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Turkey looks to improve production, scrap procurement

Jul 31, 2013 | 08:00 PM |

Tags  Month in Metals, Turkey, US ferrous scrap exports, ferrous scrap

Turkey has been a key component of U.S. ferrous scrap strategies and competition for global steel production, sales and distribution for several years. As the nation attempts to become a more important international steelmaker and an increasingly independent scrap consumer, its efforts are reverberating across America.

Turkish steelmakers hope that product diversification, along with a push to fill existing supply gaps, will propel the industry toward self-sufficiency, according to executives from the nation’s steel trade groups.

Since the 2008-09 global recession, Turkey has faced the same sluggish growth as other steelmaking countries. But the country’s steel industry has bounced back due to its cost-competitiveness and strong export volumes, members of the Turkish steel delegation told AMM during the Steel Success Strategies XXVIII conference in New York.

“Despite the ongoing crisis and seasonal effects, in the first four months there was a 3-percent increase in steel consumption so it’s an important development for us,” said Namik Ekinci, chairman of the Turkish Steel Exporters’ Association.

Turkey’s crude steel production grew 5.2 percent to 35.9 million tons last year, according to World Steel Association data, overtaking Brazil and Ukraine to become the world’s eighth-largest steelmaker.

Imports, however, rose 10.8 percent to 11.8 million tons, due mainly to high shipments of flat steel and slab. Ekinci said that while imports aren’t necessarily a negative thing, particularly because of the nation’s open markets, Turkish steelmakers--predominantly known for long products--are trying to become more active in the flats sector to satisfy domestic demand. “In the past, there was only one facility for flat production,” he said. “Now, there are many investments for flat products and the number increases.”

Veysel Yayan, general secretary of the Turkish Iron and Steel Producers’ Association, said Turkey’s steel industry has dragged its feet in the flats sector due to competition from neighboring countries such as Russia and Ukraine.

Ekinci refuted suggestions that Turkey is an unfair player in the global market. Instead, he said, steelmakers have adopted a competitive cost structure, even with natural gas prices that are two to three times higher than in the United States. “We always choose to proceed within World Trade (Organization) rules. So, if there are some countries that say we cannot send materials to (their) backyard, we’re not taking it positively,” he said.

U.S. trade cases against Turkey, including imports of wire rod and reinforcing bar, have led to talk that Turkey may be acting illegally, but both Turkish executives said they were not aware of the rumors and denied them.

“Of course there’s no dumping from Turkey. The U.S. authorities are well aware of this,” Ekinci said. “The people who spread these rumors are trying to ... create confusion for importers. (With) confusion for importers and exporters from Turkey, they think they (will) gain (some) advantage.”

Turkey’s steelmaking facilities are technologically advanced, its inputs and raw materials are used efficiently and its productivity levels are high, he said. “We entered the market not with high profit margins. We make a reasonable profit.”

Moving forward, the Turkish steel industry will continue to grow, but the association said that its top goals are to diversify its product mix, allow for more self-sufficiency in its steel industry and add value to steel.

Turkey also is ramping up efforts to boost domestic collections of ferrous scrap in order to reduce its dependence on scrap imports, according to the Turkish Iron and Steel Producers’ Association.

The country remains the world’s largest importer of ferrous scrap, and although that scenario is unlikely to change for some years, the Turkish government and steel industry will look to boost domestic scrap collections and processing through measures like incentives, Yayan said.

The country has already made some progress in improving flows from domestic scrap companies directly into steel mills. “Now there are big scrap collectors,” he said, citing incentives from the Turkish government that have helped improve scrap collections in the country over the past five years. “They’re collecting, processing and delivering to the steel producers.”

Ekinci called it a work in progress, but said the efforts have delivered some positive results to date. “We’re talking with the government on (how to improve domestic scrap generation and collection). In different parts of Turkey, there will be (better) scrap collection,” he said.

Yayan said that several international scrap companies also have set up collection facilities in Turkey, with more recyclers from Europe expected to establish Turkish collection and processing bases in the coming months.

Government regulations and incentives triggered the “more intensive” collection of scrap in Turkey, he said. “The rate of scrap collection increased from 22 percent to 30.2 percent during the past five years. The domestic scrap volume is now around 10 million (tonnes), and it’s increasing every year.” The country hopes that current measures will push domestic scrap collection rates to around 40 percent in the next year or two, he added.

Turkey will take a two-pronged approach to reduce its reliance on scrap imports, the two executives said.

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