The Turkish Steel Producers’ Association (TCUD) anticipates Turkish crude steel production to increase in 2021, exceeding 2017 output and compensating for losses in 2018 and 2019. This comes after output rose 6% on-year in 2020 to 35.8 million tonnes, making Turkey the world’s seventh and Europe’s largest steel producer.
The 2020 growth was achieved despite global production cuts due to the Covid-19 pandemic, as well as protectionist measures limiting trade.
In December alone Turkey’s crude steel production increased 17.7% on-year to 3.4mt.
Production, which contracted -4.1% due to the pandemic in the first half of 2020, rose 16.6% and 16.2% in the third and fourth quarter respectively.
December finished steel consumption was 2.4mt, down -10.3% on-year. Finished steel consumption increased 42.7% in Q1 and then declined -16.9% in Q2. In Q3 and Q4 it again increased by 25.2% and 6.6% respectively. As a result, 2020 consumption was up 12.9% to 29.4mt.
Exports of flat and long steel products rose in December by 22.1% to 1.8mt. 2020 exports, however, declined -5.5% to 16.6mt and -10.9% in value terms to $8.6 billion, Kallanish notes.
The product shortage caused by the rapid increase in demand in international markets had a significant impact on imports in December. These fell -31.9% to 994,000t. 2020 imports, however, still grew 4.5% to 12.5mt.
The ratio of exports to imports in 2020 fell to 111:100 versus 121:100 last year due to the increase in imports and decrease in exports.
“Following the recovery in demand in the international market, the additional demand caused by steelmakers turning to the domestic market [due to import supply shortages] caused temporary disruptions in the supply of steel products,” says TCUD general secretary Veysel Yayan.
“The demand in question grew exponentially due to additional buying from consumers to strengthen their inventories, driven by the high rate of increase in input prices in international markets by more than 100%,” he adds.
The demand surge was met by Turkish mills postponing exports and increasing production, as they attempted to resolve the situation, Yayan says.
“The special effort of our producers to meet domestic demand was reflected in exports in January. In the first three weeks in January, exports of flat products shrank by 67% as producers gave priority to the domestic market,” he continues.
Yayan says Turkey’s share of imports from FTA countries and under the inward processing regime, which are subject to zero duty, reached 94.6% of all imports in 2020. “Still asking for zero duty for the rest [of imports] by ignoring Turkey’s current situation is unacceptable,” he adds. “On the contrary, in order to balance our exports, which protectionist measures try to prevent, we need to rapidly narrow imports with zero duty, to take measures to support domestic supply and to review the inward processing regime.”
Slackening iron ore and scrap prices in January did not reflect positively on the protected prices of the US and EU, which have been unaffected, Yayan says. This is in contrast to the $50/tonne finished steel price declines seen in Turkey and other markets.