Dr. Veysel Yayan, secretary general of the Turkish Steel Producers Association (TÇÜD) spoke to SteelOrbis about 2025 review and 2026 expectations.
2025 emerged as a particularly challenging period for our steel sector. Rising financing costs and, in particular, dumped and state-subsidized global prices originating from countries in the Far East, primarily Russia and China, placed significant pressure on producers. Despite all the negative developments, our steel sector maintained its strong stance by modestly increasing its production.
However, during the first 11 months of the year, which saw Turkish finished steel consumption reach 35.8 million mt, approaching historically high levels, the decline in consumption in Russia, China and Far Eastern countries led to increased export pressure from these regions. This pushed our imports up by 11.8 percent to 17.4 million mt and also contributed to a decline in our exports. In the January-November period, the capacity utilization rate of the Turkish steel sector, which ranks seventh among the world's largest crude steel producers with a production of 34.6 million mt in the given period, remained at 63.3 percent. The fact that the capacity utilization rate was well below the 74.8 percent rate achieved in 2021 revealed that the sector fell far short of its potential.
Protection measures, which have gained momentum since 2023, saw the European Commission reduce quotas by 47 percent and aim to lower them to 18.3 million mt, citing the expiration of current steel protection measures in 2026, following the US decision on June 4, 2025, to increase tariffs on steel imports to 50 percent and to increase the customs duty applied to non-quota imports from 25 percent to 50 percent, thereby significantly tightening the system. Our steel sector, which has demonstrated its ability to diversify its export markets by increasing exports to markets such as the CIS and North Africa in 2025, is expected to face a potential 60 percent decline in exports to EU countries if the aforementioned policies are implemented.
Meanwhile, the Carbon Border Adjustment Mechanism (CBAM) process officially began on January 1, 2026. The Turkish steel sector views the CBAM process not only as an additional compliance obligation but also as an area of strategic transformation where sustainable competitive strength is rebuilt. The widespread use of renewable energy, the integration of digitalization and green production technologies, and compliance with the regulatory framework will be the key determinants in the coming period. The decisive and comprehensive steps Turkey will take in line with its 2053 Net Zero Emissions target could position the Turkish steel industry as one of the leading centers of low-carbon production not only in the EU market but also on a global scale.
Our steel sector is entering 2026 under the shadow of multifaceted uncertainties with international political and economic dimensions. Persistent inflationary pressures in the global economy, difficulties in accessing finance and slowing demand continue to be decisive factors for the sector. On the other hand, although the decline observed in inflation and interest rates has not yet been sufficiently reflected in credit costs, a gradual recovery trend in domestic consumption and production is expected to continue, and 2026 is anticipated to be a period of more pronounced and rapid improvement in economic indicators.
The outcome of the ongoing wars in neighboring countries remains uncertain. The establishment of peace in both Ukraine and Palestine would be somewhat reassuring. It is believed that concrete steps towards peace will revive construction activities in the region, leading to new demand for steel, which could positively affect global capacity utilization rates.
Our exports to the European Union are of strategic importance for our steel sector. Steel trade between the European Union and Turkey has developed in a way that benefits both sides. However, the European Union, in particular, has benefited significantly from the free trade agreement between us. Over the past 20 years, we have had a trade deficit of $24.4 billion with the European Union. It is not realistic to say that the free trade agreement should remain in force, but that we should raise the tax rates on steel products to 50 percent, simply because of developments in the last one to two years. It is also impossible to talk about such a free trade agreement. Therefore, it is vitally important for Turkey to resolve its steel foreign trade with the European Union within a framework that balances the interests of both parties. The European Union also has a serious responsibility in this regard. There is no other country besides Turkey that imports from the European Union in quantities close to its exports. All other Far Eastern countries continue their exports unilaterally, importing almost nothing from the European Union. Therefore, a solution based on a simple mathematical balance, without taking into account the 40-year-old free trade agreement, would not be fair to Turkey vis-à-vis other Far Eastern countries. In 2026, the solution found with the European Union will significantly affect the future of the Turkish steel sector.
Steel consumption continues to grow steadily. Parallel to the decline in inflation, with the fall in credit interest rates, consumption is expected to continue to increase in the coming year. The upward trend in domestic consumption acts as a kind of insurance for our steel sector. However, what is important is to ensure that this consumption is met through domestic supply, as Europe, the United States and many other countries have done. Already, countries such as the United States, Mexico, Canada and Serbia have begun to follow suit with 50 percent tax rates. This situation requires our steel sector to implement similar measures. In the event that the negotiations with the European Union fail to reach a balanced agreement that satisfies the interests of both parties, it is of vital importance to take immediate action to prevent a recurrence of the difficulties experienced so far. Only in this way will it be possible for both the Turkish steel sector and the sectors that consume Turkish steel products to maintain their presence and continue to develop. This will also contribute to ensuring Turkey's sustainable position in economic terms. From this perspective, if Russia, China and Far Eastern countries, which have concentrated on Turkey due to their declining consumption, are brought under control and a specific agreement is reached with the European Union - in addition to achieving a decline in inflation and interest rates and a restoration of exchange rates to reasonable levels - then we may see the production increase that began in the last quarter of 2025 continue into 2026, as well as finished product consumption and crude steel production exceeding 40 million metric tons, and a capacity utilization rate reaching 70 percent.