Turkey's Steel Production Rises: Growth Amid EU Quotas and Chinese Pressure

Turkey's crude steel production climbed 7% year-on-year in July to reach 3.4 million tons, despite volatility in global trade dynamics. For the first seven months of the year, total production rose by 7.9% to 23.2 million tons, while a notable improvement in the sector's foreign trade balance was observed.

The South American Pivot and the EU Risk Factor

In July, steel product exports increased by 2.9% in volume and 4.4% in value, reaching $827.3 million. An aggressive 85% surge in shipments to South American markets served as the primary engine driving the total export figures.

■Total exports for the January-July period reached 9 million tons.

■The total value of exports in the first seven months was recorded at $6.1 billion.

■The export-to-import coverage ratio rose from 76.9% last year to 82.1%, providing a positive contribution to the current account balance.

Chinese Import Pressure and the Call for Protectionism

While expanding production capacity, the sector is grappling with market pressure from cheap Chinese imports. With imports from China reaching approximately 2.5 million tons in the first seven months, domestic producers are calling for urgent protective measures.

■Import volume in July dropped by 19.7% year-on-year to 1.5 million tons.

■Import value fell by 17.6% to $1.1 billion during the same period.

■TÇÜD argues that implementing protectionist measures similar to those in the EU, USA, and Canada would increase capacity utilization rates.

The Looming Shadow of EU Quotas

Despite the positive growth figures, the risk of a contraction of approximately 4 million tons in exports to the EU looms over the industry. While the full impact of quota applications has not yet materialized, a acceleration in the decline of the European market is expected in the coming months.

While the increase in production and the improved export-to-import ratio are positive from a macro perspective, EU quotas and Chinese pressure pose critical risks to the sector's financial sustainability. I anticipate that for SME-scale steel processors, the need for working capital will increase, and the banking sector's credit appetite for this segment will be shaped by the speed at which protective measures are implemented.