Executive Interviews

Asian Metal: Good afternoon, Mr. Khositsakul. Welcome to the interview. Please briefly introduce your company first.

Mr. Khositsakul: My Pleasure. We found Visavakit Patana Corporation (VIPCO) in 1979. Now, the company has become one of the world-class mechanical fabricators with the monthly supply of around 3,000t. The development of the company goes through several stages. In 1979, we established the company and set up the first VIPCO workshop in Pathumthani. From 1980 to 1996, VIPCO grew robustly from cement plant construction work to power plant and petrochemical construction work. In 1997, we set up the second Workshop, which acts as the main workshop and main office of VIPCO. In 1998, we started export business with the first destination to Taiwan China. In 2000, we obtained certification of quality management system. In 2004, we obtained ASME certification for pressure vessel (U) and power boiler (S) manufacturing for our main workshop. In 2005, we set up Laem Chabang workshop for the manufacture of finned tube and HRSG harps & module boxes. In 2006, we obtained ASME certificate for pressure vessel (U) and Power boiler (S) manufacturing for LCB workshop. In 2008, we obtained certification of OHSAS18001. In 2013, we set up Nong Kham workshop for the manufacture of HRSG & Fire heater module boxes.

Asian Metal: Where do you buy raw materials?

Mr. Khositsakul: We purchase raw materials both from home and abroad. Though we enjoys the price advantage from the imported products, of which the price gap between domestic and import stands as high as USD80/t (10%), it takes longer time of delivery for imported materials compared with those of domestic products, so we purchase more from local steel mills, accounting for around 60%, with the rest imported from China, South Korea, Japan and Europe.

Asian Metal: How do you like the demand for HRC in 2022?

Mr. Khositsakul: Statistics from Thai Iron & Steel Association shows that the steel consumption in 2022 reached 16.3 million tons in 2022, down by 12% YoY compared with 18.6 million tons in 2021. Especially, the consumption dropped by nearly one fourth to 1.2 million tons dragged by the flood in October. Though the rainy season came to the end in November, the downstream projects maintained slow progress, and the demand failed to improve. Even though market participants worry about the economic recession in the year of 2023, we believe lots of projects such as power plants, oil and gas, petrochemical and refinery would be lauched around the world and these industries would recover. Therefore, VIPCO still holds optimistic anticipation of an improving demand in HRSG, heaters and WHRU industries, and all of these projects will support the demand. So we expect full operation in 2023.

Asian Metal: The Russia-Ukraine Conflict led to the soar of energy prices in 2022, so how about its influence on HRC production in Thailand?

Mr. Khositsakul: The increasing energy costs surely hurt HRC steel mills in Thailand. As far as I learnt, all of the top three HRC producers in Thailand ran at low operating rates continuously in 2022. The country produced about 5.3 million tons of steel in 2022, down by nearly 3% compared with 2021.

Asian Metal: How about the current HRC market in Thailand?

Mr. Khositsakul: In Thailand, HRC acts as raw materials for welded pipe manufacture, automobile industry, steel structure and furniture manufacture. Most HRC products are sold through coil centers. Both steel mills and traders lifted prices of HRC actively since early January boosted by the upward price trend in the international market as well as the positive anticipation in China, and the mainstream prices witnessed a total markup of around THB1,000/t (USD35/t) from mid-January to mid-February. However, end users tended to hold back from purchasing dragged by insufficient orders for final products in late February, forcing traders to accept more discounts so as to promote sales. From early March, steel mills and traders lifted prices tentatively stimulated by the rising prices of import raw materials due to the currency depreciation.

Asian Metal: HRC export prices in China witnessed the markup of around USD145/t since the middle of last Q4, and steel mills in other countries such as Japan, Korea and Vietnam remained eager to follow suit. What are your thoughts for the market prospect in Thailand for Q2?

Mr. Khositsakul: We also learnt that producers all over the world keep active in lifting prices of HRC seeing the continuous price increases and positive expectations after the government of China adjusted COVID-19 control policies. The worldwide steel demand would improve in 2023. In 2022, Thai Investment Commission approved 12 steel investment projects with a value of about THB5 billion (USD146 million). The investment in infrastructure development projects in the Eastern Economic Corridor (EEC) and the real estate industry might push steel consumption to increase in 2023. Therefore, we foresee increasing prices of HRC in Thailand in the second quarter of 2023, with the markup of around THB2,000/t (USD58/t) to THB27,500/t (USD795/t) by the end of June.

Asian Metal: What's your biggest challenge at present? What about your advantages?

Mr. Khositsakul: VIPCO faces uprising competitions with steel fabricators in Vietnam who enjoy lower labor costs and strong competitors in South Korea and China with high productivity. All of these factors push VIPCO to work hard to improve efficiency and to explore new market segments which have less competition. With more than 43 years' experiences and the biggest finned tube manufacturing facility in this field, we believe that VIPCO still stays as the preferred partner for clients from power plant and oil & gas industries.