At the 17th SteelOrbis Steel Conference "New Horizons in Steel Markets" being held in Istanbul on November 30 with over 600 guests, Dr. Veysel Yayan, secretary general of the Turkish Iron and Steel Producers’ Association, stated that, while the preliminary expectations for 2022 were positive, it has been an exceptional year with the outbreak of the Russia-Ukraine war. Pointing out that the crude steel output globally and in China slowed down compared to the beginning of this year and came closer to last year’s levels, Dr. Yayan said that Turkey’s crude steel output moved down by 10.1 percent in the first ten months this year. Turkey ranked seventh in global crude steel output last year among all countries worldwide and ranked eighth after Germany in the first ten months of the year, Dr. Yayan said, noting that Brazil and Iran drew closer to Turkey with the help of their governments and the advantages of natural resources.
According to the TCUD official, global crude steel capacity utilization rates were 80.2 percent last year and at 75.2 percent in the first ten months this year. Though Turkey’s crude steel output declined by 10.1 percent in the January-October period this year, the expectations for the last two months of this year are not so bad, Dr. Yayan said, adding that capacity utilization rates decreased to 66.4 percent in the given period, especially due to energy costs, the share of which in total production costs increased to 28 percent with the price hike in August. Yayan said that it is hard for producers to carry the burden of the rise in energy costs because they cannot quickly reflect the hikes in their own prices.
Global finished steel consumption is expected to drop by 2.2 percent this year, while Turkey saw a 5.2 decline in the first nine months, Dr. Yayan said, stating that the decrease in long steel consumption is connected to the regression seen in the construction industry, but this situation is expected to be reversed in 2023. Yayan drew attention to the decrease in Turkey’s steel exports and the increase in imports, and added that in the January-September period of this year Turkey’s steel export/import ratio was 95 percent compared to the 111 percent recorded in the same period last year. This ratio may decrease further but is expected to increase later, Dr. Yayan stated, adding that Turkey is ranked the sixth country in the world in terms of its steel exports and fifth in imports, while 10 million mt new capacity will be coming on stream next year.
According to Dr. Yayan, the energy crisis showed that Turkey and the EU are different from other regions. Turkey is the most important export destination for Russia because of the sanctions and the aggressive price policy of Russian suppliers negatively affects the local Turkish market, he said, noting that there has been a cost differential between Turkey and the regions which are not affected by the sanctions and that this has disturbed the balance of the sector. Dr. Yayan said that an improvement is expected for natural gas costs as of December and for electricity costs as of January. Meanwhile, he underlined that producers feel price pressure when the share of scrap costs in total costs decreases and they struggle to compete when scrap prices fall since their margins drop. He said that he does not assess the decrease in finished steel prices as a positive because the sharp falls indicate unbalanced structuring.
Lastly, Dr. Yayan noted that the products which Turkey produces with a cost about $650-700/mt are sold by India to Turkey at $580-590/mt with the help of 40 percent lower energy costs. He added that it is natural to help households with energy costs but it is not right to place the burden on industry at such levels that they cannot carry.