Current market situation and expectations discussed at EUROMETAL & YISAD Steel Conference

Tatçelik was the main sponsor of Eurometal Steel Day & YISAD Flat Steel Conference, which held at Istanbul Marriott Hotel Asia on Thursday, April 27, in cooperation with SteelOrbis and with nearly 300 participants, while Ağır Haddecilik, Proemtia, Gökmetal A.Ş, Soybaş, Tube&Steel, WISDRI and Yametaş were among other sponsoring companies.

Following the opening speeches of Metin Tayfun İşeri, chairman of Turkey’s Association of Flat Steel Exporters and Manufacturers (YISAD), and Eurometal board member Alexander Julius, Ayhan Uçar, procurement manager of Turkish steel producer Tatçelik has taken the floor. Stating that Turkey can regain its competitiveness when the pressure from energy costs eases, Mr. Uçar said that the country’s flat steel imports may be halved in the coming years with new flat product investments. Reminding that the new import tax rates to be applied on HRC and coated steel in May are same, he stated that the duty for coated steel must be higher in regards to added-value. Speaking at the first session, Veysel Yayan, secretary general of the Turkish Iron and Steel Producers’ Association (TCUD) pointed out that in the first three months of the current year Turkey’s crude steel production decreased by 21.5 percent, however, especially with Isdemir resuming production, in April crude steel production is expected to increase and, with Tosyalı’s new plant in Sarıseki near Hatay due to come online, production figures in the second half of the year will improve. Stating that steel overcapacity in Turkey stood at 55 million mt, Mr. Yayan noted that this overcapacity may be evolved with the transformation of the integrated mills under the scope of the green deal.

At the second session of the conference, EU economic and steel trends were discussed. Evaluating the economic situation and trends in the steel market in the EU, Alexander Siryk, chief executive officer at Metals Consulting International (MCI), said that steel demand in the EU is expected to fall to 142 million mt in 2023 with a better GDP growth outlook of 0.8 percent compared to the 0.7 percent forecast in October 2022. Noting that the European steel market trends are negatively affected by the high volatility in major economic parameters despite the expectations of cost and inflation stabilization, Mr. Siryk said that the increasing interest rates, exchange rate uncertainties, and Emission Trading System (ETS) costs pose potential downside risks for steel demand.

Addressing the Carbon Border Adjustment Mechanism (CBAM), sustainability and the CBAM’s potential impact on Turkey’s exports, Ömer Kayhan Seyhun, senior specialist at the Turkey’s central bank, stated that in order to ensure Turkish iron and steel industry’s competitiveness in the export markets, it is necessary to focus on R&D. If Turkey takes no action regarding carbon emissions, it is foreseen that its emissions will increase to 700 million tons in 2050 from the current 400 million tons, according to the calculations of some academic institutions.

During the panel moderated by SteelOrbis general manager Murat Eryılmaz at the third session of the conference, stating that regional protectionism, energy prices and the supply-demand balance have triggered fluctuations in the market Kerem Çakır, chairman of the Association of Cold Rolled, Galvanized and Coated Coil Manufacturers (SOGAD) in Turkey, pointed out that Turkey has remained outside of the EU and the US markets, and the country must reach an agreement with the given economies within the scope of the EU quotas and US Section 232 measures. Regarding galvanized steel capacity in Turkey, Çakır said that the current capacity of 5.3 million mt will increase to 6.5-7 million mt with new investments, but, as local demand is insufficient, it would be better to divert these capacities to the export markets. Stating that the capacity utilization rates of large diameter pipe producers in Turkey decreased as exports declined after the imposition of Section 232 measures, Vedat Yalçın, chairman of the Turkish Steel Pipe Manufacturers Association (ÇEBID), said that the flat steel investments that will come into play will make a great contribution to the sector. Noting that the main problems in the market are unpredictable energy prices and exchange rates, Mr. Yalçın said that the fact that input costs are in dollars and that sales realizations are in Turkish liras is also a big problem.

Pointing out that Turkish companies have started to withdraw from the market due to the approaching elections, Ahmet Özkan, vice chairman of Turkey’s Association of Flat Steel Exporters and Manufacturers (YISAD), stated that business in the domestic market will be active through 2024 with the revival of construction activities in the earthquake-hit zone after the elections. Saying that Turkey’s biggest option in response to the EU’s import quotas is its manufacturing sector, Özkan stated that manufacturing goods such as automotive and white goods produced using steel produced locally can be sold to the foreign markets. In addition, Mehmet Çakmur, deputy chairman of Turkey’s Foreign Steel Trade Association (CDTD) thinks that the outlooks for the second and third quarters of the year seem to be negative for Turkey’s foreign trade due to the price pressures from aggressive steel offers from Far Eastern countries, which have not been hit so much by the increase in energy costs.

Following the panel, Umut Feyzioğlu, general manager of Proemtia, a subsidiary of İşbank, has made a presentation on the digital transformation of industrial commodity trade. At the latest session of the conference, economists Dr. Mahfi Eğilmez and Dr. Asaf Savaş Akat have talked about the current issues facing Turkey’s economy and answered the questions of the participants.