FTI projects local steel sales uptick
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FTI projects local steel sales uptick

Steel is lined up at a manufacturing plant of Kobelco Millcon Steel in Rayong province.
Steel is lined up at a manufacturing plant of Kobelco Millcon Steel in Rayong province.

Domestic demand in the steel market is expected to grow 3-4% this year to 18.9 million tonnes thanks to a boost from the construction and automotive sectors, says the Iron and Steel Industry Club under the Federation of Thai Industries (FTI).

FTI expects the automotive industry will recover after exports slumped in 2019 because of a strong baht, while the construction sector will benefit from government infrastructure projects and budget disbursement eventually.

Korakod Padungjitt, secretary-general of the club, said the automotive sector, which includes agricultural machinery, requires about 40% or 7.6 million tonnes of total production capacity from the nation's premium and commodity steel segment.

"Last year, the automotive sector was forecast to bottom out, but sales are expected to pick up again in 2020," he said.

The packaging sector has demand of 700,000-800,000 tonnes of steel each year, a figure Mr Korakod said should grow this year.

The construction sector demands 10 million tonnes of steel per year, and the FTI expects this volume will increase because of infrastructure projects in the Eastern Economic Corridor (EEC).

"In 2020 the local market should improve after tallying weak capacity the past few years," he said.

The club called on the government to support and promote the industry and businesses in Thailand using local steel content for domestic projects.

"The government's EEC projects will contribute to steel demand in the country, so the government should support local steel makers," said Mr Korakod.

The automotive industry is the only sector that uses locally made steel exclusively.

Last year, many factors negatively impacted the Thai steel industry, including the government's delays in infrastructure investments and budget disbursements, as well as a lack of confidence in the construction sector to invest in new projects.

As a result of the trade war between China and the US, Vietnam and China dumped wire rod steel into the Thai market because of the US's 25% global tariffs on steel and 10% tariffs on aluminium.

"Vietnam and China cannot export steel products to the US and Europe, so both countries continued increasing steel export volume to Asean and the Thai market," he said.

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