Turkish Steel Exporters: New ship breaking plants needed to boost scrap supply

Thursday, 12 April 2012 10:13:56 (GMT+3)   |  
       

On April 11, the Turkish Steel Exporters Association evaluated the possible effects of the Turkish government's new investment incentive package on the country's steel industry and voiced its further demands for the sector, at a press conference attended by SteelOrbis.
 
As SteelOrbis previously reported, the package, effective as of January 1, 2012, will provide investors with incentives including VAT exceptions, customs tax exemptions, tax reductions, cuts in employers' social security contributions, allocations of sites for investments, and VAT refunds. The incentive package aims to increase domestic production of heavily import-dependent products, thereby helping to reduce Turkey's foreign trade deficit,
 
New incentive package provides opportunities beyond investors' expectations
 
Turkish Steel Exporters Association president Namik Ekinci said that the new incentive package provides opportunities beyond investors' expectations with its very comprehensive supports and its detailed structure in terms of regions, aimed at overcoming regional differences within Turkey in the development of domestic industry. Stating that the new package will play an important role in creating new jobs, Mr. Ekinci said, "With its attractive structure capable of enticing foreign investors to invest in Turkey and its extended scope aimed at reducing Turkey's trade deficit, we believe that the new package will further strengthen the Turkish economy and will provide further impetus for increased competitiveness for Turkey as a whole."
 
Promoting raw material investments will reduce dependence on imports
 
Mr. Ekinci emphasized the importance of the focal point of the new incentive package for the Turkish steel industry, which is to increase the production of heavily import-dependent intermediate goods and products and pointed out that investments exceeding $5 million for the production of products of which supplies are 50 percent or above dependent on imports are defined as ‘strategic investments' within the scope of package. "Within this framework, we think that the most important gain of the Turkish steel industry provided by this package is the further development of domestic resources and the reduction in dependence on imports of raw materials through the promotion of new raw material investments," the president of the association stated.
 
Iron ore extraction and beneficiation projects may accelerate in Turkey
 
Recalling the agreement between Turkey and the European Union (EU) prohibiting direct subsidiaries for the iron and steel industry, Mr. Ekinci said that new tax incentives, funding supports at low interest and allocations of sites for investments will increase the attractiveness of projects for the supply of raw materials and intermediate goods which are used by the steel industry. Ekinci went on to say that the inclusion of the mining industry within the fifth group (ranked in terms of priority of incentives) will provide support for new iron ore extraction and beneficiation projects, as well as investments devoted to ferroalloys, another important input material for the steel industry. Turkey's iron ore reserves are mostly low grade, with an Fe content of 30-35 percent, while the quality required by the steel industry is iron ore with approximately 60-65 percent Fe content.
 
New ship breaking plants needed to increase local scrap supplies
 
Given that Turkish steel production is 72 percent dependent on the use of steel scrap, the Turkish Steel Exporters Association stated that further incentives are needed to increase local scrap supplies, such as regulating the maximum age for motor vehicles in circulation according to European Union standards and establishing new ship dismantling plants, in regions other than Izmir, the current center for the Turkish ship dismantling industry.
 
Commenting on the issue, the association's vice president Serdar Kocturk said that they have received hearsay information that the regulation for maximum motor vehicle age will be included in the incentive package framework in the coming period. Regarding new ship breaking facilities, Mr. Kocturk stated that, if minimum wage incentives are also provided for this labor intensive industry in new free zones, close to major centers of the Turkish steel industry such as Iskenderun and Istanbul, then Turkey may become a major center for ship breaking and new ship breaking plants may add up to 4 million mt to Turkey's local scrap supplies. Kocturk also said that they are satisfied that this demand is already included in Turkey's Input Supply Strategy (GITES) goals.
 
The Turkish Steel Association president Namik Ekinci also called on the Turkish authorities to provide incentives for overseas scrap investments to ensure sustainability of supplies.
 
As SteelOrbis previously reported, the Turkish steel industry currently consumes some 30 million mt of scrap per year, with scrap imports reaching 21.4 million mt last year. However, domestic scrap supplies in Turkey are increasing and in 2011 30.30 percent of total scrap consumption in the country was supplied from the domestic market, up from 23.8 percent in 2010.

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