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Turkey Metals Report Q2 2010
Business Monitor International, March 2010, Pages: 53
The Turkey Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkey's metals industry.
The Turkish recession which saw the economy contract by around 6% in 2009 and the global economic downturn hit the country’s metals industry hard. Nevertheless, the report holds firm to the projected double-digit steel output growth forecast over the medium-term as capacities expand and the country consolidates its position as a production hub for Europe and the Middle East.
As reported by the World Steel Association (WSA), 25.3mn tonnes of crude steel were produced in Turkey in 2009 – a fall of 5.6% year-on-year (y-o-y). According to the Turkish Iron and Steel Producers’ Association, Turkey’s long steel production declined by 8.18% y-o-y to 20.4mn tonnes in 2009, accounting for around 80% of the country’s total steel production. Flat steel output continued its rise, increasing by 14.61% to 4.46mn tonnes, mainly due to commissioning of new capacities by Turkey’s only integrated steel producer Erdemir. Special steel output totalled 142,000 tonnes, falling by 67.36%. Electric arc furnace (EAF) plants saw output fall 10.27% y-o-y, mainly as the result of lower capacity utilisation rates, while steel production using blast furnaces increased by 7.5%. In 2009, 70.11% of production came from mini-mills with the remaining 29.89% coming from integrated plants. Turkey’s iron and steel exports totaled US$7.64bn in value in 2009, decreasing by 48.9% y-o-y while exports of articles of iron or steel declined by 20.7% compared with 2008, amounting to a value of US$4.55bn. Iron and steel imports totalled US$11.33bn, down 51.1% y-o-y, while imports of articles of iron or steel amounted to a value of US$1.53bn, down 31.4% y-o-y. This was in line with the publishers expectations and partly the result of increased duties on coated and uncoated strip mill products of up to 8%. The effect of duties was immediate, with new import transactions grinding to a halt as the Turkish market sought domestic sources. A strong recovery is anticipated from 2010, when imports are expected to grow 10.2% to 9.95mn tonnes. By 2014, Turkish imports should total 16mn tonnes in volume and US$16.1bn in value.
Despite the negative situation facing exports in the first few weeks of 2010, the report retains an optimistic outlook for 2010 and beyond. Two of the key metals-consuming industries, the automotive sector and construction, will see respective growth of 8% and 3.6% in 2010, with higher rates of growth thereafter. The report forecasts a 10.5% growth in exports in 2010 to 14.38mn tonnes followed by double-digit growth to 28.61mn tonnes in 2014 – up by over 10mn tonnes on levels reported in 2008, due to massive capacity expansion.
The decline in primary aluminium production is not expected to be as steep as steel, with the country’s sole 60,000 tonnes per annum (tpa) Seydisehir smelter – which has been operating at maximum capacity over the past five years – unable to fulfil all the country’s aluminium requirements. However, smelters will face increased competition from re-melters.
In positive news for the sector, the Toscelik Structural Steel Production Facility and several other facilities in southern province of Osmaniye were inaugurated in February 2009. The Toscelik facility was built with an investment of US$1bn and has a capacity of 2mn tpa, producing a wide range of products including semi-finished and flat steel products. Following the commissioning of the new plant, the company expects to reduce its reliance on imports and export steel products through its own port, in addition to targeting the domestic market.
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