Thai Steel Industry Faces Crisis Amid Surge in Cheap Chinese Imports

The Thai steel industry is in crisis due to cheap Chinese imports, leading to 71 factory closures this year. Industry leaders are calling for government intervention to promote domestic steel production and sustainable manufacturing practices amid rising exports from China. Strategic guidelines have been proposed to enhance competitiveness and support local manufacturing.

The Thai steel industry is experiencing a significant crisis due to an influx of inexpensive Chinese steel, resulting in the closure of 71 factories this year, as reported by Krungthep Turakij. Chinese factories are intensifying their production capabilities, exacerbating challenges for local manufacturers. In 2024, Chinese steel exports to ASEAN countries, especially Thailand, are projected to reach 110 million tonnes, leading to substantial financial losses and layoffs at major facilities such as Bangkok Iron and Steel Works.

This crisis is intensified by the operation of Chinese producers utilizing induction furnaces in Thailand, despite a 2017 ban due to environmental concerns. Meanwhile, domestic steel factories employ electric arc furnaces, which incur higher operational costs. A notable industry source highlighted that Thai manufacturers are facing severe competition from China’s growing prefabricated steel structure exports, which surged from 400,000 tonnes in 2023 to 600,000 tonnes last year.

The rampant closure of factories has prompted urgent calls for government intervention to sustain the competitiveness of the Thai steel industry. Stakeholders emphasize the necessity for the government to foster low-carbon manufacturing practices to enhance exports, particularly to European markets where the Carbon Border Adjustment Mechanism (CBAM) imposes tariffs on high-carbon goods. Efforts must involve promoting the use of affordable renewable energy.

Bantoon Juicharern, the chairman of the Federation of Thai Industries’ Steel Industry Club, has articulated seven strategic recommendations to address the challenges posed by Chinese steel imports. These include:
1. Banning the establishment of steel factories with capacities that exceed local demand,
2. Promoting government procurement from Green Industry certified producers,
3. Accelerating the development of standards for prefabricated steel structures,
4. Implementing measures to allocate iron scrap for domestic usage,
5. Encouraging the reuse of materials from dismantled vehicles,
6. Supporting domestically produced products in public-private partnerships,
7. Enhancing trade measures to adapt to market dynamics.

These combined initiatives aim at fortifying the local industry against external pressures and ensuring its sustainable development.

The Thai steel industry faces unprecedented challenges due to the surge of low-cost Chinese steel, leading to significant factory closures and economic distress. Urgent government intervention is necessary to safeguard the competitiveness of domestic manufacturers through a combination of strategic recommendations made by industry leaders. Promoting sustainable and low-carbon practices, along with trade measures, will be crucial for the industry’s recovery and long-term viability.

Original Source: www.nationthailand.com