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Turkey Metals Report Q1 2012
Business Monitor International, Jan 2012, Pages: 44
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.
The Turkish steel industry is being supported by a dynamic economy that made it one of the fastest growing in the world in 2011, according to BMI’s latest Turkey Metals Report. BMI estimates that crude steel production totalled just over 34.2mn tonnes in 2011, an increase of 18% yo-
y. EAF output, up 22.5% y-o-y, contributed to most of the growth, while BOF output grew around 7.0% y-o-y. This comes on top of 14.6% growth in output to, 29mn tonnes, in 2010. BMI estimates Turkey’s total finished steel production grew 20% to 32mn tonnes in 2011 with flat steel up 37% to 10mn tonnes, more than double the level in 2009.
Recent investments in flat steel, quality steel, structural steel and stainless steel have aided both volume and value growth. The most notable development has been the development of the Russian-owned MMK Atakas cold rolling facilities, which continued to be expanded in 2011 with the commissioning of a compact strip mill at Iskenderun and a colour coating line and continuous hot dip galvanising unit at its service centre in Istanbul. By the end of 2011, MMK Atakas’ sites in Iskenderun and Istanbul had a total hot rolled flat production capacity of 2.3mn tpa following total investment of around US$1.7bn.
The steel industry appeared to plateau by Q411. According to the provisional data released by the Central Bank of the Republic of Turkey, in November 2011 the capacity utilisation rate in the Turkish basic metal manufacturing industry was 79.2%, increasing by 0.8 percentage points (pp) compared with November 2010, but down 1.1pp compared with October. Demand from domestic industry led growth, with exports lagging behind. The automotive, construction and machine tool sectors all reported strong growth in 2011, fuelling domestic steel demand. However, their export reliance means that the expected slowdown in demand among principle export markets in Europe and the Middle East will have a negative impact on Turkish steel output in 2012.
Steel exports have been relatively lacklustre. According to the data provided by the Istanbul Mineral and Metals Exporters’ Association (IMMIB), in the first 11 months of 2011 Turkey’s steel product exports rose 4.8% y-o-y, to 16.38mn tonnes, while increases in prices ensured that the value of exports grew 26.5% y-o-y, to US$13.95bn. With rebar dominating exports, the slowdown in construction in Turkey’s principle export markets in Europe and the Middle East contributed to the moderation in export growth. The slowdown in the European market poses the most significant risk to Turkish steel production with BMI expecting declines across all market segments. A persistent weakness of the euro could cause further problems for the industry. As such, BMI has revised down the 2012 crude steel forecast from 37.8mn tonnes to 37.0mn tonnes with growth limited to 8%.
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