News Room - Steel Industry

Posted on 19 Mar 2009

Bluescope Steel (Thailand) slashes production

BlueScope Steel (Thailand), an Australia-based manufacturer of flat-steel products, has reduced its production by one-third and will concentrate more on the domestic market amid the decline in global consumption.

 

The global recession has caused declines in both domestic and export demand. As a result, steelmakers around the world have been forced to cut production.

 

BlueScope will focus more on cost management and product development to survive the global economic downturn.

 

"This is a turbulent time. While we manage our business, what we can do now is to control costs and improve our products to support our customers," said Peter Wilson, the company's regional president for Thailand and Indochina.

 

The company plans to invest more in product development over the next 12 months. This will be focused on downstream product manufacturing to serve its construction-solution services for new markets, such as building solutions, residential, commercial applications, and houses.

 

The company's manufacturing plant in Map Ta Phut, Rayong province, represents an investment of Bt8 billion - the largest by an Australian company in Thailand. The plant was established as part of a joint venture with Loxley, a leading Thai trading firm, with BlueScope controlling 75 per cent of the company and Loxley holding the remainder.

 

The plant turns out metallic coating and paints, as well as other related products, with a total annual capacity of 1.21 million tonnes, including pickled steel (400,000 tonnes), metallic-coated steel (375,000 tonnes), painted steel (90,000 tonnes) and cold-rolled steel (350,000 tonnes).

 

Of the company's capacity, 85 per cent to 90 per cent is distributed to the domestic market, and the rest exported to India and the European Union.

 

The company also operates BlueScope Lysaght, a building-solution business.

 

During the regional economic crisis of 1997, the company used a strategy of shifting exports outside Asean. However, Wilson said, the current economic crisis is different because it has caused a domino effect that spans the globe.

 

"Although the Thai market has many strengths, it will face challenges in the next two years, as 70 per cent of its GDP depends on exports. However, we intend to continue our investment in the midstream to downstream sectors here," he said, adding the firm hopes to see an economic rebound within the next one or two years. In that time, demand for steel is expected to return, Wilson said.

 

The company also plans to launch a new product range, Clean Colorbond, which Wilson said combines the strength of steel with high corrosion resistance, in the next few months. Its core products include zincalume (steel coated with an aluminium alloy), galvaspan (a zinc-coated steel) and truzinc (another zinc-coated steel).

 

Wilson said BlueScope has, like other steelmakers, seen a decline in sales, and forecasts flat growth through the second quarter of this year, although he declined to provide a specific figure. The company also would not comment on the industry's outlook for the whole year, given the rapid changes in the market.

 

Apart from its economic stimulus package and the promotion of mega-projects, Wilson said the government should consider other short-term measures to help manufacturers boost their competitiveness during the economic slump, such as a reduction in the unit cost of utilities.

 

Despite the economic uncertainty, the company plans to introduce a new generation of Clean Colorbond steel products in a few months. "Thailand has been pushing clean engineering construction … particularly in pre-engineering and residential sectors," Wilson said.