We spoke with Ahmet Özkan, chairman of the board of the Turkish Flat Steel Exporters and Industrialists Association (YISAD), about developments on the flat steel sector’s agenda, the association’s priorities, and sector expectations.
Congratulations on your new role. Could you talk about YISAD’s upcoming work for the flat steel sector?
Thank you for your kind wishes. As the board of directors and supervisory board taking office in the new term, we aim to carry out work that will create added value for our members, our association, and our sector. In this context, our priorities will be informing our members about upcoming processes such as the Carbon Border Adjustment Mechanism, continuing our conferences, and participating in quota negotiations with the EU.
As you know, YISAD has a multi-layered and in-depth structure compared to other sector associations due to the diversity of its members. In other words, the association brings together companies from different segments, including electric arc furnace producers, rollers producing coated products, spiral and welded pipe producers, steel service centers, foreign trade companies, wholesale and retail traders, and other parties serving the sector, while also maintaining balance among all these layers.
At first glance, having industrial units such as production facilities and service units such as steel service centers, traders, foreign trade companies, and other sector-related structures under the same roof may seem contrary to the idea of clustering around a common purpose. However, if we consider the iron and steel sector as a chain and each segment as a link in that chain, it is undoubtedly true that the success of the chain depends on the success of its weakest link.
Our association represents this iron and steel production chain and, together with our members, aims to make the sector as a whole more useful and productive for all parties involved.
How has the first half of 2026 been for the flat steel market?
The flat steel market has been going through a difficult period for the last two to three years due to the continuous downward movement in prices. In the first half of this year, product prices showed some upward movement due to increases in import prices from the Far East, particularly China, as well as rising costs such as scrap and freight, giving the sector some breathing room.
What is the situation in domestic demand? How do you assess end-user sectors, particularly automotive and white goods?
Regarding demand, it would be more accurate to evaluate the domestic and foreign markets separately. The most important issue in the domestic market is the effort to cope with declining domestic demand caused by the anti-inflation program and rising financing costs.
In the domestic market, production figures in the automotive and white goods sectors, which are among the most important users of value-added flat steel products, have declined in recent years and fallen below the desired capacity utilization levels. To put this in figures, according to OSD data, total automotive production in the first quarter of 2026 declined by seven percent compared to the same period of the previous year, while automobile exports fell by 29 percent. On the white goods side, according to TÜRKBESD statements, production contracted by 8.7 percent in 2025 as a whole, while 2026 also began with declines across all main indicators. The most important development supporting the sector in the domestic market is new housing and infrastructure works in the earthquake zone, as well as urban transformation activities.
In foreign markets, the most important issues are compliance with the EU’s Carbon Border Adjustment Mechanism and the additional costs that will arise from it, as well as the potential decline in external demand depending on the new quota volumes that will enter into force in July. Although it is not possible to make a definitive assessment on either issue today, both will create cost- and demand-side pressure on the sector.
How have fluctuations in input costs and energy prices been reflected in flat steel prices? How do you interpret the price trend?
When flat steel input costs are analyzed, it can be said that integrated facilities have produced under relatively more advantageous conditions than electric arc furnaces this year. The increase in scrap prices by around $50-60/mt and the rise in fuel and freight prices due to the war led to an increase of around $100/mt in domestic flat steel prices.
One fact we should not overlook is that electricity prices remained relatively favorable in this first half of the year compared to countries producing with fossil fuels, due to high generation from renewable energy sources, namely hydroelectric power depending on rainfall and wind power. Therefore, with the summer months, efficiency losses in hydroelectric and other renewable sources may increase fossil fuel-based power generation, which could bring additional cost increases.
However, unless there is a meaningful increase on the demand side, I do not think the market will allow these price increases, even though cost pressure requires higher prices.
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?
As I briefly mentioned above, EU quotas and the 50 percent out-of-quota duty are currently the most important agenda item for the entire iron and steel sector. The quota and CBAM-related work, in which our association is also participating and which is being carried out before the Ministry, is still ongoing. It would also be useful to evaluate this issue within the scope of the Customs Union, which our country is determined to update.
During this period, our producer and exporter companies will need to adjust their capacity utilization rates according to the new conditions and update their cost analyses based on the new figures. Otherwise, serious fluctuations may occur in domestic product prices.
What is the state of competition in domestic and foreign markets? Do you expect any change in HRC imports from China?
The most important issue regarding competition is the prevention of unfair competition and the need to protect domestic producers against this situation through additional measures. Indeed, the additional measures imposed on coated products originating in the Far East and the requirement to use 25 percent domestic production under the inward processing regime are measures taken in this direction.
However, another issue we should not forget is the need to preserve the competitiveness of sectors that purchase and process these products as raw materials. Therefore, it is very important and valuable not to harm one side of the sector while trying to protect the other.
Even if there is a quantitative decline in HRC imports from China, there will not be a real decrease if imports from ASEAN countries, which serve as China’s back door, increase.
How decisive will CBAM’s financial obligations be for flat steel exporters as of 2026? How prepared is the Turkish steel sector?
As an association, this new regulation is one of the most important issues we want to work on with our members this year. Although this regulation has initially entered into force only for basic products with the highest carbon emissions, such as iron and steel, aluminum, and cement, it is being discussed in EU circles that 180 separate product groups related to these sectors may also be subject to similar regulation in the future.
As of 2026, CBAM has entered its full implementation period, and it has become mandatory for emissions reports to be verified by accredited institutions. It is a critical priority for our members to measure their carbon footprints in line with the relevant standards in order to prepare for this process. However, based on what we see in the field, while large production facilities have started to manage the process, a significant portion of medium-sized producers and exporters still do not appear to have sufficient technical infrastructure. Therefore, since this process will become an important part of our lives, informing all our members about it will be one of the main objectives of our association.
How are economic conditions affecting the sector?
We left the most difficult question to the end. All players in the sector have been feeling the impact of economic conditions very strongly over the last two years. Since the current program implemented in our country has chosen to fight inflation by reducing and putting pressure on the demand side, our sector is facing a serious contraction in domestic demand. On the other hand, the controlled exchange rate policy and relatively high interest rate policy aimed at carry trade are increasing the costs of producers and service sector players in foreign currency terms and eroding their competitiveness.
In addition, the war in the Middle East has started to create inflation worldwide by pushing up fossil fuel-based energy costs. This process will have an effect in all countries, particularly energy-importing countries, by increasing the current account deficit and consequently the budget deficit. In this case, countries’ borrowing rates will rise, reducing credit availability in the markets while also increasing its cost. For this reason, the most important issue in the coming period will be liquidity, in other words, cash flow.
How has the war in the Middle East changed steel trade? What can you say about logistics problems and freight prices?
The US-Israel-Iran war has affected steel trade through both direct and indirect channels. Tensions in the Strait of Hormuz have created concrete risks both in raw material supply and exports to the Middle East. Sea freight rates have tripled in some cases, further increasing costs across the supply chain. Container freight rates on the Asia-Europe route have increased by around 70-160 percent, while transit times have also lengthened by 10-18 days.
On the market side, however, the picture is quite different. While this contraction in the Gulf market is a major loss in the short term, it also presents a different opportunity in terms of geographic proximity. Due to uncertainty on long routes, European buyers have tended to increase sourcing from Turkey. For flat steel exporters, the most critical issue right now is how to reflect this high level of uncertainty in freight and insurance costs in price offers and contract terms.
Any final comments?
Finally, despite all these challenges, I would like to say that I believe the flat steel sector will successfully overcome this difficult period thanks to its dynamic structure, broad product range, agile human resources, and Turkey’s geographical proximity to potential consumption markets.