The Turkish Steel Exporters' Association (CIB) chairman Namık Ekinci commented on the elimination of the import duty on Turkish rebar at a press conference held in Istanbul on January 10, saying that this move has reversed the expectations of the Turkish steel industry which had hoped for an uptrend in exports in 2018 after achieving a positive performance in 2017, partially offsetting the losses recorded in previous years. Mr. Ekinci said that Turkish steel industry participants have viewed this rushed decision as a blow to their industry.
The CIB chairman went on to say that, in response to complaints about increases in rebar prices by building contractors in Turkey, the import duty on rebar was reduced to zero as of the start of 2018, after being reduced to 10 percent from 30 percent in July last year, despite the steel industry’s warnings. However, he underlined that the elimination of the import duty on rebar is not expected to pull down rebar prices in the current year, instead, higher raw material and input costs might impose further increases on rebar prices.
Mr. Ekinci pointed out that higher production costs have resulted in increases in rebar prices not only in Turkey but throughout the world, citing higher electrode, ferroalloy, refractory, scrap and coking coal prices. According to Ekinci, the additional costs caused by higher scrap, graphite electrode, ferroalloy and refractory prices amount to $135/mt, $50/mt, $4/mt and $1.5/mt, respectively. He stated that building contractors, who complained of higher rebar prices, were reluctant to sacrifice their high profit margins and chose instead to place the burden on the steel industry which works with low profit margins and even risks incurring losses. Construction firms’ profit margins stand at 50 percent in Turkey, while their margins are at nine percent in the US. On the other hand, Turkish rebar producers work with 5.5 percent profit margins, while their US counterparts enjoy 14 percent profit margins.
The CIB chairman hinted that Russia, Iran and Ukraine, whose domestic consumption is at low levels, might now turn towards Turkey with its zero import duty on rebar, while he also drew attention to the threat of imports being dumped into Turkey.
“The elimination of import duties on rebar exposes the Turkish steel industry to dumped and subsidized rebar imports. Imports will not solve the problem of high prices. Steel prices are shaped in line with the global markets and Turkish building contractors have access to the cheapest, high quality rebar despite their complaints. It is unacceptable that one industry should be harmed in order to protect another. Cancelling import duties and exposing the steel industry to outside threats and pressure is a significant blow to our industry, while the rest of the world is building fences to protect their domestic producers. We are now defenseless against dumped goods. This will affect not only the steel industry but Turkish industry and employment in general, causing market participants to struggle in terms of surviving and protecting their market shares instead of being able to focus on growing through exports. Consequently, it will negatively affect 40,000 direct and 250,000 indirect jobs,” Mr. Ekinci said.
According to the CIB figures, in 2017 the Turkish steel industry’s rebar production amounted to 15.7 million mt, most of which was consumed in the domestic market, while 5.5 million mt was exported. Mr. Ekinci said that the priority for Turkish rebar producers is always their domestic market, adding that rebar exports in 2017 declined to 5.5 million mt and another decrease of 1 million mt is foreseen for 2018.