Thai steel industry in crisis as cheap Chinese imports surge

Thailand’s steel industry is buckling under the weight of cheap Chinese steel, forcing 71 factories out of business so far this year, Krungthep Turakij reported on Thursday.  

The domestic steel industry is facing upheaval as Chinese factories in Thailand ramp up steel production, according to industry sources.

In 2024, Chinese steelmakers exported 110 million tonnes, mostly to Thailand and neighbouring ASEAN countries. The influx of cheap steel has led to consecutive losses and mass layoffs at major Thai manufacturers, including the Bangkok Iron and Steel Works.

Chinese steel manufacturers have been allowed to set up factories in Thailand using induction furnaces – technology that China banned in 2017 due to its environmental impact.

Thai steel factories that shut down this year used electric arc furnaces for production of steel bars and wire rods, resulting in higher costs.

An industry source said the factories were undercut by China’s prefabricated steel structure exports to Thailand, which surged from 400,000 tonnes in 2023 to 600,000 tonnes last year. 

The factory closures have triggered calls for urgent government action to maintain the Thai steel industry’s competitiveness in the long term.

Industry sources are also urging the government to promote low-carbon manufacturing to boost exports to Europe, where the Carbon Border Adjustment Mechanism (CBAM) imposes tariffs on high-carbon imports, making eco-friendly production essential for competitiveness. This includes supporting affordable electricity from renewable energy sources.

Bantoon Juicharern, chairman of the Federation of Thai Industries’ Steel Industry Club, has proposed seven guidelines to reduce the impact of Chinese steel exports to Thailand:

1. Banning the establishment and expansion of specific types of steel factories whose production capacity exceeds demand in Thailand.

2. Measures to promote government procurement of domestically produced steel from factories that have achieved Green Industry certification at level 4 or higher.

3. Fast-tracking the development of industrial product standards for prefabricated steel structures.

4. Implementing measures to reserve iron scrap as a raw material for domestic steel production.

5. Introducing policies to encourage the reuse of materials from car wrecks.

6. Promoting the use of domestically produced products in public-private partnerships and construction projects benefiting from investment incentives.

7. Strengthening the use of trade measures to adapt to market dynamics.