The Thai Ministry of Commerce is investigating and considering expanding anti-dumping measures on hot-rolled coils (HRC) from China, as the influx of Chinese steel into Thailand has caused domestic steel mills to struggle with overcapacity and low utilization rates.

The Department of Foreign Trade (DFT) of Thailand may conclude the investigation by June 2024, following a request for investigation last year from Sahaviriya Steel, G Steel, and GJ Steel, Thailand's largest HRC producers. These companies are struggling to sell their products.

The plaintiffs have requested the DFT to investigate 17 Chinese steel producers who are alleged to have evaded anti-dumping duties by altering the composition of their steel products. According to the DFT, Thai authorities have found evidence of altered steel product compositions and dumping practices by Chinese steel producers.

Steel production in Thailand has declined over the past two years due to the surge in imported steel.

Southeast Asia, a major destination for Chinese steel, is facing a glut of supply as China's real estate, infrastructure, and manufacturing sectors stall.

China's crude steel production last year remained at 2022 levels, despite a 3.5% drop in consumption from the previous year. Exports increased by 39%.

Meanwhile, Thailand's steel imports have surged, reaching 63% of total supply in 2023, up from 58% in 2014. During the same period, domestic production decreased from 42% to 37% of total supply. Thailand consumed a total of 16 million tons of steel in 2023. The country operated at only 30% capacity, lower than the Southeast Asian average of 58% or the global average of 77%.

Mr. Wirote Rotewatanachai, President of the Iron and Steel Institute of Thailand, expressed concerns that the decline of Thailand's steel industry would pose a national security issue.

According to Wirote Rotewatanachai, President of the Iron and Steel Institute of Thailand, the decline of the Thai steel industry would pose a national security issue. "We should protect the domestic industry in case of supply chain disruptions, especially given the current geopolitical conflicts," he told Nikkei Asia.

President Wirote noted that Chinese manufacturers mixing alloys into their steel products to avoid anti-dumping duties has caused quality control issues for Thai steel producers, who rely on scrap metal instead of iron ore.

Abundant supply and competitive pricing from Chinese producers have undercut domestic steel producers. In 2023, the price of coated steel from China was 39% lower than Thai products. Chinese steel coils were sold at a 16% discount.

In a public hearing before the DFT, Chinese steel importers in Thailand opposed the petition. They argued that poor investment decisions had eroded the competitiveness of the domestic steel industry.

"Thai steel producers should focus on improving product quality and expanding sales channels to avoid price competition, or they will lose to cheap imports despite government protection measures," the Siam Commercial Bank's Economic Intelligence Center warned in 2017, when Thailand implemented anti-dumping measures on a range of imported steel products.

Some Thai steel companies hope to leverage government incentives by supplying specialty steel to electric vehicle manufacturers. However, shifting to high-value products will require investment and knowledge sharing from companies like Japan's Nippon Steel, which acquired G Steel and GJ Steel in 2022 for $722 million. Japanese automakers have been importing steel since establishing supply chains in Thailand 30 years ago.

Wirote stated, "The Thai government has asked electric vehicle manufacturers to use our local supply chain as much as possible. But we may see some Chinese steel producers setting up operations in Thailand to supply Chinese automakers, who will compete with Japanese automakers."

Source: Vietstock