Turkey's Steel Rise Amid Global Contraction and Trade Wars

While global crude steel production shrank by 2% in 2025, Turkey defied the trend with a 3.3% increase in output, showcasing resilience against global headwinds and cementing its status as Europe’s top producer.

Domestic Demand Records and Green Structural Shift

According to KPMG Turkey's "Steel Sector Outlook - 2026" report, Turkey secured the 7th spot globally with 38.1 million tons of production. Final product consumption in the country hit a record 39.3 million tons, highlighting the strength of internal demand. This surge in demand brought a shift in production technology.

■Electric Arc Furnace (EAF) production rose from 25.8 million tons to 27.5 million tons, shifting production weight towards greener technologies.

■Basic Oxygen Furnace (BOF) production declined from 11.1 million tons to 10.6 million tons.

■Capacity utilization rates remained in the 60-65% band, keeping the risk of idle capacity alive.

Net Importer Status and Pricing Wars

Despite the rise in production, Turkey’s net importer status continued as steel imports reached 18.9 million tons against 15.1 million tons of exports. Low-cost procurement, particularly from Russia and China, severely limits the pricing power of local producers in the domestic market.

■Europe's share in export markets increased from 52.4% to 59%.

■With the US raising customs duties to 50%, North America's share fell from 9.1% to 6.7%.

■Russia ranks first in Turkey's steel imports with a 22.9% share.

Protectionism Winds and the Risk of Redirected Supply

The US tightening Section 232 measures and the EU limiting duty-free imports to 18.3 million tons are altering the course of global steel supply. The inability of supply to enter the US market and its subsequent diversion to Europe and the Middle East makes price competition risky for Turkish producers in both export and domestic markets.

While the production increase provides short-term encouragement, financing risks must be carefully monitored from a banking perspective. The high trajectory of energy and scrap costs, coupled with capacity utilization rates lingering in the 60-65% band, compresses companies' cash flows and profitability. Specifically, trade barriers in the US and EU threaten the foreign currency earning capacity of exporting firms, while low-priced imports erode local producers' margins. The primary factor increasing the risk premium for commercial loans in this sector lies in the inability to clearly see the financial return of the increased production volume on the balance sheets.