Visit the global automotive industry news blog with Asia automotive industry news and India automotive industry news.

GlobalAutoTV

"Logistical Challenges in India”
Conway A. Jeffress

asia resources

Need an office in Asia? Office suites, meeting rooms, virtual offices, network access

free downloads

ASIA: "Employment Index India - 2011" report

ASIA: "Employment Index India - 2011" report. 6-page report by Monster.com.

proceed to download

eJournals

backASIAtalk August, 2008

Thailand: The Thai Steel Industry

The steel industry in Thailand is experiencing growing demands as the economy continues to expand and government infrastructure spending increases. Steel is a major raw material that is widely used in downstream industries, such as those in the automotive, electrical appliance and electronic, petrochemical, machinery, and packaging sectors; areas of the economy which require high-quality steel products that are currently imported.

The Iron and Steel Institute of Thailand (ISIT) has forecast that high-grade steel imports will increase by 7.5% in 2007 to a value of 165.8 billion baht. And over the next ten years Thailand’s demand for high-quality steel is expected to increase by twenty-five tons per year. In 2006, Thailand’s steel consumption volume hit 12.5 million tons, of which 4.5 million tons was imported high-quality steel products, mainly from Japan and Korea, which had a value of 153,449 million baht.

The recent entry into force of the Japan-Thailand Economic Partnership Agreement (JTEPA) should contribute to meeting Thailand’s steel needs and benefit industrial growth. Under this new free trade agreement that entered into force in November 2007, Thailand will eliminate the 15% import tariff on Japanese steel products that cannot be made locally. And yet, while this will help meet the pressures of current demand, there is no doubt that securing the needs of the future lies in attracting investments in the domestic steel industry. Significant strides have already been made in this direction from several different quarters. It was recently reported in the press that a leading steel company, is exploring the possibility of investing US$3 billion in an iron smelter in Thailand. Likewise, towards the close of 2006, NTS Steel announced its intention to invest 3.9 billion baht to build a mini blast furnace that will be completed in the latter half of 2008 to produce “hot-metal” for the steel industry.

The Thailand Board of Investment is keen to attract investments in upstream industries for high-quality steel production and has long promoted the manufacture of downstream steel, such as hot metal, pig metal, sponge iron, direct reduction iron and hot briquette iron, as well as the manufacture of intermediate steel such as slab, billet and bloom. Investments in these manufactures have been eligible for exemptions on import duty on machinery and from corporate income taxes for up to 8 years.

In November 2007 the Thailand Board of Investment announced revisions to its promotion of the upstream sector, with an eye towards turning the country into ASEAN’s hub of high-quality steel. It is expected that this initiative will reinforce and help to sustain downstream industries, and thereby improve the country’s long-term manufacturing competitiveness. The country’s advantages in terms of modern infrastructure, low production costs and geographic location will all contribute to the comparative advantages it enjoys vis-?-vis other regional suppliers.

At the time of the decision, Deputy Prime Minister and Industry Minister Kosit Panpiemras said that “Upstream steel manufacturing is capital-intensive, so the government has to help by offering investment incentives, as well as providing infrastructure facilities, such as project locations, deep-sea ports and water supply. Most importantly, production must meet the strictest environmental standards.” Also addressing the new BOI promotion scheme, Secretary General Satit Chanjavanakul said that investments in high-quality upstream steel would enhance the long-term competitiveness of Thailand’s major industrial clusters, such as automotives, electronics, petrochemicals, machinery and packaging. He laid out the promotion criteria to be followed by the BOI, to include:

- Modern technologies must be applied to every production process.
- There must be investments made in research and development.
- Environmentally friendly technologies and pollution control management systems must be applied.
- Production output must not be less than two million tons per year to achieve economies of scale.
- Investors must possess good corporate governance and corporate social responsibility.

For investors in the steel industry, the Board of Investment’s renewed emphasis on this sector bodes well. And with the economic upturn anticipated and additional spending on infrastructure and in manufacturing, the steel industry will continue to face increasing demand for a full range of products.

Source: The Thailand Board of Investment - GAI

*** To download: GLOBAL: "Pricing Perspective Series: Steel" executive white paper, click here.

previous page

go top

search our site