We spoke with Eftal Pehlivan, export manager at İzmir Demir Çelik, about the current situation in the steel sector.
İzmir Demir Çelik: Integrated strength, global vision, sustainable future
İzmir Demir Çelik Sanayi A.Ş. (İDÇ), has been operating as one of Turkey's leading integrated long product manufacturers since 1975. Located in Aliağa, our facility has a fully integrated production infrastructure, including two electric arc furnace steelworks, three rolling mills, our own port operations, and energy production facilities.
With our new steel mill investment, which we commissioned in 2024, we increased our annual liquid steel production capacity to 3.1 million tons, making us one of Turkey's five largest producers. Our product portfolio includes long products such as construction steel and profiles, as well as semi-finished products such as billets/blooms, thanks to our increased capacity.
In addition to its strong position in the domestic market, İzmir Demir Çelik is increasing its global competitiveness day by day with its exports to many regions, particularly Europe, North Africa, the Middle East, and Latin America.
Our production philosophy, focused on quality, sustainability, and timely delivery, along with our investments in environmentally friendly technologies, form the cornerstone of our company's long-term vision. We aim to increase our currently operational 70 MW solar power plant to 150 MW. This investment is being carried out under İzdemir Energy (the publicly traded energy company of the İDÇ Group), and we would like to emphasize that we will continue our investments in this area with determination in the coming period.
As İzmir Demir Çelik, with our high production capacity, advanced logistics infrastructure, and vision of sustainability, we aim to secure a strong position not only among today's steel producers but also among those of the future.
Service and reliability stand out in challenging market conditions
The year 2025 stands out as a period marked by oversupply and structural imbalances in the global long products market. Demand is weak, and competition is fiercer than ever. Margins have fallen to near-zero levels globally; today, it is not the companies that secure orders but those that can deliver quickly that gain an advantage. Even small differences of $1/mt can cause an order to change hands. Competition becoming this destructive has forced many global producers to focus on cash flow and capacity utilization.
The 50 percent Section 232 tariff imposed by the US on all steel imports has ushered in a period where not only Turkey but all exporting countries are being pushed out of the market. This decision has disrupted global trade balances while also paving the way for producers based in China and Southeast Asia to increase pressure on the market through aggressive pricing strategies.
In particular, China's more than 100 percent increase in long product exports in the first quarter of 2025, driven entirely by state policies, is disrupting the classic supply-demand balance. This puts EAF facilities that produce from scrap, including those in Turkey, at a cost disadvantage.
On the European front, demand still shows no signs of recovery. Import pressure makes it difficult for domestic producers to cover their costs. High energy costs drive up production costs, while the sharp decline in scrap prices creates downward pressure on final product prices. The continued low domestic demand during the summer months is forcing many producers to cut back on production.
In the Turkish domestic market, currency fluctuations and high interest rates following the elections have reinforced the contraction in demand in the construction sector. Currently, only the reconstruction process in the earthquake zone and urban transformation projects are generating some activity.
Despite this overall picture, at İzmir Demir Çelik, we are managing this challenging period in a controlled manner through product diversity, market diversification, and fast delivery capabilities. We prioritize gaining new markets with export strategies focused on service and reliability rather than price.
We are increasing our competitiveness with a dynamic supply model
As a company that manufactures using electric arc furnace (EAF) technology, our main raw material is scrap, but we pursue a flexible raw material policy in response to changing market conditions. Uncertainties and high price fluctuations in the scrap supply chain in the last quarter of 2024 and the first half of 2025 have occasionally brought the billet purchasing strategy to the fore. Indeed, Turkey’s volume of imported long semi-finished products, which was 3.145 million tons in 2023, increased to 3.840 million tons in 2024 and reached 2.077 million tons in the first six months of 2025. This figure was 1.338 million tons in the same period of 2024, representing a 55 percent increase year on year.
Imported billet play an important role in increasing our competitiveness, especially in export markets, by providing seasonal cost advantages and supporting production continuity. Therefore, in the coming period, we will continue to evaluate both scrap and billet supply within a dynamic structure shaped according to demand.
Furthermore, in line with our environmental sustainability goals, optimizing energy efficiency and reducing our carbon footprint in production are also among our top priorities.
In this regard, we aim to gain advantages in terms of both cost and operational efficiency with a supply model that allows us to flexibly switch between scrap and billets depending on market conditions.
A shift in exports: strategic steps in alternative markets
In 2025, the Turkish steel sector is facing both [JF2] structural risks and opportunities that require careful management in export markets. Due to the quota system in the European Union, our export volume is limited in certain product groups. This situation makes it imperative for us to pursue a more effective competitive strategy in alternative markets, especially for long products such as construction steel and wire rod.
The North African region continues to be an important focus area in this regard. While Morocco continues to be a market that stands out with its infrastructure investments and industrial projects, Egypt is not only a consumer but also a producer, directly competing with the Turkish steel sector in most export markets. In particular, Egypt's strengthening of its position as an exporter in certain product groups in the European market requires Turkey to assess its position in the region in a more strategic and proactive manner.
In the EU market, quota restrictions limit Turkey's sales, while the balance has shifted following antidumping investigations. In the first five months of 2025, the EU's imports of hot rolled coils (HRC) from India, Japan, Vietnam, and Egypt fell by 78 percent from 2.14 million tons to 457,000 tons, while imports from Turkey rose by 81 percent from 446,000 tons to 808,000 tons during the same period. Thus, Turkey's share of HRC within the EU has increased significantly, from 10.4 percent to 23.7 percent.
These figures show that it is still possible for the Turkish steel sector to be present in the European market with the right product at the right time. However, for sustainable success in both North Africa and Europe, it is crucial to differentiate oneself beyond price competition through factors such as product quality, delivery discipline, and technical compatibility.
Middle East: A regional market shaped by restructuring and selective opportunities
Despite geopolitical fluctuations, the Middle East market continues to be a strategically important export market for the Turkish steel sector. Population growth in the region, publicly supported infrastructure projects, and energy investments are among the key dynamics keeping steel demand strong, particularly in certain countries.
In Syria, specifically, although the post-war reconstruction process has been on the agenda for a long time, the trade environment has not yet fully matured due to the current political and economic uncertainties. Inconsistencies in customs policies, frequently changing regulations regarding border trade, and fragility in payment systems cause exporting companies to approach this market cautiously. Indeed, recent reports in the public domain regarding restrictions on imports from Turkey have been described by the Ministry of Trade as a "temporary measure," indicating that commercial stability in the region is still developing. For this reason, the Syrian market is expected to become more predictable and workable by 2026.
On the other hand, Turkey's exports of 36,860 tons of billet and 89,330 tons of construction steel to Syria in the first six months of 2025 reveal that the commercial potential in the region is still intact. These figures are expected to exceed 200,000 tons by the end of the year.
While public investments and the development of industrial infrastructure in Iraq and Jordan, other important markets in the Middle East, support steel demand, opportunities in the Gulf countries are more limited. Countries such as Saudi Arabia and Qatar, in particular, are able to meet their domestic demand to a large extent, and even supply outside the region from time to time, thanks to their increased production capacities and net exporter status in certain product groups. This stands out as a factor limiting the potential for exports from Turkey.
Consequently, in the short term, the situation requires action based on regional risks and capacity balances. However, considering restructuring processes and publicly supported projects, the Middle East market will continue to offer selective and sustainable opportunities for the Turkish steel sector in the medium term.
US market - limited opportunities under the shadow of uncertainty
The US market has long been a priority and strategic export destination for the Turkish steel sector in terms of volume and price stability. However, high customs duties imposed under Section 232 and recently revised antidumping measures have seriously weakened the competitiveness of many countries, including Turkey, in this market. At present, the total tax burden on Turkish steel products has reached 50 present.
The most important factor to note at this point is the sudden changes in US foreign trade policy decisions and the unpredictability of their implementation in recent times. In fact, additional tariffs imposed on some HRC shipments while the products were on board or during loading have left manufacturers and exporters facing serious costs. This situation has not only undermined competitiveness but has also called into question the reliability of suppliers in the eyes of American buyers.
In this context, even if price levels for certain product groups are technically "stable" today, sellers tend to avoid short-term trade. The frequent changes in the tax environment and the instability of the legal infrastructure prevent the establishment of a sustainable trade foundation. On the other hand, rising scrap and energy costs in the US domestic market may create niche opportunities in certain specialized product segments . However, these opportunities will only be relevant for companies that can react quickly and offer technically differentiated products.
As İzmir Demir Çelik, we are carefully monitoring the risks associated with the US market under the current conditions and shifting our focus to alternative markets with lower tax uncertainty. We continue to closely monitor developments in the US market in order to be prepared for possible regulations. In the medium term, it is possible to become a more active player in this market again, particularly if there is a softening in trade agreements or if special permit processes are established for project-based products. However, under current conditions, the US is a market that requires a cautious and selective approach.
Global protectionism on the rise: competition is no longer limited to price
In recent years, the steel sector has seen fundamental changes in the dynamics of global trade, accompanied by increasing protectionist tendencies worldwide. The US, the EU, and many other countries have implemented various measures such as customs tariffs, country- and product-based quota systems, antidumping measures, and border carbon regulations to protect domestic industries, support employment, and control the balance of foreign trade.
These developments not only weaken the fundamental principles of free trade but also make market access more complex and politically charged. In the steel sector specifically, this trend is resulting in regional supply surpluses, price imbalances, sudden changes in trade direction, and market contraction.
For export-oriented structures such as the Turkish steel sector, this situation has become a factor that directly affects competitiveness. In particular, the quota system applied by the European Union to Turkey is quite restrictive for certain product groups, limiting the market access capabilities of exporting companies both seasonally and in terms of volume.
As İzmir Demir Çelik, we are positioning ourselves in this new order with our flexible production planning, market diversity, and logistical advantages derived from port operations. We prioritize long-term partnerships with our customers by offering not only products but also fast delivery, technical support, and sustainable services.
As a result, one of the most significant changes brought about by increasing protectionism in the sector is that success is now determined not only by competitive pricing and quality but also by an agile and strategic approach that can adapt to trade policies.
EU quota system update: Conditions have partially improved, with a relative positive impact expected by the end of the year
The European Union's quota system revision, which came into effect on August 1, 2025, has provided the Turkish steel sector with some breathing room for certain product groups. Specifically, the designation of a special country quota for Turkey for products classified as Category 17, such as angles, shapes, and sections, is an important step towards enhancing competitiveness and making market access more predictable.
However, it is crucial to evaluate this development in comparison to previous periods. In previous years, Turkey benefited from a total residual quota of 57,000 tons allocated to "other countries" for this product group, of which approximately 35,000 tons were used solely by Turkey. From this perspective, the fixed country quota of 22,892 tons defined for Turkey as of October 1, 2025, should be seen not as a numerical increase but rather as a structural adjustment.
This new system may contribute to a slight reduction in the pressure felt by the sector as we enter the final quarter of the year. Compared to previous periods when exports were disrupted in the latter months of the year due to rapidly depleting quotas in the common pool, it will now be possible to establish more planned and long-term sales relationships.
As İzmir Demir Çelik, we view this regulation as a cautious improvement, particularly in terms of our export plans for profiles and similar product groups in Europe. Although the quota allocation falls below the amount actually used in the past, we believe that this new period will make a relatively more positive contribution after the challenging first half of the year.
In conclusion, although the quota increase is limited in technical terms, the framework it creates in terms of commercial stability and sustainable market access will enable a more balanced export environment in the last quarter of 2025.
Economic fluctuations and their impact on the construction sector: a balanced and flexible approach
As of 2025, the Turkish construction sector is operating under the decisive influence of macroeconomic indicators. High inflation rates, rising interest rates, and difficulties in accessing finance have led to the postponement or downsizing of private sector projects in particular. These developments are reflected in the steel sector as a contraction in demand for domestic market-oriented products, primarily construction steel.
During the same period, public investments have slowed down due to budget constraints, and projects are progressing gradually. This situation necessitates a more cautious and selective approach to production planning across the sector.
At İzmir Demir Çelik, we have focused on balancing this domestic market weakness with export-oriented strategies. Our increased production capacity, thanks to the new steel mill investment we commissioned in 2024, has enabled us to take a stronger position in both domestic and international markets in the semi-finished products segment. At the same time, we are adopting a flexible and controlled sales strategy based on customer segmentation by focusing on project-based sales in the domestic market.
As a result, although the current economic conditions in Turkey have caused a significant slowdown in construction activities, as İzmir Demir Çelik, we are managing this process not only with a defensive reflex but also with strategies of adaptation, diversification, and proactive positioning.
2025 and Q4 expectations: focus on balance and preparation for the future
2025 has been shaping up to be a period of increased protectionism in the global steel market, continued fragility on the demand side, and a focus on strategic positioning among producers. As Izmir Demir Çelik, we are managing this year in a balanced manner with our strong production infrastructure, integrated logistics capabilities, and export-oriented approach.
In the first half of the year, weak demand both globally and locally necessitated a more cautious approach to trade. In Turkey specifically, high interest rates and difficulties in accessing financing led to a contraction in the domestic market. Although construction investments in June showed the highest monthly increase in the last four years according to TÜİK data, this momentum has not yet been reflected across the sector as a whole.
Throughout this process, we have maintained our effectiveness in markets with strong infrastructure investments, such as North Africa and the Middle East, through our export-focused strategy. We have preserved our competitive strength in these regions by providing fast and reliable supply through our logistical advantages.
In the scrap market, prices have remained flat in the $340-345/mt CFR range for the past three months. This stagnation is directly related to global reluctance to buy and uncertainty in trade policies. Sellers are more cautious and are making short-term sales.
Our expectation for the last quarter is that the current calm outlook will largely continue. Although the European Union's country-based quota regulations offer opportunities in Turkey's favor, no significant movement is expected in the domestic market other than a possible interest rate cut.
As İzmir Demir Çelik, we view this process not only as risk management but also as a period of preparation for the future; we aim to finish the year on a solid footing with sustainable production and strong business partnerships.