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22 Apr 2005

Industry

Thai Iron & Steel Market Targeted by Large Exporters including Japan

คะแนนเฉลี่ย

The ongoing Free Trade Area (FTA) negotiations between Thailand and Japan directly impact Thailand's iron and steel industry. Japan has asked that iron and steel imports into Thailand be liberalized, particularly, hot-rolled sheet steel. Initially, Japan proposed that Thailand eliminate tariffs on hot-rolled steel immediately, while Thailand proposed to keep the present levies unchanged at 7.0-9.5 percent for a period of ten years. These tariffs would gradually be cut beginning in the eleventh year, and drop to zero in the fifteenth year. The major reason behind Thailand's proposal is to protect the local iron and steel industry that is only just emerging from a period of slack demand that began during the 1997 economic crisis. Moreover, the Thai government has established a policy to develop an integrated domestic iron and steel industry, in particular, with the development of upstream steel industries. To achieve this, the government has planned to set up the first iron-smelting plant in Thailand to help stabilize domestic supplies and prices of steel over the long run.

Thailand is in the process of developing its iron and steel industry in a comprehensive manner. The establishment of an upstream steel industry, i.e., an iron-smelting plant, has also been promoted along with the development of mid-stream industries, which would include production of billets, slabs, etc., and downstream industries to produce steel wire, structural steel and hot- and cold-rolled steels, as well as coated steels. It is expected that local producers would develop products with sufficient quality and volume to support demand from other user industries that would grow together with the overall economy.

At present, Thailand needs around 12-13 million metric tons of iron and steel products per annum. Domestic production accounts for 60 percent of this while more than 40 percent ? around 5.4 million metric tons ? is imported from overseas; of this amount, more than 3 million metric tons is imported as iron and steel sheets. Japan is Thailand's most significant source of iron and steel products, with an import value more than USD2.503 billion in 2004. Moreover, Thailand imported sheet steel from Japan worth USD1.582 billion in 2004, 72.59 percent of Thailand's total import value of sheet steel, used mostly by the domestic automobile industry. While Thailand's second most significant source of hot-rolled sheet steel is South Korea, where Thailand's purchases totaled USD216 million, accounting for only 9.9 percent of Thailand's total steel imports. Therefore, we can see that Japan, which is the largest exporter of steel products in the world, with an export volume of more than 35 million metric tons per annum, has targeted expansion of their exports to Thailand, which at present still needs around 5-6 million metric tons of imported steel per annum. The major consumers of this considerable volume of flat-rolled steel from Japan are Japanese automotive manufacturers here in the country. It is expected that the trend of increase in steel imports from Japan will continue steadily while Thailand's industrial manufacturing sector, particularly the automotive industry, continues to grow rapidly.

Industry

Iron