Asian Metal: Thanks for granting this interview, Mr Nopadon. Please can you give us an introduction to the steel sector business of Visavakit Patana Corp.

Napadon: VIPCO has been a steel fabricator and mechanical installation contractor since 1979, focusing on power generation, petrochemicals and refineries, oil and gas, and mining work. After the establishment of the second workshop in 1997, VIPCO continued to grow its fabrication for export and relied heavily on exporting components for HRSG, fire heaters, WHRU and equipment for power plants throughout the world.

Asian Metal: I see that your company serves as a manufacturer for many finished steels with additional carbon coil technologies like plate and coil. I think it is a good business pattern. So how’s the market in Thailand?

Napadon: Actually, we rely only 20 – 30 % on the local market in Thailand. Most of the work in Thailand is for local power plant projects or refinery / petrochemical projects and mining work, while this business in nearby countries is expanding noticeably, so we pay more attention to the export business.

Asian Metal: What’s the potential for cooperation with suppliers in steel making countries like China and Japan? What steel products do you need?

Napadon: We have seven fining machines and the monthly production of our fabrication workshops is over 2000 tonnes. To meet the requirement for raw materials, VIPCO regularly purchases cold roll sheet in CS and SS, as well as hot roll coil/plate and sections. In order to control the purchase cost and make our prices competitive, we source these steels from South Korea, Vietnam, Malaysia, Taiwan and China, and it helps a lot to save on production costs, compared with local purchasing. During the last couple of years, even though Japan has a much better reputation in the steel market with quality reliability and punctual shipments, the price level has forced us to limit the sourcing to jumbo H beams and seamless pipe / tube alone.

Asian Metal: In the past few years, the growth rate of the Thai economy has remained 1-2.5% on average. But this year, the government has focused on building five special economic zones and foresees a GDP increase of 5% next year. How will this affect the steel and manufacturing industries in Thailand? Will the demand for steel increase?

Napadon: Demand for steels from local infrastructure projects should be on the increase soon but I do not think it will be more than the supply unless the price begins jumping up or a big shortage is created. In fact, local mills in Thailand are now suffering a lot from slow demand and dumping of cheap steel with boron added from China, and are putting most of their effort into asking government for help to keep boron steel out of the market.

Asian Metal: More and more mills like Tata Steel, Siemens and Posco are establishing new production lines for HRC, plate, coated and long steels in Thailand. What’s the proportion of imported materials from China in Thailand?

Napadon: The sale price of steel in Thailand is quite high due to import tax/ anti dumping, and the lack of tax barriers to entry helps suppliers in Thailand to sell their products at premium prices. So as long as there is a certain price gap, imported steel from China will always have a chance, especially for re-export work. Anyhow, when the price of local steel becomes lower, the price gap can be reduced until it is not worthwhile to tolerate the longer lead times and additional risks of importing steel from outside the country.

Asian Metal: It’s said the Chinese government is about to cancel the rebate for carbon steel products like coils and plates. That means the export offer from China will be USD30-50/t higher from January if the policy is implemented. Will your purchasing from China be affected?

Napadon: Recently, we placed a 1,250-tonne order with a Chinese mill for cold rolled sheet because the price gap between Chinese offers and POSCO mill in Vietnam is not less than USD40 /t. If Chinese mills cancel the rebate for carbon flat steel and this leads to a price increase of USD30-50/t over the current level, the chance of us buying from Chinese mills may become less, considering the cost. Anyhow, from our experiences in buying Chinese steel in the past couple of years, what concerns overseas buyers is the reliability in quality, punctual shipment and consistency in price level. Of the many suppliers, prices from Chinese mills have swung rather, from being unreasonably high to surprisingly low, until we can no longer use the price level from China to support our bidding. The worst I have faced was a very late shipment, which damaged our production plans significantly. If Chinese steel mills can improve their reliability, buyers may not require too much of a price gap to cover this risk.

Asian Metal: Thanks for joining us for the interview and I hope you enjoy more cooperation in the steel sector though the platform offered by AM.