Thai steel plate prices to level off
----Interview with Ekasit Anukoolprasert
CEO
Siam Five Steel 1995 Co.
- Founded in 1995, Siam Five Steel 1995 Co. acts as one of the major steel trading companies in Thailand, dealing with steel plate, HRC, and steel pipe. The company has built long-term cooperation with several state-owned and famous enterprises after more than 20 years' development and has achieved significant achievements in processing and distribution industry.
- Asian Metal: Hello, Mr. Anukoolprasert. Welcome to the interview. Please briefly introduce your company first.
- Mr. Anukoolprasert: My pleasure. We major in the sales and process of steel plate, HRC and steel pipe. Through over two decades of development, we deliberately select and provide standardized steel products for lots of business groups covering construction, oil refinery, fabrication, and processing centers. We operate the business elaborately to provide the utmost convenience for our clients.
- Asian Metal: Which domestic steel mills do you cooperate with?
- Mr. Anukoolprasert: We built harmonious relationships with numerous steel mills such as LPN Plate Mill Co. (LPN), TMT Steel Public Company Limited (TMT), Siam Yamato Steel Company Limited (SYS) and Pacific Pipe Public Company Limited and so on during more than 20 operating years. For our target customers, we deal with both traders and consumers. Our customers come from construction, engineering and machinery sectors.
- Asian Metal: Please make an introduction of the steel plate production in Thailand in 2023.
- Mr. Anukoolprasert: There are two steel plate producers in Thailand, Sahaviriya Steel Industries PLC (SSI) and LPN Plate Mill Co. (LPN). Prices of steel plate dropped by around THB4,000/t (USD117/t) or 13% in 2023, However, the operating costs increased following the rising electricity charge and the increasing prices of raw materials. The electricity charge witnessed the markup of 20% in 2023, weakening the production enthusiasms of steel mills to some degree. Given efficiency and cost issues, local steel mills maintain low capacity utilization rates. In the year of 2022, the capacity utilization rate of steel mills in Thailand reached 33%, against 37% in 2021. In the first half of 2023, the capacity utilization rate achieved 32%, down from 36% compared with the corresponding period of 2022. In 2023, the capacity utilization rate of steel plate producers reached 14%, similar to 2022. Therefore, local end users rely much on imports and the imports account for 65%-70% of the total steel consumption. Japan, China and South Korea act as the top three sources of imports for steel plate in Thailand.
- Asian Metal: How about the demand for steel plate in Thailand in 2023?
- Mr. Anukoolprasert: The demand for steel plate shrank in 2023. Discouraged by the downward price trend, end users remain inactive in purchasing. Besides, the long transition period of the new government made the economy slow down. Generally speaking, the construction industry and the automobile industry stay among the two largest steel-consuming industries in Thailand. The steel market faced a period of stagnation in 2023. Presently, the demand from downstream industries stays insufficient. End users keep inactive in purchasing. However, producers remain eager to lift prices upon the reduced competition from overseas. Personally, I believe the current steel plate prices hit the bottom and become hard to go down further. Meanwhile, they lack power to go up upon the soft demand.
- Asian Metal: Prices of steel plate in Thailand changed narrowly since January. What do you think are reasons for this situation?
- Mr. Anukoolprasert: Absolutely. Prices of steel plate fluctuated narrowly since early this year. I believe the high costs and low demand led to the situation. Boosted by the rising production costs following the prices hike of raw materials such as steel billet and steel scrap, steel mills remain eager to lift ex-works prices of steel plate to transfer cost pressures. However, the soft demand from downstream industries restrained prices from rising. Meanwhile, clients purchased enough materials last December when prices showed signs of going up, and the demand shrank in January.
- Asian Metal: What about your thoughts for the market prospect in Q2?
- Mr. Anukoolprasert: We predict firm prices of steel plate in the second quarter of 2024. Steel mills keep eager to raise prices boosted by the rising operation costs, but the demand from downstream industries remains insufficient and end users strictly purchase from hand to mouth. The market remains unlikely to recover.
- Asian Metal: What will you do to improve the competitiveness? Do you plan to diversify or upgrade products in the coming years?
- Mr. Anukoolprasert: We concentrate on processing steel plate through laser cutting machine, press brake machine, and shear cut machine in order to add value on our products. We will penetrate the new market to enlarge the demand for construction steel and the processed steel plate.
