The most important news last week in the local Turkish flat steel market was Erdemir's announcement of new price levels for the first time in a very long time. Accordingly, the producer has increased its sales price levels for August production materials. Following the announcement, a lot of steel service centers and stockists in the country have also increased their price levels. The strengthening of the euro cannot be said to be the main reason behind this increase since the price level in Europe, where materials are also bought in euro, have likewise increased. Given the time of the year it is normal to see consumption levels register an uptrend. However, it should be remembered that consumption will likely start to move on a downtrend as of mid-July with the start of the holidays.
Thanks to the consumption increase in Turkey resulting from the Turkish government's incentives, local companies have gained some relief. The continuation of the incentives is a vital necessity for the Turkish flat steel market and the Turkish government has taken a further important step with its stimulus package announced on June 4. However, other parties such as the banks also need to play their part, for example by being more flexible in lending money, by trusting the industry and supporting the real sector with loans given at low interest rates. Although current times are tough, consumption looks certain to increase in the future when new money from the US enters the overall global economy. When global consumption increases, countries that produce a wide range of products at high volumes will gain the advantage. Turkey may be one of these countries.
Meanwhile, what difficulties hinder an improvement in Turkey's situation? - The budget, of course. Turkey is collecting high levels of taxes in order to pay back its loans but is still weighed down by its gray economy. Looking at developed countries, the common point they share are their high taxes and the general absence of a gray economy. For this reason, income per capita in these countries is at high levels and consumers have strong spending power. Reforms need to gain momentum in Turkey and domestic industry needs to receive stimulus support in order to be numbered among the developed countries. Also, increased production of high value added materials is now more important than it has ever been before. The future belongs to those countries that can produce efficiently, are open to reforms, have a strong global vision and are able to integrate effectively with the global markets.
Considering that flat steel consumption in Turkey is expected to increase in the future, domestic industries that use flat steel and produce finished products will also need to undergo an expansion. However, such an expansion will have to be planned; regional factors and needs will have to be analyzed and, if necessary, players from the real sector, representatives from the government and the universities should meet to discuss all relevant issues.