Nakornthai Strip Mill Plc (NSM) aims to upgrade its production by making more sophisticated hot-rolled products, from quality-grade iron, by next year to establish a niche position in a fiercely price-competitive market.

Don Bhasavanich, NSM president, said the company planned to produce, among other things, 12-per-cent pickled and oil steel, 2-per-cent coated steel and 10-per-cent tempered hot-rolled steel.

He said the expansion should raise the company's profit margin by US$20 (Bt760), to $70 a tonne.

He said NSM had imported machinery from the United States in 2000 to produce hot-rolled coils. However, production was suspended when the firm underwent a debt-restructuring programme.

The machinery was restarted in 2004 but produced mostly commercial-grade steel, which accounted for 97 per cent of total production.

But from next year, the company will add more sophisticated product lines and aims to boost its quality-grade production to 70 per cent of the total by 2010.

"We aim to turn NSM into a mini mill of high-quality hot-rolled products to move away from the commercial market where the pricing is now intensely competitive," Don said.

He added that the more sophisticated product line would allow the company more flexibility in terms of receiving orders. In addition, the new products will take a shorter time to make.

They will be used in the automotive industry, electrical appliances, and in fuel and petroleum pipelines.

Don said the company had the potential to achieve the product expansion it planned, but it might have to make an additional investment to do so.

Meanwhile, NSM has been in discussions with foreign steel producers with a view to forging a business alliance.

Don said the company would also consider separating some of its production units - "Direct Reduce Iron" (DRI) or semi-milling factories - to set up a subsidiary, with a foreign partner being asked jointly to invest in the new unit instead of putting its money in NSM.

"We have invested a lot of money, say around $150 million, in NSM. In fact, we need only some $50 million to expand our production line to be more comprehensive," he added.

Preeprem Malasitt, commercial senior manager of NSM, said the company wanted a foreign alliance for raw materials and marketing.

This year, it has supplied hot-rolled steel to some auto parts and fuel pipeline producers, awaiting the trial results before applying for certification.

Preeprem said China planned to increase its steel production by 20 million tonnes in the next few years. "This indicates if Thai producers can't produce more quality products, we will face tough competition, especially from China," he said.

And if its economy slows down, China will surely export its surplus steel, making things difficult for producers of commercial-grade steel.

This year, NSM plans to produce 1 million tonnes of hot-rolled steel. At present, the company's capacity is 1.5 million tonnes.

Watcharapong Thongrung

The Nation