Thailand struggles to compete with China's cheap steel

This situation arises from a surge in steel imports from China, leading to a drastic reduction in capacity utilization to only 28% between January and February.

The production of long steel, a crucial material for construction projects, has declined from 7 million tonnes to approximately 6 million tonnes over the past four to five years. This decrease in production is expected to significantly impact the construction industry.

The Commerce Ministry revealed that 75 local steel companies ceased operations last year, and there are fears within the association that this number might increase this year. Local steel companies are struggling to compete with China's inexpensive steel, compounded by challenges such as the Carbon Border Adjustment Mechanism (CBAM), high electricity costs, increased daily wages, and weakened purchasing power amid an uneven economic recovery.

The CBAM encourages businesses to utilize more renewable energy to avoid non-tariff barriers when exporting products to EU countries.

The association has observed a significant increase in exports of Chinese steel products, including long steel and wire rod steel, by more than 37.5% year-on-year to 15.9 million tonnes during January and February. Meanwhile, Thai imports of steel from China increased by 18% year-on-year to 244,000 tonnes during the same period.

Tata Steel (Thailand) Plc, a subsidiary of India's leading steelmaker, has also expressed concerns about China's continuous dumping of cheap steel products in Southeast Asia amid its economic slowdown.

Last year, low-cost imports from China surged by 39% to 1.47 million tonnes, according to the company's president and chief executive, Tarun Kuma Daga, affecting ASEAN members, including Thailand, Indonesia, and Vietnam.

Despite these challenges, the association predicts that Thailand's steel consumption will exceed 16.3 million tonnes this year, surpassing the previous year's total, based on government budget disbursement, a rebound in the tourism industry, and expected economic improvement.