Japan-based Nippon Steel and JFE Steel remain interested in investing in upstream steel facilities in Thailand, even though the global slowdown is making the steel industry sluggish.

Despite production capacity cuts announced late last year in line with the deepening fall in world demand, both firms are still eager to expand blast furnace production in Thailand, said a company executive who declined to be named.

"This investment is a long-term commitment which would take time to develop and set up. By the time the project is complete, the global economy will have picked up," the executive said.

Both world leaders in steelmaking, Nippon Steel and JFE Steel are two of four foreign firms that have expressed keen interest in developing high-quality steel blast furnaces in Thailand.

The other two are ArcelorMittal from Luxembourg and Baosteel from China.

"Thailand remains a prime location for such investment based on domestic market demand to support the automotive and electronics industries. Its strategic location for iron ore imports also helps," said the source. "However, their decision would also depend on support provided by the local government."

JFE and Nippon executives will talk with Prime Minister Abhisit Vejjajiva when the premier leads the Board of Investment (BoI) roadshow to Japan starting today.

"They will personally inform the PM about their continuing interest and ask for government support for infrastructure development as well as other incentives to support their investments," the executive said, adding that they expected "generous offers" from the Thai government.

Vikrom Vajragupta, director of the Iron and Steel Institute of Thailand, said the Industry Ministry had established three committees to develop details of the steel-industrial-complex, which is to be part of the Southern Seaboard project, to promote the industry seriously.

"The government will have to invest in building infrastructure but if investors need additional assistance, we will have to see if their proposals and our capability meet," Mr Vikrom said.

The industry has invested over 100 billion baht and hopes to support future downstream growth for steel as a raw material, like the automotive industry.