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29 Apr 2016

Industry

Iron & Steel Industry Recovering on Construction and Premium Iron/Steel Demand (Current Issue No. 2730)

It is expected that demand for iron and steel in Thailand will improve in 2016, supported by ongoing and new public construction projects. Demand for pre-engineered buildings (PEB) should increase substantially during 2H16 and into 2017 since many projects will begin in1H16, including private residential projects in response to the government “Pracharat Housing” program for low-income earners.
Given this, we at KResearch expect that demand for iron and steel in the construction sector will reach some 8.4-8.6 million tons in 2016, increasing 2.3-4.5 percent YoY, versus the 8.2 million tons reported for 2015, then rising 2.0 percent YoY.
With regard to demand for premium steel in the Thai automotive and auto-parts industry, despite sagging domestic car demand, increased car and auto-parts production for exports will help support its demand somewhat. Hence, we project steel demand in the automotive and auto-parts industry will advance perhaps 1.2-2.8 percent in 2016 to 3.04-3.08 million tons, growing slightly over the 3.0 million tons used in 2015.
Meanwhile, overall iron and steel demand, excluding high-quality and steel products, will likely continue to be sluggish amid heightened pricing competition. To brace for this, Thai manufacturers are advised to focus on advanced and innovative manufacturing technologies to add value to their products and capture customers in the medium and high-end segments.

KResearch expects that overall iron and steel demand in Thailand may reach perhaps 16.7-17.0 million tons, representing (-)0.5 to 1.5 percent growth YoY, which would be slightly better than the 3.5 percent contraction recorded for 2015, due to strong demand for construction and premium steel products.

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