US tariffs deepen Thailand’s steel struggles amid rising imports and costs, say analysts

[SINGAPORE] Struggling with low capacity utilisation and escalating production costs, Thailand’s steel industry is bracing for further disruption as US tariffs reshape global trade flows, said market observers.

The potential influx of cheaper imports adds another layer of complexity to an already strained domestic market.

Kasem Prunratanamala, head of research at CGS International Securities Thailand, said there is a need for the government to set anti-dumping policies to protect the local steel industry, as the domestic players are less competitive compared with those in countries with economies of scale, such as China.

While the demand for long steel will be supported by a recovery in the construction sector, the flat steel segment is expected to expand at a slower pace, depending on the pace of recovery in consumer spending which will spur the demand for automotive and electrical appliances.

Risk of shutting down

Analysts at Krungsri Research warned that an increased supply of cheap steel imports, coupled with the US’ tariff, will further intensify competition.

“Thai producers face challenges due to higher production costs and limited access to upstream raw materials. As a result, capacity utilisation has dropped to around 30 per cent, particularly affecting smaller operators, who are at greater risk of shutting down,” added the analysts.

In the long run, Thailand’s shift to green steel production, coupled with rising imports of cheaper alternatives, is likely to reshape the country’s steel industry.

“The industry is expected to become increasingly dominated by larger players, (though) smaller operators struggling to adapt may face heightened competition due to declining capacity utilisation and rising per-unit production costs,” said Krungsri.

Still, Nomura analysts warned that Thailand is highly vulnerable to US trade policy shifts, as over a quarter of its steel exports go to the world’s largest economy.

“We have warned that Thailand is among the most exposed countries to Trump’s reciprocal tariffs, and the domestic economy is already suffering from deteriorating structural impediments and tight financial conditions,” said Nomura. - additional reporting by Goh Ruoxue