SteelOrbis talked to Tolga Kısacıkoğlu, chairman of the Board of Galva Metal, about the role of steel service centers in the industry.
How do steel service centers play a strategic role between the producer and the end consumer?
Steel service centers are not merely an “intermediary” between the producer and the end consumer; they serve as a strategic solution partner managing the efficiency, speed and sustainability of the supply chain. First and foremost, as Galva Metal, we bridge the scale gap between integrated facilities producing large volumes and industrialists making smaller, more flexible purchases. We don’t just hold inventory; we perform value-added processing. Through operations such as slitting, cutting to length, packaging, quality control and logistics planning, we prepare the product to be directly integrated into the customer’s production line. This provides both operational efficiency and cost advantages for the end consumer. In summary, steel service centers act as a buffer mechanism in the supply chain. They manage the differences in time, quantity and product specifications between production and consumption; they balance financial and operational risks. Under today’s conditions, this role has evolved far beyond the traditional trading function, transforming into a strategic partnership.
What is the state of demand and competition in the Turkish domestic market?
Domestic demand continues to follow a cautious and fragile trajectory in the first half of 2026. The slowdown in industrial production, high financing costs and businesses’ reluctance to maintain inventory are causing orders for flat steel to be shorter-term and lower in tonnage. We observe that capacity utilization rates in the automotive parts industry and white goods and general manufacturing sectors are lower compared to previous years.
How do you interpret the price trend?
Domestic demand is remaining weak in the first part of the year. The slowdown in industrial production, high financing costs and companies’ tendency to operate with low inventories are exerting downward pressure on prices. Therefore, it seems unlikely we will see a strong price increase in the short term. On the other hand, cost pressures are also preventing prices from falling sharply. Scrap, energy and financing costs remain a significant burden for producers. Although not all of these cost increases can be fully passed on to sales prices due to weak demand, a certain floor has been established.
Globally, protectionist policies and China’s export strategy will continue to be decisive factors. Restrictions in export markets can periodically lead to a shift in supply toward the domestic market and result in price pressure.
Overall, we expect a market in 2026 characterized by periodic fluctuations - rather than sudden spikes - driven by demand and cost dynamics, as it seeks to find equilibrium.
As a steel service center, what do you look for when purchasing steel sheets? What criteria, besides price, are prioritized?
While price is important in sheet metal purchases, it is not the sole determining factor. Consistency in quality and reliability of mechanical properties and surface and coating standards are critical for us, because we process the product in a way that it goes directly into the customer’s production line. Therefore, working with suppliers that produce with low error margins and consistent quality is our priority.
That said, payment terms are particularly crucial during periods of weak demand and high financing costs. Flexible payment terms, a variety of financial instruments, and business models based on mutual trust directly impact our risk management. In today’s market conditions, strong collaboration gains meaning not just through price, but also through quality, delivery discipline and payment flexibility.
EU quotas remain in place, and quota volumes are expected to decrease further in the coming period. Meanwhile, the US has raised tariffs back to 50 percent. How is this wave of protectionism generally affecting the market?
The increase in protectionist measures is forcing producers and trading firms to seek alternative markets by narrowing export channels. The tightening of EU quotas and the US’ high-tariff policy mean that significant volumes of flat products cannot enter traditional markets. This is creating a shift toward more intense competition in regions such as the Middle East and North Africa.
However, every market has a limited absorption capacity. As supply shifts toward alternative markets, price competition intensifies and margins narrow. During periods when exports are curtailed, a portion of this volume returns to the domestic market. In an environment where domestic demand is already weak, increased supply creates serious pressure on prices and can disrupt market balance.
As a steel service center, we view this situation as a process that requires careful management and poses significant risks. While rising domestic supply may seem to create a short-term price advantage, unsustainable price levels could lead to capacity reductions on the production side and supply instability in the long term.
What changes does the concept of green steel bring for steel service centers?
The concept of green steel is not merely an environmental issue for steel service centers, it also signifies a commercial and operational transformation. Customers are now questioning not only price and quality but also the product’s carbon footprint. This requires steel service centers to assume new responsibilities across various areas, from supplier selection to inventory management, and from traceability infrastructure to reporting.
However, the most critical issue here is the uncertainty surrounding the Carbon Border Adjustment Mechanism (CBAM) process. Although the reporting period under CBAM, implemented by the European Union, has begun, how carbon costs will be priced, which emission values will be used as a basis, and the implementation details during the transition period remain unclear. This uncertainty raises serious concerns regarding pricing and long-term contract management for both manufacturers and service centers.
Since service centers act as intermediaries, they must anticipate how and to what extent they will pass on the carbon costs from manufacturers to the end customer. However, making a reliable cost projection is quite difficult until the final regulatory framework is clarified.
In your opinion, what is the most urgent structural problem the sector needs to address?
In our view, the sector’s most urgent structural issue is the imbalance resulting from exports shrinking due to various quotas and protective measures while imports remain at high levels.
Quotas and trade restrictions implemented in many markets, particularly the European Union, are severely limiting the export capacity of Turkish steel producers. While producers struggle with exports, domestic demand remains weak. Despite this, the continued strong inflow of imports - especially in certain product groups - is creating a supply surplus and price pressure in the domestic market.
This situation is squeezing domestic producers from both sides: market loss abroad and intense price competition at home. Unsustainable price levels are eroding profitability, dampening investment appetite, and negatively impacting capacity utilization rates in the long term.
As steel service centers, we are also directly feeling this imbalance. For a healthy market, export channels must become more predictable, and imports must be balanced within the framework of fair competition. Otherwise, the sector will be condemned to a structure that operates under constant pressure and struggles to make long-term plans.