Thai officials invite steel producers to use raw material inventories

Thai officials invite steel producers to use raw material inventories

As a result of the rising steel prices with the lift of strong demand from China, raw material prices start to surge in international markets. The Thai Industry Ministry is discussing the alternative solutions to avoid these sharp rises of steel prices to lead to huge losses of certain local producers. The Industry Ministry has recently made a call to the Thai steel producers to take necessary precautions in order not to accelerate the already increasing raw material prices in the international markets and prefer to run their production using their inventories rather than try to build up new stocks of same. Particularly the imported billet prices have surged in Thailand and therefore, using the inventories for a while is seen as a short term solution. At the same time government officials emphasize the importance of securing the sufficient supply of steel products coming onto the market, in a form of warning to the local steel producers, not to reduce their production levels or quality. It has also been confirmed by the Commerce Ministry that Thai steel producers have enough stocks to continue production for another six months. Therefore the state authorities prefer to use these stocks and see whether there will be certain soothing of raw material prices after a while. As a long-term solution, the Industry Ministry will discuss with the Commerce Ministry whether it was possible to use government-to-government contracts for billet purchases with countries that sell the raw materials. Local steel demand in Thailand is expected to be 3 million tons this year compared with a production capacity of seven million tons.