Tuesday, May 20, 2008

Concern grows over local steel shortage in Thailand


Concern is mounting about a possible steel shortage as demand rises in anticipation of work starting on government megaprojects. As well, global demand would be pushed up by reconstruction following the earthquake in China and the cyclone in Burma.

The Commerce Ministry has asked manufacturers, distributors and importers for weekly reports on their stocks and has dispatched officials to inspect stocks to prevent hoarding.

The ministry's Department of Internal Trade plans talks with industry executives later this week or early next week to discuss ways of ensuring adequate steel supplies, said Yanyong Phuangrach, the department's director-general.

An industry source said there were signs of price speculation by traders who believe the department will approve increases in steel prices. A Commerce Ministry source said that officials had tentatively approved higher prices for steel bar and sheets.

Last week, local contractors threatened to boycott government projects unless authorities acted within 30 days to deal with skyrocketing material prices.

The source said steel bar prices would increase by eight or nine baht per kilogramme from 28 baht, or to at least 36,000 baht per tonne. The new price for steel sheet would be 39-40 baht per kg, up from 30-31 baht currently.

''Steel manufacturers have been asking to raise prices since the end of April, but the ministry asked them instead to help hold the prices for a while and they agreed, but now the price of raw materials have risen markedly, partially on expected higher demand from China to rehabilitate [buildings] damaged by the earthquake,'' the source said.

Vikrom Vajarakupta, executive director of the Iron and Steel Institute of Thailand, said world prices remained relatively high, with hot-rolled steel at US$900 to $1,000 per tonne compared with about $600 at the end of last year.

He predicted prices would ease later this year on ebbing demand in a slowing world economy. He estimated Thailand's steel demand at 13 million tonnes this year, a rise of 3-5% from last year.

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