In an interview with Reuters, Turkish Steel Exporters’ Association chairman Adnan Aslan said that, following the new adjustments in EU steel import quotas, the Turkish steel industry, which is already seeking alternative markets amid trade measures in the US and EU, could face further distress. In addition to exports markets, Turkey is having difficulties in domestic sales as well, with domestic steel consumption decreasing by 31 percent in the first seven months on year-on-year basis.
Warning that, after having lost almost 80 percent market share in the US with the doubling of the import duty to 50 percent, Turkey will now face problems in exporting flat steel to the EU following the new quota adjustments, Aslan stated, “The EU imposed a limitation of 30 percent on the share of the global HRC quota that any single exporting country can reach per quarter. Regarding rebar and wire rod imports, the 30 percent limitation will also apply to the remaining ‘other countries’ quota which is opened up for all countries during the last quarter of each one-year period. These limitations apparently aim to limit Turkish exports to the EU. It is questionable why the EU is seeking to limit imports from certain countries, when it said, when imposing the quotas in the first place, that their main purpose was to prevent a significant increase in imports”.
According to the association’s data, in the first eight months this year Turkey’s steel exports to the EU decreased by 0.5 percent to 5.1 million mt, while the value of these exports was $3.6 billion, down 9.1 percent, both year on year. Turkey ships more than one third of its exports to the EU.
As quotas have not been exhausted yet, no sharp decline has been observed in exports to the EU; however, the rebar quota is expected to be depleted by end of this month, while the wire rod quota is to be filled up in October or November. Therefore, Turkey’s exports to EU are likely to see significant decline until July 2020, when the new quota period will start.
Mr. Aslan said that Turkey’s steel exports to the US, its key export market in recent years, came to a halt due to the trade measures, adding that Turkey’s exports to the US totaled 2.4 million mt in 2016, 1.8 million mt in 2017 and 1.2 million mt in 2018, while its exports to the destination in the first eight months of the current year stood at only 208,000 mt, down 77 percent year on year. He stated that, even though the US has reduced the 50 percent duty on Turkish steel to 25 percent, Brazil, Mexico, Canada and Australia are exempt from the duties and so no improvement is foreseen for Turkish steel exports to the US market.
Turkey is trying to make up for the losses in exports to the US and EU with alternative markets such as Latin America, North Africa, West Africa and Israel, registering a 12.24 percent increase in steel exports during the first eight months, amounting to 14.2 million mt. Total exports for the full year of 2019 are expected to reach 21 million mt, nearing the 21.4 million recorded last year. The reason why the steel export volume is expected to reach 2018 levels is that the Turkish steel industry has turned to billet exports to compensate losses in finished steel exports.
Mr. Aslan concluded by saying that the steel industry capacity utilization rate in Turkey has decreased from 72 percent last year to 66 percent, while steel production this year is likely to decrease to 34 million from 37.3 million mt in 2018.