Tata Steel Thailand Plc (TSTH), a unit of India's largest steelmaker, is maintaining its sales target of 1.2 million tonnes amid hopes for the smooth formation of a new government to inject budget into construction and infrastructure projects.
The target was set for the company's fiscal 2024, which runs from April 2023 to March 2024.
The company expects the budget allocation of the new government and tourism recovery will boost steel consumption, said Tarun Kuma Daga, president and chief executive of TSTH.
Thailand has seen more foreign tourist arrivals following its reopening. Beijing's decision to reopen its borders early this year also led to the arrival of more Chinese visitors.
But the country is still facing a high cost of living, which has weakened people's purchasing power.
"TSTH remains optimistic about the continual growth of the economy this year. We hope the new government can be established without too much delay," said Mr Daga.
New infrastructure development projects need to wait for approval from the new government, but ongoing construction of the Thai-Chinese high-speed rail system and roads can continue.
According to TSTH, steel sales in the first quarter of the company's fiscal 2024, running from April to June this year, decreased by 15.7% year-on-year to 226,000 tonnes mainly because of low domestic demand, an increase in imports of inexpensive wire rods from China as well as weak international market sentiment.
Revenue during this three-month period dropped by 28.9% year-on-year to 6.2 billion baht and profit before tax reduction also fell by 91.7% year-on-year to 48 million baht.
"These reflected the subdued market sentiment," said Mr Daga.
TSTH is seeking a new opportunity to export steel to Australia and New Zealand. The company currently exports to India and fellow Asean states.
Up to 90% of steel products are sold in the domestic market while the remaining 10% is exported, said Jayanta Chakraborty, vice-president and chief financial officer of TSTH.
The company is aware of the export slowdown which is attributed to the sluggish economies of Thailand's trading partners and the impact of geopolitical conflicts.