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Turkey Metals Report Q1 2011
Business Monitor International, Dec 2010, Pages: 52
Business Monitor International's 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.
Expansion of flat steel production capacity led growth in the Turkish steel industry in 2010, with output largely devoted to consumption by domestic industries. However, the sector will require export-led growth over the medium-term to justify the new plants coming online, according this latest Turkey Metals Report from BMI.
We estimate that Turkish crude steel production will total 29.3mn tonnes in 2010, an increase of 15.6% year-on-year (y-o-y), maintaining its position as the world’s ninth largest steelmaking nation as a result of new capacity and revival in domestic and external markets. Nevertheless, actual capacity utilisation rates remain below pre-crisis levels. Flat steel output grew by around 40%, leading the recovery in the steel industry. The proportion of crude steel capacity devoted to flat steel rose from 18% in 2009 to 24% in 2010. Growth in the industry is being spurred on by growth in the domestic market, with consumption of finished steel up by around 20% to 19.75mn tonnes. Domestic consumption of flat steel grew 60%, assisted by growth in key consuming industries such as the automotive sector. This growth rate is partly due to base effects but is also due to real growth in the Turkish economy. Turkey is expected to be selfsufficient in flat steel, structural steels and specialty steels by 2015.
Production is being bolstered by the expansion of steelmaking capacities. In October 2010, Russianowned MMK Atakas commissioned a US$250mn cold rolling facility with a 1.2mn tonnes per annum (tpa) continuous pickling line, 750,000 tpa reversing mill, 450,000t pa hot dip galvanising unit and 200,000 tpa colour coating line. By the end of 2011, the commissioned cold rolling shop is scheduled to reach its planned capacity of 750,000 tpa of ready-made metal products. In 2011, MMK Atakas will commission an electric arc furnace (EAF) with a compact strip mill at Iskenderun, and a colour coating line and continuous hot dip galvanising unit at its service centre in Istanbul. MMK became the owner of a 50% stake plus one share of MMK Atakas Metalurji Sanayi in July 2007, with the remainder owned by the Atakas Group. Construction began in March 2008, and when completed, MMK Atakas’s sites in Iskenderun and Istanbul will have a total hot-rolled flat production capacity of 2.3mn tpa. Total investment is estimated at around US$1.7bn. MMK Atakas operates two service centres, also in Iskenderun and Istanbul, where coils and sheets are cut and slit. Turkey’s move towards greater self-sufficiency in flat products, with the opening of the MMK Atakas plants, will focus the industry on exports. Turkey’s flat steel production in 2010 is expected to be around 12.3mn tonnes. Flat steel capacity is set to rise to 14mn tpa in 2011, though flat steel imports are forecast to rise to 6mn tonnes with anticipated domestic demand of 12mn tonnes. As such, Turkey could be facing over-supply of 8mn tonnes in 2011, requiring a significant increase in exports to ensure high operating rates.
BMI estimates that Turkey’s steel exports will decline by 7.5% to 15.14mn tonnes in 2010 as more steel is used for steel-consuming export-oriented industries. Although exports of billets and slabs are expected to rise by two thirds to 3.8mn tonnes and pipes 7.5% to 1.7mn tonnes, exports of flat products are forecast to fall 28% to 1.3mn tonnes and long steel exports by 25% to 9.2mn tonnes. The Middle East remains Turkey’s most important export destination, with the volume of sales to the region anticipated to rise 12% in 2010. However, exports to Africa have nearly halved, while those to the EU are expected to fall 15%.'
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