the past several years, Thailand's steel industry has encountered
challenges that stem from price competition against steel imports from China
due mainly to steel oversupply in China’s market. Since 2014, Chinese
steel manufacturers have cleared out their excessive stock via exports to
markets including Thailand – one of the world's leading steel importers. The
prices of steel bars for construction imported from China during 2014-2019 were
lower than domestic steel bars by around 20% on average, resulting in a
significant increase in the market share of imports from 8% in 2016 to 40%
during 2017-2019. Under such circumstances, Thai steel manufacturers called for
the related authorities to step in and continually support the Thai steel
September 1, 2020, the Thai Cabinet approved the draft Ministerial
Regulation No. 2 on supplies and procurement methods of materials that the
government wants to promote or support, with an additional Section 9: Materials.
The new regulation aims to promote domestically produced materials,
particularly steel that must account for 90% of the value or volume used in a
construction project. However, the steel must first gain approval from the Thai
government to confirm that it was manufactured inside the country. Furthermore,
these Thai manufacturers will win the auction for material procurement if
their bids are no more than 3% higher than the lowest bid.
believes that this policy should help to increase domestic steel production by
around 360,000 tons annually, for the next 3 years. Such a figure suggests that
capacity utilization would rise from 55% to 58.6%. At the same time,
it may also cause construction costs of government projects to increase by
approximately 0.5-0.8%. If this regulation covers public-private
partnership (PPP) construction projects, it will result in a higher consumption
of domestically produced steel, because large-scale infrastructure projects in
recent years have often come in the form of PPP. Nonetheless, as these projects
require special types of steel, the use of steel will subject to project
contracts and specifications set by the architects who designed these projects.
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