MethodologyContact usLogin
“The biggest challenge will be sourcing steel scrap. If European countries stop exporting, we can’t rely on scrap from developing countries, because the supply is unsustainable. Turkey’s main source of scrap will always be from developed areas such as the EU and the US,” Emrah Ugursal, deputy general manager of foreign trade at Turkish scrap-based steelmaker Bastug Metallurgy, said on Tuesday.
Current EU proposals to limit scrap exports under its Waste Shipment Regulations would not apply to Turkey, though, because the country is a member of the Organization for Economic Co-operation and Development (OECD).
European steel association Eurofer is pushing for stricter controls of exports to OECD members. This could pose a significant problem for the Turkish steel industry, which is overwhelmingly based on scrap, according to Didem Taskiran, sales manager at Turkish steelmaker Colakoglu Metalurji.
“Turkey’s [steel] competitors, such as India, don’t have energy concerns — it’s only Turkey and Europe that are facing such costs. We’re unable to reflect these costs [in our prices] because demand [in export markets] is too low,” Taskiran said.
Both Bastug Metallurgy and Colakoglu Metalurji agree that still mills will need to either reduce output or stop altogether as a result of the current conditions.
“Turkey is losing its advantages and competitiveness, so we must cut or stop production over the next few months,” Taskiran said.
Domestically, long steel demand is expected to rise after Turkey’s June elections, which are likely to result in construction projects being fast-tracked. A lack of foreign currency and a weak lira mean the country’s ability to finance the large-scale infrastructure projects that would provide a real boost to the industry are currently not possible, according to Taskiran.
Domestic flat steel demand is structurally lower than for longs in Turkey, and Ugursal called for investment in domestic coil-consuming industries such a automotive and white goods production.