Asian Metal: Good afternoon, Mr. Anukoolprasert. Thanks a lot for agreeing to the interview. Please could you briefly tell us about your company?

Ekasit Anukoolprasert: Siam Five Steel 1995 Co., Ltd. has been involved in steel trading business for more than 20 years. We provide high quality steels for construction projects, oil refinery industry, fabrication factory and so on. We mainly deal with HRC, steel plate and steel pipe. By adhering to the "Consumer first, reputation first" business philosophy, we have earned a favorable reputation in the steel industry.

Asian Metal: What's your biggest challenge at present? What about your advantages?

Ekasit Anukoolprasert: With the recession of the macro economy, all the entity performs slowly in Thailand for the moment, so the steel business is hard to run. Besides, to avoid potential risks, banks have tightened loans to steel enterprises in recent two or three years, and the capital flow is slow.

However, as a long-established company, we focus on entity and refuse to make extra investments in other fields, which enable us to concentrate the capital to where it is most needed. In the meantime, we are seeking opportunities and striving for broader development space at the moment.

Asian Metal: What about HRC production in Thailand last year? Do you think the situation will change after the General Election?

Ekasit Anukoolprasert: There are altogether three HRC producers in Thailand. However, two of them produced intermittently due to capital shortage in the whole year of 2018, and only one mill produced continuously, with the monthly output of about 40,000t, which meant the supply was tight. Currently there are two mills under normal production.

Even facing tight supply, prices for HRC were powerless to go up and even witnessed a markdown of approximately 5% YOY in 2018 dragged by the insufficient demand from downstream industries.

Actually, HRC mills in Thailand face high production costs, which restrain them from producing normally to some degree. Firstly, the steel raw material supply is insufficient in the domestic market and relies much on imports. Secondly, the production technology of enterprises is relatively backward, leading to unreasonable production structure. Thirdly, the backwardness of Thai machinery industry forces steel producers to import equipments with higher prices.

Currently we adopt wait-and-see attitudes towards the market prospect, and we do not think the market performance could make long-term improvement after the General Election in late March. It is said that Thailand will form a multi-party coalition government after the General Election.

Asian Metal: I heard that the automobile production capacity in Thailand will reach 3 million units before 2020, so how about the current downstream demand for HRC in Thailand?

Ekasit Anukoolprasert: Personally, I'm not so optimistic towards the downstream demand this year. It's well known that the economy in Thailand has been sluggish since the flood in 2011, with more and more foreign companies retreating from the country.

Meanwhile, although politics has tended to stabilize in recent years, investment from foreigners hasn't improved much due to rising operating costs.

In addition, the new energy vehicles (NEVs) has become a worldwide trend, but as far as I learnt, most automobile producers in Thailand lack relevant technology and will surely restrain the demand for flat steel in the future.

Asian Metal: Do you rely much on imported materials? Where do you mainly import from?

Ekasit Anukoolprasert: We do not import materials now, but we consider starting relevant business if there are reliable suppliers in other countries. Therefore, we pay much attention to market situations such as China, Russia, Turkey, Ukraine and so on as most steel raw materials of Thailand are imported.

Asian Metal: It's said that the government of Thailand cancelled the 39.21% protective tariff on alloyed HRC at the end of this February, which means there will be more imported materials this year, so how do you think the influence on Thai HRC market?

Ekasit Anukoolprasert: Yes, the cancellation of protective tariff for HRC will certainly boom imports and drag down local prices this year.

However, a coin has two sides. On the one hand, the pour of imported materials will heighten the market inventory pressure and drag down the market price to some degree in the short term, while on the other hand, with the arrival of imported materials, customers will gain a broader choice and mills will be forced to optimize product structures. It's well known that the steel industry in Thailand is limited to the reuse of steel scrap and relies much on imported steel raw materials, semi-finished products and finished products. That is, the cancelation of the protective tariff may impact the domestic steel industry in the short term, but it will be beneficial to industrial optimization in the long run.

Asian Metal: What are your thoughts for the market prospect after the Songkran Festival?

Ekasit Anukoolprasert: Personally, I think the market performance after the Songkran Festival holiday will be worse than now with the influx of imported materials. In the meantime, the downstream demand has not showed any signs of getting strong by now. With increased supply but steadily weak downstream demand, the price for HRC is unlikely to go up obviously.