SET-listed Tata Steel (Thailand) Plc (TSTH), the Thai unit of India's largest steelmaker, expects Thai steel demand to drop by 5.2% to 18 million tonnes this year because of slow disbursement of the government's massive investment in infrastructure projects, says chief executive Rajiv Mangal.
That is slightly below demand of 19 million tonnes last year, he said.
In the first eight months of 2017, Thai steel demand dropped by 13.9% to 11 million tonnes year-on-year because of falling construction activity during the rainy season and flooding weighing on steel demand.
"We expect government infrastructure projects such as high-speed railways, double track railways and investment in the Eastern Economic Corridor projects would boost demand for steel in the last quarter this year, particularly for investments that would boost the Thai economy in general," said Mr Mangal.
Tata projects steel sales volume in Thailand in the first half of its fiscal year (April-September 2017) was 600,000 tonnes.
In the second half of its fiscal year (October 2017-March 2018), the company expects a rise of 5% in sales from the first half as the Thai economy continues to recover and consumer confidence increases. This period is considered the high season for steel use and government investment projects will build confidence in real investment next year, he said.
Mr Mangal said the company plans to increase production capacity of cut-and-bend steel to serve rising demand. It has set aside 75-85 million baht for investment to raise capacity, with the plan due to start in June 2018.
Cut-and-bend steel serves mostly infrastructure and construction projects. TSTH has production capacity of 10,000-13,000 tonnes a month and plans to increase output by 3,000-3,500 tonnes a month.
Mr Mangal expects Tata's total sale volume for this fiscal year (April 2017-March 2018) will be 1.25-1.28 million tonnes, up slightly from 1.20 million tonnes the previous fiscal year.
The company has annual production capacity of 1.7 million tonnes from its three Thai plants.
He said the company predicts the Thai economy to grow by 3.6% this year, largely because of the strong export outlook as the global economy is recovering, which should help spur steel demand eventually.
Mr Mangal expects to conclude the deal to sell the company's mini-blast-furnace steel project to an Indian steel company by this month.
The steel plant has a capacity of 500,000 tonnes a year. It started operations in 2007 and the company shut down the plant in 2011.
Tata Steel invested 4-5 billion baht in the steel project.
The company reported an increase of 25% in net sales value year-on-year to 5.7 billion baht in the second quarter (July to September 2017).
