Thailand's capacity utilisation in the steel industry continues to decrease, following the slow economic recovery and the influx of cheap steel from China, says Tata Steel Thailand Plc (TSTH), a unit of India's largest steelmaker.
A delay in the state budget planning for fiscal 2024, following the 2023 general election and the lengthy process forming a coalition government, also resulted in sluggish steel manufacturing in the country.
"We hope the government will speed up its budget distribution via infrastructure development projects to drive domestic demand for steel," said Tarun Kuma Daga, president and chief executive of TSTH.
Last year, steel consumption in Thailand decreased by 9.1% year-on-year.
Mr Daga is worried about rising imports from China, which are dealing a blow to the local steel market.
From January to November last year, China exported 85.2 million tonnes of steel to many countries, a year-on-year increase of 35.4%, the highest in seven years.
The dumping of steel wire rods into the Thai market was partly blamed for causing a drop in capacity utilisation to 28% in 2023, down from 33% in 2022, according to TSTH.
The company said it is not worried Russia is interested in marketing its steel products in Thailand because competition is normal, but it wants the Thai government to make sure steel will be imported at fair prices with no impact on domestic steel manufacturers.
In the third quarter of the company's fiscal 2024 (October to December last year), TSTH saw its sales drop by 12% year-on-year to 253,000 tonnes due to lower domestic sales of steel wire rods and lower exports.
Its revenue decreased by 20.4% year-on-year to 5.4 billion baht in this period, resulting in a loss of 96 million baht.
From April to December 2023, the company's sales decreased by 11% year-on-year to 800,000 tonnes, attributed to sluggish demand in Thailand and overseas and the import of cheap steel wire rods.
The revenue decreased by 24% year-on-year to 17.7 billion baht, with a loss of 104 million baht.