A general image of a steel factory in Thailand. (Bangkok Post file photo)
Local steel producers have urged the government to mandate Thai-made steel in the Bangkok-Nong Khai high-speed train project to help revive the domestic industry, according to the Association of Thai Steel Industries (ATS).
Pravit Horungruang, head of the association, said the project is expected to require up to 500,000 tonnes of round steel bars, which could be produced in Thailand. This would help support the local industry, which is still recovering from a downturn.
“We have already raised this proposal during talks with the government a few weeks ago, and we expect a response from the government as to whether we have a chance to take part in the project, which would help support the Thai steel industry,” Mr Pravit said.
In June, Prime Minister Prayut Chan-o-cha exercised his power under Section 44 of the charter to speed up the 179-billion-baht Bangkok-Nakhon Ratchasima rail project.
The project is expected to be extended from the northeastern province of Nakhon Ratchasima to the border province of Nong Khai in future. The construction of the 253km high-speed rail project is due to start in the last quarter of this year and begin operations in 2020.
The cabinet has approved the first phase of the high-speed rail project at a cost of 179.4 billion baht, which will include six stations on the route: Bang Sue, Don Mueang, Ayutthaya, Saraburi, Pak Chong and Nakhon Ratchasima.
The project is also part of the Chinese flagship initiative to link China to the world via its One Belt, One Road policy.
In addition to the ATS, the Iron and Steel Industry Club of the Federation of Thai Industries (FTI), as well as other associations of local steel makers, have proposed the same idea to the government. There has been no official response.
The club’s chairman, Vikrom Wacharkrup, said: “Thai local steel producers are concerned that if there is no government support, such as an order to use locally made steel in the project, then local steel producers will be badly affected.”
As a result, the steel associations are pinning hopes on the government at least negotiating with their Chinese partners to allow Thai-made steel to be used in the project.
In terms of the current steel market outlook, Mr Vikrom said he expects Thai domestic steel demand to contract by 4-5% this year. This estimate is based on GDP growth of 3.0%-3.5%.
Chaichalerm Bunyanuwat, vice-president of Tata Steel Thailand Plc, said local steel producers have a combined production capacity of 8 million tonnes annually and can cover demand from the high-speed rail construction if needed.
Thai producers are concerned about most, however, is that Chinese engineers will choose all-Chinese materials for the project.
As a result, they are asking the Thai government to put in the terms of reference the requirement of Thai steel in order to make sure that the project will benefit Thai steel makers, Mr Chaichalerm said.