Steel Production in Turkey: A Look at 2023 and 2024

Turkey's steel industry has faced significant challenges and transformations in 2023, with a cautious outlook for 2024. This article explores the production trends, market dynamics, and future prospects of steel manufacturing in Turkey.

Overview of 2023

In 2023, Turkey's crude steel production declined by approximately 4% compared to 2022, totaling around 33.7 million tonnes. This decrease was influenced by various factors including macroeconomic instability, high energy costs, and the aftermath of two devastating earthquakes that struck the southern regions of the country in February.

The domestic consumption of steel saw a notable increase, rising to 38.1 million tonnes, which reflects a 17.1% growth from the previous year. However, this growth was largely met by increased imports, which surged to 20.3 million tonnes, marking a 12.5% rise.

The Turkish steel industry faced a tough competitive landscape globally, with high production costs limiting export capabilities. In fact, Turkish steel exports plummeted by 25.8%, down to 14.5 million tonnes in 2023.

The overall market conditions were exacerbated by a decline in finished steel prices, which fell more sharply than raw material costs, squeezing profit margins for producers.

Key Challenges

1. Economic Instability: The Turkish economy has been marked by inflation and currency depreciation, which have significantly impacted production costs and competitiveness.

2. Energy Costs: High energy prices have placed additional pressure on steel manufacturers, particularly those relying on electric arc furnaces (EAF), which constitute the majority of Turkey's steel production capacity.

3. Natural Disasters: The February earthquakes disrupted local markets and delayed reconstruction efforts that could have stimulated demand for steel.

Prospects for 2024

Looking ahead to 2024, Turkish steelmakers are optimistic about rebounding production levels. Early forecasts suggest that crude steel production could align with levels last seen in 2021, potentially reaching around 40 million tonnes if domestic demand remains strong and energy prices stabilize.

In the first half of 2024, production is already showing signs of recovery with a reported increase of 14.9% year-on-year compared to the same period in 2023.

Factors Supporting Growth

• Increased Domestic Demand: As Turkey's economy stabilizes, there is hope for continued growth in domestic consumption.

• Export Opportunities: Turkish mills are targeting export markets more aggressively, particularly in Europe where demand is expected to improve.

• Government Support: The Turkish government is also expected to provide support for energy transitions and infrastructure improvements that could enhance production capabilities.

Conclusion

The Turkish steel industry is at a pivotal moment as it navigates through recovery from a challenging year in 2023. With strategic adjustments and a focus on both domestic consumption and export markets, there is potential for significant growth in 2024. However, ongoing economic challenges and global competition will require careful management and innovation within the sector to ensure long-term sustainability and competitiveness.