Sahaviriya Steel Industries (SSI) is set to become a leading high-end steelmaker in Asean as it plans to form strategic partnerships with local producers to offer a wide variety of products.
To achieve the plan, the company started manufacturing galvanised steel sheet and tin plate to cater to manufacturers of vehicles, electrical appliances and canned seafood. The company has long been a manufacturer of both hot-rolled and cold-rolled steel sheet.
The plan has been drawn up not only to cope with soaring prices in the global market but also to capture more lucrative markets, particularly the growing auto industry in the region.
SSI president Win Viriyaprapaikit said the company plans to expand production capacity of cold-rolled steel sheet. It is also liaising with customers to develop products that meet their demand.
"We are not only developing our existing products but also studying to develop down-stream goods," he said.
Early this year, the company bought back a 50-per-cent stake from its Japanese partner in Thai Cold Rolled Steel Sheet. It plans to become the largest cold-rolled steel sheet-maker in Asean.
In addition, the company is looking for suitable local partners to form a synergy of marketing and manufacturing.
"We have to find good partners with different manufacturing experiences to ensure low-cost products and directly respond to market demand. Our partners also should have a clear marketing objective," Win said.
He said SSI also has plans to invest overseas in the mining business. There are high potential places in West Africa and Australia.
The plan will ensure the company's iron supply.
To strengthen the domestic steel industry's competitiveness, Win suggested that the government set up a state-run company like PTT to outsource cheap raw material and supply sources.
"Thailand should have a national steel company to back up private operations like that created for the energy sector.
"Singapore and China have a clear policy to set up a state-run company to encourage the core industry," he said.
The government's financial institutions should also provide soft loans and risk-guarantees to steelmakers.
Thai steel manufacturers face an iron-scrap shortage. Thailand's steel business focuses on smelting manufacturing with a total production of 4 million tonnes per year. However, the country's iron scrap comes to only 1 million tonnes, and the rest must be imported.
Win said Thailand is an agricultural country, so it has only a small volume of iron scrap unlike industrial countries such as Germany and Japan.
"Thailand is facing a steel crisis like other countries," he said.
In addition, steel prices have shot up more than 50 per cent since early this year. The increased price has been adjusted in line with production costs, particularly oil prices, transportation and raw materials.
The global steel industry is dominated by four key players: Luxembourg-based Arcelor Mittal, Brazilian-based Vale and two Australian companies: BHP Billiton and Rio Tinto.