Thailand's steel market runs counter to the international

At present, domestic steel prices in Thailand tend to rise, which runs counter to the gradual decline of international market prices, mainly due to domestic demand and the growth of exports to ASEAN. In the first five months of 2012, domestic steel consumption reached 5.3 million tons, an increase of 10.6% over the same period of last year. In the same period, Thailand’s exports to ASEAN countries accounted for 37% of the total value of steel exports, of which exports to Laos and Malaysia increased by 49.9% and 24% respectively year-on-year.

Thailand's Kai Tai Research Center believes that domestic steel consumption will continue to show a growth trend. The supporting factors are as follows:

1) Expansion of the construction, automotive, and machinery industries: The devastating floods in the fourth quarter of 2011 caused serious damage to the central region of Thailand. The demand for reconstruction and replacement of damaged cars and machinery in the floods has driven these industries. expansion. In addition, stimulating economic policies such as the construction of government infrastructure such as rail transit projects and the tax rebate for the purchase of the first car have further stimulated the construction and automotive industries to substantially expand in the first five months of 2012.

2) Support for Iron and Steel Manufacturers Encouragement Policy: At present, Thai Steel is facing the challenge of cheap imported products. Competitors can export at a lower price than similar products in Thailand due to their government export tax rebates. At the same time, its products also received Thailand's import tariff concessions because its composition differs from that of domestically produced steel products in Thailand. Therefore, the government must seriously study the measures to provide assistance to domestic steel manufacturers, such as strict quality standards for imported products, prevent the entry of inferior products into the market, formulate inspection measures so that imported steel products meet the requirements of taxation numbers, and prevent tax evasion; Strict construction and manufacturing steel materials standards, and strengthen inspections and so on.

3) Iron and steel prices in the international market tend to weaken due to declining demand: Decline in world steel prices will help Thai steel companies reduce their production costs, because there is no upstream ironmaking industry in Thailand, and steel companies need to import pig iron from abroad.

Kai Tai Research Center expects domestic steel consumption in 2012 to reach 15.60-16.5 million tons, an increase of 6.4-12.5%; and in 2011 it was 14.7 million tons, an increase of 4.8%. The monthly average steel consumption is 1.3-1.4 million tons, which is the highest in five years, mainly driven by the demand for steel downstream industries. At the same time, in the context of the European debt crisis that has led to a slowdown in world steel demand, Thailand still has the opportunity to expand the ASEAN steel market, and the ASEAN market will become Thailand's new steel export destination.

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