Turkish steel in the spotlight
For the most part, positivity overflowed at the 6th annual SteelOrbis Turkish Steel Market Conference in Istanbul on November 18, 2011, which kicked off with a presentation by Dr. Veysel Yayan, General Secretary of the Turkish Iron and Steel Producers’ Association. Casting his eye over trends in steel production across the world—and the current situation of Turkish steel producers in particular—Yayan stated that world steel production in 2011 was expected to increase by 5 percent, even though ongoing instability in the world economy, particularly in Europe, may require the need to revise this prediction.
Regarding the Turkish steel industry, Yayan said that Turkey is a dynamic economy with a rapidly growing steel industry, ranking first among the fastest growing steel industries in the world in 2011, thanks to recent investments in flat steel, quality steel, structural steel and stainless steel. These investments will give the Turkish steel industry a better production and trade structure and will help the Turkish steel industry to serve the domestic and export markets better, he stated. Accordingly, Turkey’s total finished steel production for 2011 was foreseen to reach 31.5 million metric tons (mt) from 26.3 million mt in 2010, while its flat steel production is predicted to hit 10 million mt in 2011, up from 7.3 million mt in 2010 and 4.8 million mt in 2009. Besides, with its crude steel production hitting over 3 million mt in both September and October, Turkey ranks as the 7th largest steel producing country in the world. Yayan also remarked that Turkey may become Europe’s largest steel producer by 2023, replacing Germany.
Yayan also underlined the growth in Turkey’s finished steel consumption, which increased from 23.6 million mt in 2010 to an anticipated 26.5 million mt in 2011. In 2012, Turkey’s total finished steel consumption was forecasted to reach 30 million mt. As for finished steel consumption per capita in Turkey, Yayan said that it is expected to grow by 12 percent year-on-year to 375-380 kilograms, which is above the average finished steel consumption in the European Union and about 70 percent higher than the world average.
Despite the growth recorded both in Turkey’s steel production and consumption, Yayan said that in 2011 capacity usage in Turkey will likely remain at 78 percent and this rate is not expected to increase in the near term, due to the contraction in Turkey’s export markets. Nevertheless, the Turkish steel industry’s contribution to Turkey’s external trade surplus will become stronger in the coming period, as Turkey’s steel exports already exceed its steel imports, 13.8 million mt against 8.2 million mt in the first nine months of 2011.
Also spreading the positive vibes at the conference was Hasan Danişment, Vice President of the Turkish White Goods Suppliers Association (BEYSAD). Danişment stated that the contraction in European white goods production since the financial crisis in 2008 has provided opportunities for the Turkish white goods sector, which has increased its production destined for the European market.
According to Danişment, the prospects for 2012 are positive, following the strong results anticipated for 2011. Further, he pointed out that the Turkish white goods industry is ahead of Europe in terms of innovation skills, and “Made in Turkey” has become a well-established mark of high quality in the world markets.
Providing a more skeptical view of the Turkish steel market, Çetin Kaya, the general coordinator of Turkish steel producer Yolbulan Baştuğ, said that the uncertainties and fragility surrounding the world economy are having a negative impact on the Turkish steel industry, increasing the volatility in the world steel industry and causing reduced demand in Turkey’s export markets. Kaya also stated that there is a lack of optimism regarding the outlook for 2012, as consumers find the prices of all commodities, including steel and steelmaking raw materials, to be on the high side and are waiting for new price levels to emerge.
Kaya added that Asia and other developing regions are now the main drivers of growth in steel production and consumption. However, he also warned that global steel supplies are expected to exceed worldwide steel demand by 500 million mt by 2012, resulting in increased competition in the global industry.
As for the Turkish steel industry, Kaya said that domestic steel consumption is still below pre-crisis levels, and this, coupled with increased local production on the back of the commissioning of new capacities, has increased the pressure on the domestic steel sector to export.
Kaya also told attendees that, after the devastating earthquake which hit the eastern Turkish city of Van in October, reconstruction projects across the country and new mass housing investments may create huge demand for structural steels, but it will take some time before this demand is seen.
Finally, Kaya said that high raw material prices, indirect taxes and expensive energy prices are placing a heavy burden on the Turkish steel industry, and that this is an issue that must be addressed by the Turkish government.