Posted on 15 May 2023
Turkey is facing a potential risk of excess capacity in galvanized steel and hot-rolled coil in the coming years, prompting the need for measures to ensure a balanced supply and demand scenario, Borcelik general manager Kerem Çakır tells Kallanish.
Over the past few years, Turkey has witnessed an uncontrolled growth in its galvanized steel capacity, mostly focused on commercial grades, according to Kerem Çakır, who is also chair of the board of Turkey’s Association of Cold Rolled, Galvanized and Coated Coil Manufacturers (SOGAD).
Despite excess capacity, the country imported 0.8 million tons of hot-dip galvanized (HDG) steel in 2022 while exporting 1.2 million tons, Cakir says.
To tackle this issue, it is crucial to prioritize the production of grades that are not currently manufactured in Turkey.
A similar situation is expected for hot-rolled coil (HRC) in the future, with Turkey transitioning from being a net HRC importer to a net-exporter. However, relying solely on commercial grades won't be sufficient to substitute the 4.3 million tons of imports.
To remain competitive, the Turkish industry needs to focus on value-added and high-quality production.
Protectionism measures implemented by the European Union (EU) and the United States (US) further contribute to the supply-demand imbalance.
Turkey, as the only NATO member subjected to Section 232, faces challenges in exporting flat steel to the US, Cakir says.
Interestingly, nearly 75% of flat steel exports to the US originate from countries exempt from Section 232. Moreover, despite having a Customs Union Agreement with the EU, Turkey still encounters safeguard measures. Strengthening commercial relations with these natural trade partners and seeking long-term, mutual solutions becomes imperative to overcome these trade issues.
In addition to enhancing production and export quality, Turkey can restore the supply-demand balance by emphasizing the utilization of steel in construction.
Following two major earthquakes, the importance of steel structures has become evident. Therefore, the government should incentivize the adoption of light-gauge galvanized structural steel, thereby boosting the use of galvanized steel. This initiative not only creates a new market for galvanized steel but also promotes the usage of a safer construction material, particularly for areas prone to earthquakes.
By implementing these measures, Turkey can address the excess capacity challenge in galvanized steel and hot-rolled coil, establish a balanced supply and demand scenario, and maintain its competitiveness in the global market, according to Cakir.
Source:Kallanish
