SCB unit suggests ways to counter cheap steel from China
The global steel oversupply, especially from China's overproduction, has slammed Thailand's steel pipe industry, according to Siam Commercial Bank's Economics Intelligence Centre.
The rapid hike in imports from China is hurting local producers by cutting prices and taking market share. This has led to a request for antidumping (AD) protection.
Local makers will not be able to compete with their Chinese counterparts on price, while AD protection will only provide short-term protection.
Welded stainless steel pipe imports would rise even further as traders make speculative purchases before AD measures are implemented.
Consumers will not be able to enjoy low prices for steel pipes even with an AD policy.
In the short term, Thai producers should try to preserve their customer base through service and credibility.
In the long term, they need to find a strategy to meet price competition since China will always enjoy economies of scale.
They can compete by enhancing efficiency and reducing costs as well as adding more value and diversifying products. They can develop marketing and branding strategies to build brand awareness.
Last year, steel pipe imports grew 22 per cent, with 66 per cent of that coming from China, while other countries contracted by 8 per cent. China’s import share expanded to 55 per cent from 40 per cent in the previous year.
Chinese steel pipes this year continued to grow by 16 per cent in number in the first six months. Imports of welded and seamless steel pipe in 2014 increased by 7 per cent and 4 per cent. Another reason for the rising inflow of steel pipe from China is the lack of compulsory Thai Industrial Standards certification for imported steel pipe, with general requirements serving only as guidelines.
This left importers unregulated and importing steel pipe freely. The lack of standards not only affects domestic producers, but is also detrimental to consumer safety.
On September 17, Thailand announced an AD investigation in both hot-rolled and cold-rolled stainless steel pipe products coming from China and other countries.
Chinese products under the probe grew 177 per cent on year in the first half of this year. Highest growth was seen in welded round steel pipes and rectangular welded steel pipe, usually used in manufacturing, heat exchangers and furniture.
