Scrap metal prices have risen to US$370 a tonne (Bt12,935) and billet steel is $530 to $540 a tonne.

An institute source said steel prices had risen more than 10 per cent since the beginning of this year owing to high demand from China as well as an increase in import duties on steel rod.

China increased duties on billet by 10 per cent in order to protect its domestic suppliers.

Duties are expected to rise another 5 per cent soon, the source said, adding Thai steelexporters will experience difficulties because China is their main market.

"If billet prices go higher than now, steel-makers will be unable to carry the burden any longer," the source said.

The source noted the stronger baht helped reduce import costs but could not keep pace with aggressive increases in scrap and billet prices.

"Steel-makers hope the Internal Trade Department understands our reasons and allows a price increase soon," he said.

The institute forecasts domestic prices will grow 5 per cent to 10 per cent this year, mainly from rising demand from construction necessitated by last year's flooding.

However, the source added steel-makers would not increase production capacity during the next few months because of a slowing global economy and domestic consumption.

Annual production capacity will stay at 13 million tonnes.

Meanwhile, a department source said it could not allow a price increase until martial law was lifted.

"The government understands steel-makers face burdens because of world steel prices. The department will consider allowing a rise as soon as the cancellation of martial law is announced in the Royal Gazette," the source said. The department froze steel prices in September last year. The price of steel rod is set at Bt22.50 a kilogram to Bt23 a kilogram. Sheet is fixed at Bt23.50 a kilogram to Bt24.50 a kilogram.

Chalida  Ekvitthayavechnukul,

Petchanet Pratruangkrai

The Nation