Sahaviriya of Thailand to Increase Hot Coil Output by 30% in 2010

Sahaviriya Steel Industries, one of the largest hot rolled steel sheet makers in Thailand, expects the firm’s output increases by 30% in 2010 from 2009. The firm aims to start construction of no.2 hot rolling mill and a blast furnace in 2011 while examines to acquire steel plants in Malaysia or Indonesia. Mr. Wit Viriyaprapaikit, the firm’s CEO, said the firm’s hot coil output totaled 2 million tonnes in 2009 while the sales were 1.9 million tonnes. He said at an interview with Japan Metal bulletin the output would become 2.7 million tonnes or more in 2010.

Mr. Wit explained Sahaviriya plans to start construction of no.2 hot rolling mill in early 2011 with the capacity at 2.5 million tonnes per year. If the firm achieves 2.7 million tonnes of the annual output in 2010, Sahaviriya will also start construction of a blast furnace in exrly 2011 with the capacity at 5 million tonnes per year. The investment for the blast furnace will total US$ 2.7 billion. Mr. Wit said Sahaviriya will gain financaial and technical supports as well as equipment from Chinese steel maker. He explained Sahaviriya acquired a construction license from Bureau of Investment in Thailand 10 years ago and regained the license 2 years ago again.

Mr. Wit reffered to a capacity expansion plan for Sahaviriya Plate Mill, increasing the output capacity to 1.5 million tonnes by the end of 2010 from present 600,000 tonnes. The firm will increase the plate size lineup to 4-10 feet width and 1.5-3.1 millimeters thickness to export the products for US and European shipbuilders. Mr. Wit said the firm acquired Japanese Industrial Standards of SS and SM grade.

Mr. Wit said Sahaviriya aims to cover major demand fields of hot rolled steel sheets such as automobiles, electric appliances and building materials. The firm tries to increase the sales of automotive steel sheets by the own technology while, Mr. Wit said, several Chinese steel makers offer thechnical supports to Sahaviriya Steel. Mr. Wit explained steel sheet demand is strongly increasing in China while Thai demand had increased for January-August 2008, dropped for September 2008-April 2009 and recovered since May 2009. He gave a forecast Thai demand for steel sheet could increase in 2010 even compared with the high season in 2007.

As to the material costs, iron ore price is said to surge by 20-40% this year as well as coke, Mr. Wit pointed out. Crude oil price and marine freight are also expected to rise. Mr. Wit said slab price should be raised. He explained slab suppliers are offering US$ 500 per tonne for January-March contracts while Sahaviriya requires US$ 450. He decribed hot coil price is currently around FOB US$ 600 though Japanese high grade slab price partially reaches US$ 700. Mr. Wit said Sahaviriya should reduce the output volume in order to refelct high material costs on the products, though the supply and demand balance is relatively tight in Thailand at present.

As to the blast furnace construction plan, Mr. Wit said Sahaviriya could acquire lands of good locations in Bang Saphan and Chumphon areas in South Thailand. Both areas have deep sea which allows large ships to enter the ports. Thai government is actively inviting overseas steel makers to construct blast furnaces in the country but, he said, they cannot prepare appropriate lands for the construction due to environmental concerns in many areas of Thailand.