Thailand’s steel demand could expand by as much as 25% next year under a best-case scenario as demand recovers in key manufacturing sectors, says the Iron and Steel Institute of Thailand.

Demand could reach 12.57 million tonnes, up from this year’s estimated
figure of 10 million, said Wikrom Wajragupta, the institute’s president.

The
end of the year has been good for the industry because of rising steel
prices and growing demand, and also because it is the high season, he
said. Demand has been helped by an increase in construction activity
and reviving automobile sales.

“This year has been better than last
year, because last year was the beginning of the bubble burst when
everyone was depressed. But this year we have already passed the bottom
and are on the road to a recovery,” he said.

Last year, the industry
struggled when demand for steel fell far short of targets due to delays
in government megaprojects. As well, many businesses suspended
construction to save cash as the global economy slowed, which also
eroded consumer purchasing power in domestic and overseas markets.

This
year Thailand is expected to consume 10 million tonnes of steel, which
was what the institute projected at the beginning of the year.

The
institute forecasts next year’s demand under a worst-case scenario at
10.98 million tonnes and a best case of 12.57 million, with a median of
11.78 million tonnes. Demand reached 13.53 million tonnes in 2008.

The
figures are based on projections for the automotive sector, the growth
of the real estate sector and a return to gross domestic product (GDP)
growth, said Mr Wikrom.

He said the Map Ta Phut case might have an
effect, but was not included in the forecast since it is considered
construction by the private sector.

The forecast growth includes
real estate, the automotive industry and government infrastructure
projects under the Thai Khem Kaeng stimulus programme.

The best-case
scenario would reflect construction resuming and the Map Ta Phut
impasse being solved. It is also based on confidence among investors,
said Mr Wikrom.

The price of scrap in the first half of December was
US$340 or 11,359 baht per tonne. Billet prices are at $472 or 15,769
baht per tonne, with construction steel at $513 or 17,139 baht and slab
$530 or 17,707 baht per tonne.

“The prices have increased from
November’s prices, but are lower than in the same period last year by
around a thousand baht,” said Mr Wikrom.

He said prices would remain volatile until April when new negotiations on the prices of coal and iron ore are expected.

Source: Bangkok Post

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