We spoke with Tolga Kısacıkoğlu, chairman of the board of Galva Metal, about flat steel market price movements, the impact of global trade policies, and expectations for the future of the sector.
How has the first half of 2026 been for the flat steel market?
Unlike in recent years, prices have been trending upward this year. Prices started the year on a positive note due to a combination of factors, including lower Chinese exports, the correction of steel prices that had been suppressed for a long time, and the increasing impact of protectionist measures, particularly in the European Union. These factors have been further supported by wars, uncertainty, shipping delays, rising energy costs, and higher freight rates, allowing prices to maintain a strong trajectory. Demand was particularly stronger in the second quarter. I hope this trend continues.
What is the situation regarding domestic demand? How do you assess end-user sectors such as automotive and white goods?
There has been some contraction in domestic demand. I closely follow the PMI data for the metal manufacturing sector every month. So far this year, we have not seen a reading above 50. The figures have consistently been between 45 and 49, indicating contraction. Unfortunately, plans to lower interest rates have not materialized due to the war and various other factors. Sectors such as automotive, white goods, and construction tend to recover under conditions of low interest rates, monetary expansion, and optimism about the future. When there is no clear investment environment, spending is restricted, which slows down these sectors.
How have fluctuations in input costs and energy prices affected flat steel prices? How do you view the current price trend?
Iron ore and scrap prices are rising. In fact, if domestic demand were somewhat stronger, price increases would be much more pronounced. Since prices have been declining for nearly two years, I believe that this year, together with rising production costs, prices will move toward more sustainable and normalized levels.
The EU is preparing to significantly reduce quotas and increase the out-of-quota duty to 50 percent as of July 2026. How will this affect exports?
In my opinion, the EU is following a path that will negatively affect both the Turkish steel sector and the EU manufacturing industry. There are four parties involved, and I believe two will benefit while two will be negatively affected. Turkish steel producers and the EU industrial manufacturing sector will be adversely affected, whereas EU steel producers and Turkish industrial manufacturers will benefit. Following recent developments, steel prices in Europe have risen to roughly 30 percent above Turkish prices. Due to quotas and tariffs, our steel producers can only export limited volumes, but Turkish manufacturers using locally sourced raw materials now enjoy a raw material cost advantage of around 30 percent compared to their European counterparts. While our steel raw material exports may decline, our exports of finished products are likely to increase. The EU manufacturing sector will be negatively affected. This situation presents both risks and opportunities for us.
How decisive will CBAM-related costs be for flat steel exporters as of 2026? How prepared is the Turkish steel sector?
Turkey already has a certain advantage because production is largely based on scrap. However, I believe the EU has managed the CBAM process very poorly. Accreditation procedures and many other issues have still not been clarified in an official and written manner. Perhaps this is intentional. We also have a company in Romania and import products there as an EU-based company. Even so, we can only estimate our costs based on assumptions and forecasts. Companies are being deprived of their right to know their exact costs when making purchasing decisions, which I find highly inappropriate.
How are economic conditions affecting your business?
The steel industry thrives on stability, peace, low interest rates, and a favorable investment climate. Unfortunately, for the past four to five years, our sector has been moving against the wind. A stable environment with low uncertainty, low risk, and low interest rates is ideal for steel demand. We are far from that point at the moment. I hope the wars will end soon. I hope the ring of conflict and instability surrounding us turns into a ring of construction sites and investment projects. Domestically, the tight monetary policy, high interest rates, and inflationary environment have lasted much longer than expected. We are combating rising costs through technological development and productivity improvements, while also increasing our market share and developing new markets in a shrinking market environment. I believe both domestic and international conditions will become more favorable within the next five to six months. We have planned accordingly and made significant capacity increases during this period.
Any final comments?
There is no need to be overly pessimistic. I am convinced that companies that successfully navigate this period will perform much better in the next phase. Wars will end. Uncertainty will decrease. Costs will move down. Until then, we need to continue strengthening our efficiency capabilities and investing in advanced technologies.