We talked to Bahar Parladı, sales manager of Parladı Metal about the situation in auto steel market and the relationship between automotive and steel industries.
How much of your total production do you devote to the automotive industry?
75 percent of our total production capacity is accounted for by sales to the automotive industry.
How do you view the automotive sector’s demand for steel? What is your prediction for the coming period?
The transition process from fossil fuel vehicles to electric vehicles has slowed sales figures in Europe, which is the biggest customer of the Turkish domestic automotive industry. We predict that this temporary situation will disappear with the introduction of new projects of OEMs [original equipment manufacturers] in the medium term, especially in the domestic market, and market conditions will continue to improve with the impact of VW Group’s investment and the impact of producing our own national car. Accordingly, the use of steel in the automotive industry will also increase.
Why do you think steel enterprises care so much about supplying products to the automotive industry?
It is a bit of a cliche, but I think the term “safe harbour” is precisely the main reason for steel enterprises’ approach to this sector. We can list many sub-reasons such as the continuity of the sector, the financial reliability of companies in the sector, and the demand for high value-added products.
What can be done to strengthen cooperation between the automotive and steel industries?
The new generation steels used in the automotive industry ensue from many years of R&D studies. The economic return from these studies takes a long time. Hence, I believe that the issue should not be devolved on to the private sector alone. I hope that this issue will gain importance in the eyes of the government with the launch of the domestic car project. If such a vision is determined for our domestic car manufacturer and is supported by government policies, we can be a country that exports automotive steel in the medium term with the cooperation of the private sector, universities and the public sector.
In this process, as a steel service center, we try to help both universities and the automotive sub-industry companies as much as we can in terms of R&D studies.
What is your view of the competition from imported automotive steel products?
Since automotive import products are compulsory, the cost of automotive parts has increased. Labor wages and other expenses are strongly suppressed to balance this increase.
The automotive sub-industries, the steel service centers serving them and manufacturers are extremely uncomfortable with this situation.
As we expect the quotas applied by countries to soften in 2020, we expect that the situation will improve somewhat.
To what extent have the protectionist measures affecting the entire industry impacted your exports?
We are trying to replace the European market, which is a priority for the flat steel industry due to its logistics advantage, by heading towards more virgin markets such as North Africa and the Middle East. Our efforts accordingly have started to show results. We aim to proceed by increasing our exports in 2020 as compared to 2019.
How was 2019 for your company? What do you expect from 2020?
After the protectionist measures, domestic flat steel producers lost their share in export markets and headed towards the domestic market, causing prices to be suppressed and sales to be difficult due to surplus supply. For this reason, 2019 was a year with low profitability in the sector. For Parladı Metal, it was a year we closed by exceeding our targets in terms of both tonnages and turnover, compared to the previous year.
We think 2020 will be the beginning of the reacceleration iof the sector. This year will be a year in which we will prepare for the future with investments. Our target in both sales and turnover is to achieve growth compared to 2019.