to 7 million tonnes a year.
Mr Wanlert said Vietnamese steel producers are likely to conduct market research across the region and export steel wire rod to many countries.
"Thai steelmakers are monitoring Vietnam's steel exports and keeping apprised of new information from the Thai government because local steel producers are afraid of the impact from this situation," he said. "Meanwhile, state agencies are trying to solve the problem of imported Chinese steel in the region."
Chaichalerm Bunyanuwat, Tata's vice-president for marketing and sales, said Tata produces steel wire rod at a capacity of 400,000 tonnes a year, or roughly 5,000 tonnes a month.
"Domestic steel producers can serve demand in the country and can increase capacity to meet market demand," Mr Chaichalerm said.
Moreover, steel wire rod producers are in talks with the Commerce Ministry to stay updated on measures to resolve Chinese imports and submit an inquiry letter concerning Vietnamese steel.
"Vietnam started exporting steel wire rod to Thailand eight months ago," Mr Chaichalerm said. "Even though volume is still limited, steelmakers in Thailand are worried because Vietnam offers cheaper prices."
Thailand's steel wire rod imports stand at roughly 1 million tonnes a year. China is the largest exporter at 600,000-720,000 tonnes, followed by Japan and South Korea.
The global price for steel wire rod stands at US$590-620 a tonne.
Steel wire rod is used for nuts, screws, bolts, rivets, pins, anchors, studs and sleeves, mostly in machinery, automotive and electronics.