Page 12 - Annual Report English 2018

Tycoons Worldwide Group (Thailand) Plc.

Due to TY’s production model of “steel-making and steel-rolling under the same
roof”, billets can be directly passed to rolling procedure right after the billets are
produced. The production model enables TY to reduce reheating cost and transport
cost. TY is the only one producer with “steel-making and steel-rolling under the same
roof” in Thailand, which makes TY more cost-effective than other Thai producers with
old model. The production of deformed bars will increase the utilization rate of billet
capacity and reduce the unit production cost. The increase in utilization of billet
capacity will lead to an increase in consumption of steel scrap, which means TY will
have more bargain power in the domestic market of limited steel scrap supply. Besides,
TYCN provides unique small package that customers can easily take and use, which
makes TYCN much more competitive. Moreover, Thai government announced a new
TISI standard for building deformed bars on Dec. 20, 2016, which does not allow
additions of alloy to building reinforcing bars and wire rods. The new standard will
prevent the imports of Chinese reinforcing bars with alloy and low-price billets.

Bans on Thai steel plant expansion
Steel plant expansion and construction of steel bar plants will be banned for the next
five years in Thailand to reduce the domestic surplus, according to an industry
Ministry draft regulation the cabinet approved on Jan 29, 2019. The government calls
on steelmakers to improve their technology, upgrade steel quality to meet high
standards and solve SOx and NOx emission levels to prevent outdated technology from
polluting surrounding communities. TY is expected to benefit from the bans due to the
fact that the billet/deformed bar prices will get stable. Meanwhile, as TY upgrades its
technology, there will be an improvement in its profitability.

2.3 Procurement of products/services

1. Production

TYCN is located at 99 Moo 1, Nikompattana, Amphur Nikompattana, Rayong.
The company could achieve maximum production capacity of 500,000 tons/year if
it were to produce only a single type of wire rod (that used for bar in coils), since it
is less time consuming to make than other types of wire rods. Actual capacity will
be lower, at approximately 360,000 tons/year, if the company produces a
combination of mixed product range with different grades. And the company also
could achieve maximum production capacity of 240,000 tons/year if it were to
produce only a single process of annealed wire. Actual capacity will be lower, at
approximately 144,000 tons/years, if it were produce over a single process of
annealed wire.

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