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Thailand: Steel industry wary of major Chinese push

  • Apr 19, 2020
Thailand’s steel industry, already battling unstable prices, is edgy ascompetitors from China are all set to be back in business with full government support.

Domestic steel producers will have to adjust rapidly and begin to cut production due to the impact of Covid-19 on downstream industries that have continuously slowed down production, suspension of automobile production while the private sector is holding off on new projects.

The steel industry has reportedly been worried about the risk of oversupply and shrinking demand in China when the logistics system returns to normal. Chinese steelmakers will definitely find a way to release huge stocks of products as exports to Thailand, experts believe. The Chinese government has issued urgent measures to support exports by announcing an additional 3 per cent tax compensation (from 10 to 13 per cent), effective from March 20.

China’s worldwide export volume has shrunk from 73.4 million tonnes in 2017 to 62.2 million tonnes in 2019, but China’s exports to Thailand continued to increase from 3.1 million tonnes in 2017 to 3.5 million tonnes in 2018 and 3.7 million tonnes in 2019, representing a 20 per cent growth rate in the said period.

Clearly, Thailand is the target of Chinese steel exports, according to industry experts. And this time, as many years ago, when the Chinese government announced it would discard old machinery and manufacture over 100 million tonnes of steel, a lot of the steel spilled into Thailand and Asean and the old machines were used to set up steel factories outside China, including Thailand, with a price fight strategy (selling 20-30 per cent cheaper)

According to Customs statistics, Thailand imported 502,963 tonnes of steel from China in the first two months of 2020, down 14 per cent from the same period in 2019, but found irregularities in the flat steel products with abnormally increased imports while some products imported from China had increased by 379 per cent.

Korrakod Padungjit, secretary-general of the Federation of Thai Industries’ iron and steel industry club, said that the Thai private sector wants the government to find a way to prevent imports that will spill into the future with increasing volumes and a very low price. Importers say the price of steel from China has been continuously offered at a very low price since they could not export to the US and the EU. This is the reason why they dump their stocks in Thailand and other Asean countries.

Source: https://www.nationthailand.com/business/30386344?utm_source=category&utm_medium=internal_referral