Turkey should stop investing in long steel production

Ugur Dalbeler, General Manager of Colakoglu Metalurji AS said that Chinese long product exports were an important threat for Turkish long product exports. According to Dalbeler, who spoke at SteelOrbis Turkish Steel Market 2006 Conference, the increase in China's long product exports will eat into Turkey's share in long product exports market. Currently, Turkey produces 9 million metric tons of long products per annum, while consumes only 3.8 million metric tons of that figure. On the other hand China produces 67.5 million metric tons and consumes 65.9 million metric tons. The export markets of Turkish long steel mills and traders are narrowing down. Turkey has began losing its share in the imports to the US and EU markets, and currently Middle East, Gulf and North Africa are the main destinations for Turkish long steel exports. Dalbeler pointed out the weak points of Turkish long steel market as being highly scattered, imbalanced production, dependence on imports for raw materials, dependence on exports for sales, and strong competitors. On the other hand, the strong points of the market are being dynamic, being located at an equal distance to world markets, proximity to scrap sources and having a good reputation for a long time in exports. As also stated by Veysel Yayan, Chairman of Turkish Iran and Steel Manufacturers Association, the production of flat products in Turkey is becoming stabilized while the consumption is increasing. Meanwhile billet and long product exports are decreasing. Therefore, both experts agree that Turkey needs to reduce investments in long steel production and increase the investments in value added flat steel production. However, this is not quite easy, because flat steel investments require considerably more capital than long steel investments.