Checks to prevent steel hoarding as prices rise

"Some suppliers have declined to sell to construction companies, saying they are running out of quota," a department source said last week.

Some steel-makers have been stocking up on speculation that the Commerce Ministry will soon approve a Bt7-per-kilogram hike in the steel price, he said.

The steel committee has proposed to raise the steel price by Bt3 early this month and by Bt4 in the middle of the month, but the move is still pending Commerce Minister Mingkwan Sangsuwan's approval.

An industry source said the steel price did not deserve to go up by as much as Bt7.

"What steel-makers told the Internal Trade Department was not true. They claimed their production cost rose more than US$1,000 (Bt32,400) per tonne in line with the increase in billet prices. In reality, they did not use 100-per-cent billets as raw material, but mixed it with scrap steel, which is much cheaper.

"Therefore, the current price of Bt36 a kilogram does not reflect the real production cost. Those steel-makers can make a profit even though they quote a price of Bt30," he added.

The price of construction steel has kept rising from Bt18,000 per tonne last August to Bt35,000-Bt38,000 at present due mainly to speculation in the global market and high demand in China.

Contractors have cried over the steep price increase, which is the major factor pushing up construction costs by 25 per cent this year.

Those building public works are also asking for the government's help in raising the project value. They threaten to leave jobs unfinished or boycott future bidding on government jobs.

The industry source said the government should allow imports of construction steel now that there is no reason for the state to prop up the local industry.

Imports of construction steel are subject to approval by the Thai Industrial Standards Institute, as an indirect measure to defend the local steel industry.

India-based Tata Steel has become the largest construction steel producer in Thailand, with a market share of more than 50 per cent, after it took over Millennium Steel, one of the country's leading steel-makers, two years ago.

"So it's useless to enforce this regulation to protect local steel-makers at this time. The government had better give serious consideration to liberalisation to relieve steel-related operators' suffering," the source said.