Inconsistencies in Turkey's customs policy are allowing foreign
steel suppliers to exploit tax loopholes and put pressure on
local prices, the chairman of local steelmaker Erdemir has
said, while the domestic industry is lobbying for higher duty
"There are some surprising points in the customs regulations at
present," Fatih Tar, head of the board at the Turkish mill,
told reporters last week.
"For instance, we have customs duty of 9% for coil 1.5m wide.
Thanks to gaps in the customs regulations, you can import the
same coil at zero tax if you cut it into strips 20-30cm wide,"
"It makes a double loss for Turkey," he added. "We miss both
the tax and the work, and because of this we have
[non-operational] cutting capacity of 7.5 million tpy in Turkey
at the moment."
"We don't ask for special protection [for the local
steel industry] but we must prevent unfair competition. Iron
and steel products have been imported into Turkey without any
tax on occasions," he said.
"Of course, there is customs duty of about 5-9% for imports of
steel from non-EU countries and others such as China, South
Korea and Japan, but about 90% of imported iron and steel is
free of tax," he said.
Tar also claimed that South Korea, Japan, Ukraine and Russia
sell finished products to Turkey at $600 per tonne while they
sell the same material at $770-800 per tonne in their local
markets, although he did not cite any specific transactions.
Steel imports from Russian and Ukraine "disturb us", he added,
with import volumes from these countries and Romania now
standing at a combined 4 million tpy.
'Paradise for imports'
"Turkey consumes about 13 million tpy [of flat
products]," Tar said. "The country has turned into a paradise
for iron and steel imports while local mills cannot operate at
Turkey imported about 11 million tonnes of steel in 2011,
including semi-finished, long and flat products, according to
Turkish customs. These high import volumes and the cheap prices
of imported steel are the main challenges facing the domestic
Turkish steelmakers have asked the authorities to bring in
higher customs duties on imports, along with other forms of
support which would allow mills to operate nearer capacity and
lower their production costs.
The country's steelmakers have a combined nominal capacity of
50 million tpy but produced only 34.1 million tonnes of crude
steel in 2011, an increase of 17% year-on-year, according to
the Turkish Iron & Steel Producers Assn. Mills operated at
an average 68% of capacity in 2011.
End-users, however, say they prefer low customs rates for
imports as this eases their access to cheap material and
consequently lowers their production costs.
"We usually import hot rolled coil from Russia or
Ukraine as the price is lower than from local steelmakers," a
commercial manager with a Turkish mill told Metal Bulletin.
"Of course, Russian or Ukrainian steel quality is sometimes
lower than that of local products, but we do not need
high-quality hot rolled coil to produce hollow sections," he
An economic consultant with a Turkish steelmaker said there was
a "struggle" between steelmakers and the end-users which
benefit from lower import taxes.
"The steelmakers and affiliated groups support the idea of
raising customs duty to 15% or higher for imports of steel,"
the consultant said. "However, a lot of Turkish industries
which produce final products [from imported steel] are in
favour of low customs duty as it helps them to cut their