FTI’s Recommendations to Combat Substandard Steel in Thailand
The Federation of Thai Industries has raised alarms about the increasing influx of substandard steel into Thailand’s construction and manufacturing sectors. In the wake of the collapse of the 30-storey State Audit Office, the FTI is advocating for stronger measures to ensure steel quality and protect public safety. Bantoon Juicharern, chairman of the FTI's Iron and Steel Industry Group, has outlined a set of strategies to combat these concerns and improve Thailand’s steel production standards.
The Role of Substandard Steel in the Collapse
The tragedy at the State Audit Office prompted an investigation into the materials used in its construction, with substandard steel suspected as a contributing factor. This event has highlighted the critical need for stringent quality controls in the Thai steel industry, particularly in construction materials, which are essential for public safety. The FTI has taken proactive steps to address these concerns by suggesting several changes to the regulatory framework.
FTI's Recommendations for Improving Steel Standards
1. Strict Adherence to Quality Standards: Bantoon emphasized the need for stringent quality control in steel production. This includes ensuring that all steel products meet national and international standards to guarantee their reliability and safety. Additionally, regulatory oversight should be reinforced to monitor the quality of steel throughout its lifecycle, from production to final use.
2. Consumer Education: The FTI suggests that public awareness campaigns be launched to educate consumers about the importance of purchasing certified steel products. By raising awareness, consumers can be empowered to make informed decisions and avoid substandard alternatives that are often sold at lower prices.
3. Mandatory Quality Inspections for Imports: One of the FTI's key proposals is the mandatory inspection of imported steel, particularly prefabricated steel structures. In 2024 alone, Thailand imported around 700,000 metric tons of such products. The FTI believes these imports should undergo rigorous quality inspections to prevent substandard steel from entering the market.
4. Enhancing Transparency in Quality Control: Transparency in the steel manufacturing process is vital for maintaining public trust and ensuring product quality. The FTI recommends the introduction of measures to track and verify steel quality throughout the supply chain. This includes enforcing stricter industrial certification standards and ensuring the traceability of steel products from production to final use.
5. Combating Misclassification of Imports: The FTI also highlighted an issue concerning the import of substandard steel products into Thailand. Approximately 30,000 metric tons of aluminium-zinc coated steel, SZACC, were misclassified under the tariff code for magnesium-coated steel. This tactic allows manufacturers to evade mandatory quality checks and anti-dumping duties. The FTI advocates for legal action if discrepancies are found in product classifications.
6. Addressing Overcapacity and Quality Concerns: Since 2017, steel mills using induction furnace technology (banned in China due to quality concerns) have relocated to Thailand. This has contributed to overcapacity, aggressive price-cutting, and, most critically, compromised steel quality. To address this, the FTI calls for measures to regulate these producers and ensure they comply with environmental, labor, and product quality standards.
7. Fair Competition and Procurement Policies: To promote a level playing field for domestic steel producers, the FTI has requested that the government implement policies that ensure fair competition. This includes enforcing regulations that guarantee all steel manufacturers, whether local or foreign, adhere to the same taxation, labor, and environmental standards.
8. Promoting "Made in Thailand" Steel: The FTI has proposed that the Thai government set procurement targets to ensure that at least 50% of steel used in public sector projects comes from domestic manufacturers. Expanding this policy to include Public-Private Partnership projects exceeding 1 trillion baht annually would further boost Thailand’s local steel industry, create jobs, and contribute to the national economy.
9. Encouraging the Development of Green Steel: In line with global sustainability goals, the FTI has urged the government to promote the development of "green steel" technologies. These eco-friendly production methods reduce carbon emissions and help create a more sustainable steel industry in Thailand.
The Challenges Facing Thailand’s Steel Industry
Thailand's steel industry is grappling with multiple challenges, including global steel surpluses and the influx of cheap imports. According to the FTI, China currently produces 1.1 billion metric tons of steel annually, with 200 million metric tons being exported to markets like Thailand. This has led to unfair price competition, with cheaper, often substandard steel products flooding the market.
The domestic demand for steel in Thailand is projected to remain between 16.0-16.3 million metric tons in 2025, a decline from the pre-pandemic level of 18-19 million metric tons. Despite this, the country remains heavily reliant on imports, especially from China, exacerbating concerns about steel quality and fair competition.
Legal and Regulatory Proposals to Address These Issues
The FTI has urged the government to take immediate action to enforce stricter import controls, regulate overcapacity, and ensure fair competition for local producers. The FTI also stresses the importance of transparency in steel certification and urges the Customs Department to take legal action against companies that misclassify products to evade quality checks and duties.
Key Takeaways:
• The FTI calls for strict adherence to quality standards and enhanced regulatory oversight to address the concerns over substandard steel.
• Consumer education campaigns should focus on the importance of choosing quality-certified steel to ensure safety and durability.
• The FTI recommends mandatory quality inspections for imported steel, particularly prefabricated steel structures, to prevent substandard materials from entering the market.
• Transparency in quality control and improved traceability of steel products throughout the supply chain are essential for maintaining high standards.
• The misclassification of imports to avoid quality checks and duties must be addressed through legal action and stricter enforcement of regulations.
• Overcapacity and quality concerns arising from relocated steel mills should be managed to ensure fair competition and compliance with local regulations.
• The FTI proposes a 50% procurement target for domestically produced steel in public sector projects to promote the local industry and economy.
• The government is urged to support the development of green steel technologies to promote sustainability in Thailand’s steel production.
Through these proposed measures, the FTI aims to enhance steel quality in Thailand, reduce reliance on cheap imports, and strengthen the domestic steel industry, ensuring the safety and sustainability of Thailand’s infrastructure projects.
