A better economic outlook next year amid rising demand for steel from construction projects following massive infrastructure investment is expected to push steel prices higher and allow debt-ridden G Steel Plc, a SET-listed maker of hot-rolled coil, to improve its performance, says the company's chief executive Somsak Leesawadtrakul.
G Steel filed its bankruptcy plan with the Central Bankruptcy Court on Tuesday with a debt restructuring plan to pay back 17 billion baht in debt to SSG Group.
"We spent about nine years after suffering from the subprime crisis in 2008 before all the major shareholders agreed on the debt restructuring plan and filed it with the court," said Mr Somsak, who is the company's founder.
He said the company will await the court's ruling that is due next week. It plans to spend around one year resolving all debts if the court agrees on the debt restructuring plan.
The plan calls for G Steel to use some of its cash and revenues from steel sales next year to pay the debts, said Mr Somsak.
"We expect steel prices to rise, particularly next year, which should give us more bargaining power to make our debt restructuring plan more realistic," he said.
Over the past 9-10 years, global steel prices have gradually fallen from around US$800 a tonne to only $200 a tonne the past few years. This is a main reason the company has been in debt, said Mr Somsak.
For the domestic market, the average steel price dropped from 20,000 baht a tonne to around 17,000 a tonne largely because of China dumping cheap steel on the world market including Thailand, and the resulting supply glut putting pressure on price, said an industry analyst who requested anonymity.
However, prices are expected to rebound to 20,000 baht a tonne, which would allow G Steel to make some profit next year, said Mr Somsak.
He voiced the same concerns as other local steel makers that cheap Chinese steel dumped on the world market has hurt Thai producers, asking the government to issue anti-dumping measures regularly to protect the local industry.
However, analysts have said anti-dumping measures are short-term fixes and suggested Thai producers should adapt by using higher technology to increase efficiency instead of relying on government protection.