In 2012 metals and metal products were Turkey’s fourth-largest export industry after automotives, chemicals, and textiles and ready-to-wear. Indeed, by 2011 the sector had already reached an all-time high in crude steel production, of 34.1m metric tonnes (MT), while it has long since regained and surpassed the output levels it had before the global downturn. Aluminium output is also high, with the need for additional capacity in order to meet growing domestic demand already clear.
The sector has undoubtedly benefitted from the countrywide construction boom as well, which has compensated for the decline in European markets – still the sector’s main overseas trading partners. Now, the question is how the sector can go forward to meet its ambitious 2023 targets.
Numbers
The year 1937 saw the opening of the first Turkish steel plant, and two more were added in the 1960s and 1970s. State enterprises Kardemir, Erdemir and Isdemir were established to run these, with privatisations in the 1980s and 1990s. Take-off began after 2000, with production increasing 87% between then and 2008, according to the Turkish Iron & Steel Producers Association (DÇÜD). By 2010, the country was ranked 10th in the world for steel production. Other major players have also entered the field, including Çolakoğlu, Diler, Habaş, İçdaş, İzmir Demir Çelik, Nursan Çelik, and Yazıcı Demir Çelik, which each have over 1m MT of capacity and production.
In 2011 a record 34.1m MT of crude steel was produced, up 17% on the 2010 total, while capacity was up 10% to around 47m MT, 2010/11. At the same time, billet production reached 24.4m MT, up 11.8% year-on-year (y-o-y). Finished steel production, meanwhile, was up 21.5% y-o-y, to 31.94m MT in 2011. Flat products were the standout, with production of these up 36.9%, due to the successful deployment of new technologies. Long steel production, meanwhile, was up 16.3% to 22.87m MT. In 2012 Turkey reached eighth in the world in terms of crude steel production, increasing its share of global output from 2.2% in 2011 to 2.3%. Figures from the World Steel Association show the country producing 35.9m MT, up around 5% on 2011. DÇÜD figures show steel billet production up 10.9%, y-o-y to 27m MT, with slab down 9% to 8.8m MT. Production using electric arc furnaces was up 5.1% to 26.6m MT, and that using blast furnaces was up 5.6% to 9.3m MT.
Key Players
Meanwhile, the aluminium sector has long been dominated by a single primary producer, Eti Alüminyum, and a handful of flat producers, such as Assan Alüminyum, which has a 250,000 MT per year capacity at its Tuzla and Kocaeli facilities, and Teknik Alüminyum, with a capacity of 125,000 MT per year. Asas Alüminyum and Saray Döküm both produce extruded products. The sector exports to Europe mostly, with outfits able to produce a range of quality goods.
“Many manufacturers in Turkey have a dual capacity,” Remzi Örnek, the general manager of Assan Alüminyum, told OBG. “They can produce cheap products for low-income economies and expensive goods for advanced markets.”
The main market for Turkish steel exports is currently the Middle East, which received 1.3m MT in the first two months of 2013. Second was the EU, with 608,300 MT, and then North Africa, with 339,100 MT.
Coming Changes
Exports are central to the metals sector, with 2012 seeing the value of these reach $15.56bn, up from $15.29bn in 2011. Still, Turkey has also historically imported steel products, particularly flat products. Recently, though, increased domestic capacity has led to a drop in imports.
Indeed, an effort to boost quality in the metals sector is currently under way, led by an attempt to increase added value and move into the higher end of the global metals market. Given that steel exports have begun to decrease in the first few months of 2013 – down 0.9% y-o-y in February – the domestic market is also of growing importance. With construction booming and major infrastructure projects being rolled out across the country, the sector will have considerable opportunity to prove its metal close to home in the years ahead.
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