TSTH expects sales volume to gain 5-10%

TSTH expects sales volume to gain 5-10%

Steel maker to boost exports, new markets

Construction labourers at work in Bangkok. Tata Steel Thailand plans to seek new markets as the Thai construction sector is quite bearish.
Construction labourers at work in Bangkok. Tata Steel Thailand plans to seek new markets as the Thai construction sector is quite bearish.

SET-listed Tata Steel Thailand Plc (TSTH), the local unit of India's largest steel maker, expects its sales volume this fiscal year starting in April to rise by 5-10% to 1.20-1.25 million tonnes thanks to the expansion of its overseas markets.

TSTH plans to increase its export volume and seek new markets as Thailand's construction sector is quite bearish.

Rajiv Mangal, president and chief executive, said the company has not received new purchase orders from local customers despite the construction plans of many government megaprojects expected to be implemented this year.

Many companies and contractors are concerned about an unstable political situation following the general election on March 24, so they are waiting to see what happens before acting, he said.

For the last fiscal year ending in March, TSTH posted sales of 1.15 million tonnes, down by 5.18% year-on-year, which it attributed to bearish local demand.

Export volume gained 20.4% for the period to 136,000 tonnes, making up 11.8% of total steel sales.

"We secured exports to many countries such as Malaysia, India, Laos, Indonesia and Cambodia," said Mr Mangal.

"We plan to export our steel products to Oceania in the near future."

TSTH operates plants in Chon Buri, Rayong and Saraburi, specialising in rebar and wire rods with a total capacity of 1.7 million tonnes.

The company plans to bolster its local retail distribution channel to expand its steel products and maintain overall sales amid uncertain demand.

He said TSTH will propose to its board in May a budget of 400 million baht for this fiscal year, up from 200 million last year, to upgrade its wire rod products to high-carbon steel in addition to managing operating costs.

In 2019, TSTH projects Thai steel demand will increase by 5-6% to 18 million tonnes from 17.4 million in 2018, but Mr Mangal said it depends on positive movement in the Thai economy.

"Both the global and domestic economies have myriad negative factors, so steel consumption in Thailand is estimated to expand at a slower pace of 2-3% because some construction projects may be postponed," he said.

Separately, TSTH updated the progress of its sale of a 67.9% stake to a new venture in Singapore, with Tata Steel Global Holdings Pte Ltd, TSTH's major shareholder, completing the transaction in May.

Following the sale, TSTH will issue a tender offer to other shareholders of the company on the stock market.

On Jan 28, TSTH reported Tata Steel Global Holdings entered into a share purchase agreement with Hebsteel Global Holding Pte, a wholly owned subsidiary of HBIS Group Co from Hebei, China.

Tata Steel Global Holdings will sell 5.72 billion shares, representing 67.9%, to a new joint venture company and hold an ownership via Hebsteel Global Holding and Tata Steel Global Holdings.

Hebsteel will hold a 70% stake, while Tata will own the rest.

The new company will buy all the shares of Singapore-based NatSteel Holdings Pte Ltd from Tata Steel Global Holdings as well.

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