We spoke with Mehmet Ali Fincan, general manager of Yametaş Yassı Metal Mamulleri, about the price outlook in the flat steel market, the impact of global trade policies, and the sector’s future expectations.
How has the first half of 2026 been for the flat steel market?
The first half of 2026 has been a historic turning point, marked by protectionist barriers in the global steel market reaching their highest level, the beginning of financial obligations under the green transition, and the reshaping of logistics routes due to geopolitical risks. The flat steel market is trying to maintain selective activity in domestic demand while also struggling to adapt to radical rule changes in foreign markets.
What is the situation in domestic demand? How do you assess end-user sectors, particularly automotive and white goods?
Although high borrowing costs and tight monetary policy have somewhat weakened domestic consumption appetite, the export strength of the manufacturing industry and ongoing urban transformation and infrastructure projects are preventing a sharp break in flat steel demand.
The automotive industry has slowed down in local sales due to credit restrictions and high interest rates, but continues to support flat steel demand through production and exports. The sector’s aggressive $43 billion export target for 2026 keeps production lines busy. In addition, under pressure from European OEMs, the Turkish automotive industry is turning toward flat steel with a low carbon footprint, including green and recycled steel.
The white goods sector is directly affected by both the slowdown in housing sales in the domestic market and stagnation in the European market. In the first half of 2026, the sector adopted a “wait-and-see” and “just-in-time supply” strategy for flat steel demand.
Due to high financing costs, white goods producers avoid holding large-volume steel inventories and purchase flat products only in line with confirmed orders.
Pipe and profile producers, another major consumer of flat steel, are supported in the domestic market by selective growth in the construction sector. Urban transformation projects and infrastructure investments in the earthquake zone provide baseline support for structural flat steel demand. However, as this sector is struggling in exports due to quota reductions in global markets, particularly EU quotas, it has entered into intense price-based competition in the domestic market.
How have fluctuations in input costs and energy prices been reflected in flat steel prices? How do you interpret the price trend?
In the first half of 2026, flat steel prices were shaped more by “cost inflation” and “geopolitical disruptions” than by the traditional supply-demand balance. While final demand from end users did not show exceptional momentum in either domestic or foreign markets, rigidity in input costs and structural fluctuations in energy prices became the main factors keeping flat steel floor prices high. Depending on flat steel production methods, integrated BF and electric arc furnace production, cost pass-through differed in terms of raw materials. Adverse weather conditions in Australia and Brazil, together with higher global freight rates, kept iron ore prices in the $95-105/mt range. Coking coal prices, meanwhile, exceeded expectations due to supply constraints from Mongolia and Australia, testing $210/mt. This directly pushed up the cost base of integrated flat steel producers.
On the energy side, increases in fuel and diesel costs and logistics route changes caused by the Red Sea crisis multiplied the cost of transporting raw materials to plants. In the domestic market, periodic adjustments in electricity and natural gas prices directly affected melting costs for scrap-based EAF producers.
Despite weak domestic demand, producers were unable to absorb these cost increases. As a result, raw material and energy pressure led to a compulsory, rather than voluntary, increase in flat steel prices. Regionally, domestic HRC prices in Europe settled in the €680-715/mt range, while the US domestic market tested levels above $1,100/mt. In Turkey, both import and domestic HRC prices maintained a firm stance in line with these cost margins.
In light of current dynamics, a radical decline or collapse in flat steel prices is not expected in the second half of 2026 and beyond. Three key factors will determine the price trend.
First, we are entering a cost-based pricing period. Even if prices show some softening due to insufficient demand, the floor created by raw material, logistics, and labor costs remains very high. Producers prefer to reduce capacity utilization rates rather than operate at a loss. Therefore, sharp bottom levels similar to those seen in previous years are unlikely.
Second, protectionist barriers and regional price gaps are becoming decisive. As of July 1, 2026, the EU’s 50 percent out-of-quota duty and quota reductions will regionalize global steel trade. Since domestic producers are protected in Europe and the US, prices in these markets will remain high. By contrast, products from major suppliers such as China and India, excluded from Western markets, will flow into Asia and the Middle East, meaning import pressure and intense price competition will continue in these regions, including Turkey.
Finally, under Carbon Border Adjustment Mechanism (CBAM) and the “green steel” premium, the start of financial obligations under the CBAM as of 2026 is expected to divide the price mechanism into high-carbon, cheaper steel and low-carbon/green, premium steel. Especially for flat products exported to Europe, carbon certificate costs will be directly added to product prices, making an upward trend inevitable in the qualified and sustainable steel segment.
The EU is preparing to significantly reduce quotas and raise the out-of-quota duty to 50 percent as of July 2026. How will this affect exports?
The new steel import regulation approved by the European Parliament in May 2026 will enter into force as of July 1, 2026. This new legislation is not merely a rule change for Turkish steel exporters; it is a radical protectionist wall that fundamentally changes the rules of the game and effectively locks the gates of the European market.
As the temporary safeguard measures implemented by the EU since 2018 under World Trade Organization rules expire on June 30, 2026, the EU has prepared a permanent and much stricter new regulation to replace them:
Sharp quota reduction: The total annual duty-free steel import quota has been reduced by 47 percent compared to 2024 levels, to 18.3 million mt.
Doubling of the duty: The current 25 percent penalty duty applied to products exceeding the quota has been doubled to 50 percent.
“Melt and pour” requirement: It will become mandatory to document not only where the steel is processed, but also where the crude liquid steel was melted and poured. This completely ends the practice of buying billet or hot rolled coil from another country, such as Russia or China, processing it in Turkey, and selling it to the EU as “Turkish origin.”
Turkey exported an annual average of around 6.5-7 million mt of steel to the EU in 2024-2025, with flat steel products such as HRC and galvanized steel accounting for roughly half of this volume. The EU is Turkey’s largest steel market, with a market share of 38 percent. The scenarios awaiting us after July 2026 are as follows:
For a low-margin commodity such as flat steel, selling to the EU by paying a 50 percent customs duty is commercially impossible. Once the quota is exhausted, EU trade for Turkish exporters will come to a complete halt for that quarter. Monitoring quotas on a daily basis will become much more critical.
Due to the nearly 50 percent reduction in total quotas, period quotas, namely quarterly quotas, will be filled much faster, perhaps within the first few weeks. Queues may form at ports among exporters, and the “first come, first served” race could lead to logistical chaos.
Millions of tons of Turkish flat steel excluded from the EU market will urgently have to be directed to alternative markets.
This move by the EU may affect not only foreign trade but also Turkey’s domestic market directly. Domestic flat steel that cannot be sold to Europe will be redirected to the local market, creating a serious supply surplus and price competition.
It will not be only Turkey; major suppliers such as China, India, South Korea, and Vietnam will also be excluded from the EU market, and these countries will redirect their products to free trade areas such as the Middle East and Turkey. It has become an inevitable necessity for Turkey to implement similar antidumping and safeguard measures without delay in order to protect its own domestic market.
What is the state of competition in domestic and foreign markets? Do you expect any change in HRC imports from China?
As of the first half of 2026, competition in both domestic and foreign markets is going through one of the most aggressive and difficult periods in the history of the steel sector. As global protectionist measures narrow market access, supply pressure toward the remaining open markets has effectively turned into a price war.
China remains the most decisive actor in the global steel market. However, 2026 is becoming a year of critical shifts in China’s HRC export strategy and its impact on Turkey.
Although inventory pressure on Chinese producers continues due to the ongoing real estate crisis and weak domestic demand in China, the “new export licensing policy” introduced by the Chinese government as of January 2026 has started to curb uncontrolled product flows into global markets. Indeed, in the first half of the year, China’s finished steel exports declined by around 9-10 percent compared to the previous year. This shows that China is moving from a strategy of flooding the world with billions of tons of cheap steel toward a more controlled supply approach.
In Turkey’s domestic market, local producers’ long-standing requests for protection and antidumping measures against Chinese-origin HRC imports continue to gain legal ground in 2026. In order to protect its domestic industry, Turkey has tightened antidumping duties and customs controls on China and certain Far Eastern countries.
In the coming period, a volume decline and structural change are expected in direct HRC imports from China. Due to the Ministry of Trade’s mechanisms to prevent unfair competition and existing or potential new antidumping duties, directly importing low-quality and cheap HRC from China will lose its former appeal. Domestic industrial users are expected to turn to local production or other duty-free alternative countries due to tax risks.
Even if direct imports decline, Chinese producers may continue the tendency to avoid duties by sending semi-finished products such as slab or billet to Southeast Asian countries, converting them into HRC there, and exporting them to Turkey through origin circumvention. However, due to the EU’s strict “melt and pour” rule, pipe-profile or white goods exporters in Turkey will also have to avoid purchasing such HRC if it contains Chinese-origin liquid steel in its background in order to sell products to the EU.
How decisive will CBAM’s financial obligations be for flat steel exporters as of 2026? How prepared is the Turkish steel sector?
As of January 1, 2026, the transition period under the Carbon Border Adjustment Mechanism ended and the financial obligation period officially began. For Turkish flat steel exporters, this is no longer just a reporting and bureaucracy issue; it has become the most critical commercial threshold directly determining companies’ balance sheets, profit margins, and competitiveness in the European market. CBAM means a financial bill for the embedded emissions, Scope 1 and Scope 2, released during the production of flat steel exported to the EU. Producers will have to purchase CBAM certificates indexed to the EU ETS carbon price in proportion to the amount of carbon they emit per ton.
The market has now split into two: low-carbon, CBAM-compliant green steel and high-carbon conventional steel. Automotive and white goods giants in the EU demand only low-emission steel to avoid paying high carbon costs. Therefore, CBAM has become the single visa determining whether companies can remain in the EU market.
Turkey has a significant advantage compared to China and India, its main competitors in the EU. While production in China and India is largely carried out at coal-based integrated blast furnace facilities, around 70 percent of Turkey’s production capacity consists of electric arc furnace facilities using electricity. This enables Turkish producers to pay lower carbon costs than their competitors, putting Turkey one step ahead.
The Turkish steel sector is among the earliest and fastest sectors to adapt to the CBAM process. However, the level of readiness differs depending on companies’ production models, whether EAF or integrated.
Turkish flat steel producers have made major investments to reduce Scope 2 emissions from electricity consumption to zero. Factory rooftops and land purchased in different regions have been converted into wind and solar power areas. Many producers have achieved self-consumption levels that allow them to meet all electricity used in production from green energy. In addition, the quality of scrap used as raw material in electric arc furnaces is being improved to minimize energy consumption and emissions during melting.
For integrated flat steel producers operating with blast furnaces, such as Erdemir and İskenderun Demir Çelik, the process is more challenging and costly. These facilities have put medium- and long-term roadmaps into practice to radically reduce carbon emissions.
The use of green hydrogen instead of coal and investments in DRI facilities have been brought to the planning and pilot implementation stages.
In the short term, emissions are being reduced by increasing scrap charging in blast furnaces.
Drawing on the experience gained during the transition period, Turkish producers have fully established the infrastructure for monitoring, calculating, and reporting carbon emissions in line with international standards and verified by accredited institutions.
The sector’s greatest expectation at present is for Turkey’s own National Emissions Trading System to be fully enacted and become functional. If carbon emissions are taxed in Turkey and the funds collected are transferred back to the sector as grants for green transformation, then under a double taxation prevention arrangement with the EU, Turkish producers will pay the carbon tax in Turkey instead of paying it to the EU. This is of vital importance for preserving the sector’s financial strength.
How are economic conditions affecting your business?
The macroeconomic climate prevailing in the first half of 2026 is directly and deeply affecting the operational processes, financial management, and long-term strategies of the flat steel sector. The sector is struggling with financial pressures caused by high inflation and tight monetary policy while also trying to maintain production continuity. Rising labor and operational expenses are structurally increasing production costs.
In flat steel production, raw material purchases are large-volume transactions and usually require cash or short-term cash flow. High interest rates have made working capital financing highly costly. Banks’ tight lending policies are affecting not only producers but also buyers. As a result, the ability to conduct deferred transactions in the market has narrowed across the chain.
Economic uncertainty and liquidity constraints have fundamentally changed customers’ purchasing habits. Large-volume and speculative stock purchases made in previous years to hedge against price increases have declined significantly. Market players now prefer to buy only as much as their confirmed orders require and choose products with the shortest delivery times. While this complicates production planning at plants, it also increases the frequency and cost of logistics operations.
Although the high cost of capital is putting pressure on general capacity expansion investments, investments have not completely stopped due to regulatory obligations. Because of CBAM financial obligations, budgets must primarily be allocated to renewable energy, including solar and wind power, energy efficiency, and technological transformations aimed at reducing carbon emissions.
How has the war in the Middle East changed steel trade? What can you say about logistics problems and freight prices?
In the first half of 2026, escalating military conflicts in the Middle East sent a real shockwave through global steel trade, especially after the closure of the Suez Canal/Red Sea corridor, one of the two vital arteries of global maritime trade, followed by the closure of the Strait of Hormuz to commercial traffic as of March 2026.
This unprecedented geopolitical crisis permanently changed the routes, delivery times, and freight costs of steel trade. The war in the Middle East transformed steel trade from a global structure into one that is necessarily regional and focused on geographical proximity. The disruption of the Far East-Europe route added 14 days or more to transit times from Shanghai to Rotterdam or İskenderun ports. As steel stayed at sea for an additional two weeks, production planning was disrupted. Companies have to hold higher safety stocks to balance the working capital tied up in transit.
Longer logistics times and freight disadvantages for Far Eastern producers have turned Turkey’s delivery speed to nearby regions, namely Europe and North Africa, into an advantage. However, on the other side of the coin, the contraction of the Middle East market due to the war disrupted Turkish producers’ exports to the region.
In the first half of 2026, the freight market followed a sharp upward trend resembling the pandemic period in 2020. Both longer routes and the energy shock were behind the price increases.
With the outbreak of the war, crude oil prices, Brent, rose rapidly per barrel, pushing up global bunker fuel costs. Marine fuel prices at main ports increased by 60-75 percent in a short period.
Scrap shipping, the largest raw material flow for the steel sector, was directly affected. For example, freight rates for scrap vessels from the US East Coast to Turkey jumped from around $30/mt to $46-48/mt. This brought an additional direct burden of approximately $15-20/mt to the raw material costs of EAF producers in Turkey.
Even on short-haul intra-Mediterranean routes, carriers introduced war risk and peak season surcharges ranging from $300 to $1,300/mt as of July 2026. Asia-Europe spot container indices doubled compared to pre-war levels.
Under the scenario that the Hormuz and Red Sea corridors remain closed in the second half of 2026, the near-shoring trend will strengthen, freight prices will consolidate on a high plateau, and the Turkish steel sector will try to use its geographical proximity advantage to the European market with maximum efficiency despite high raw material freight costs.
Any final comments?
The developments experienced in the first half of 2026 show that the flat steel sector is no longer a traditional industry that simply produces and sells iron and steel. Our sector has become a strategic front at the very center of global diplomacy, environmental policies, advanced technology, and financial engineering.
Turkey ranks among the world’s leading countries in terms of crude steel production capacity. However, EU quotas and global protectionist barriers show us that simply producing large volumes is no longer enough. The future of the Turkish flat steel sector lies in focusing on high-strength, specially coated, tailor-made, qualified flat products required by the automotive, aerospace, defense, and next-generation white goods industries.
In an environment where costs are so sensitive, energy prices are volatile, and customer orders are small in tonnage, we no longer have the luxury of making mistakes. From scrap optimization to energy efficiency, from line planning to carbon emission monitoring, data analytics and artificial intelligence integration have become not a luxury but a main cost-reduction tool at every stage of our plants. The vital importance of public-private industry cooperation has once again become one of our priorities.
In the coming period, as free trade agreements are replaced by carbon- and quota-focused blocs, steel producers will not be able to fight this battle alone.
The speed of trade defense instruments, such as antidumping and surveillance certificates, that will protect our domestic market against unfair and dumped imports,
the strength of CBAM exemption and regulatory negotiations with the European Union,
and the structuring of Turkey’s National Emissions Trading System in a way that funds domestic industrialists
will directly determine the position of our sector in the global league.
The Turkish flat steel sector has very strong muscles thanks to its flexible production capability, geographical advantage, young and dynamic workforce, and early investments in renewable energy. The year 2026 is a year of patience and adaptation. Producers that get through this stormy period without compromising financial discipline and by completing their green transformation responsibilities will stand out as some of the world’s most competitive steel suppliers once global conditions settle.