In the realm of Southeast Asia’s steel market, a tempest is brewing as Thailand braces itself against a tide of Chinese hot-rolled coil steel exports. The Ministry of Commerce in Thailand is now mulling over the possibility of expanding anti-dumping measures against this inundation, a move that could have significant ramifications for the region.
The genesis of this saga lies in a petition lodged by Sahaviriya Steel, G Steel, and GJ Steel, Thailand’s premier hot-rolled coil steel manufacturers. They’ve accused 17 Chinese steel giants of skirting anti-dumping duties by making minor modifications to their products. The Thai Department of Foreign Trade, in its investigation, has uncovered evidence supporting these claims, pointing to a practice known as ‘anti-circumvention.’
This revelation couldn’t come at a more critical juncture for Southeast Asia. China’s steel mills are grappling with overcapacity and low utilization rates, leading to a surge in exports to neighboring countries. Southeast Asia, a key export destination for China, is now facing the brunt of this surplus, just as China’s property, infrastructure, and manufacturing sectors begin to stutter.
Thailand’s own steel industry is feeling the heat. Imports have skyrocketed, accounting for 63% of total supply in 2023, up from 58% in 2014. Meanwhile, domestic production has dwindled to just 37% of total supply, down from 42%. This decline in domestic production raises concerns about national security, particularly in a volatile geopolitical landscape.
The influx of Chinese steel comes at a cost beyond just numbers. Chinese manufacturers, flush with excess supply, are offering their products at significantly lower prices than their Thai counterparts. In 2023, the price difference between Chinese and Thai steel products was as high as 39%.
The implications of this trade imbalance are profound. Thai steel producers are being forced to confront the harsh reality of competing with cheap imports, even with protective measures in place. This has prompted calls for a strategic shift, with some advocating for a focus on improving product quality and expanding sales channels.
There are glimmers of hope amidst the turmoil. Some Thai steel companies are eyeing the burgeoning electric vehicle (EV) market, hoping to capitalize on the government’s promotional incentives by supplying special-grade steel. However, this shift towards high-value products would require substantial investment and knowledge-sharing.
As Thailand navigates these choppy waters, one thing remains clear: the need for a balanced approach that safeguards local industries while fostering growth and innovation. Only time will tell how this steel saga unfolds and what it means for the future of Southeast Asia’s steel industry.
(Source: Nikkei Asia)
