NEWS

Fastmarkets: What would you highlight as the key challenges for the Turkish steel market?

Ali Okyay: I believe that Türkiye is suffering the most as a result of global protectionism measures. The US and EU are the biggest export markets for the Turkish steel sector, however during the last 1.5 years we have had very limited exports to these regions. On top of this Türkiye is also struggling with domestic demand. Construction and automotive are the biggest steel consuming sectors in Türkiye, however we have recently seen demand in construction decrease significantly as well as a decrease by 20% in automotive production. About 80% of automotive production in Türkiye is exported and the EU is the main market, however it is expected that EU automotive demand will continue to decrease in 2020, and as a result we may see further decline in Turkish automotive production.

US steel prices decreased sharply after they reached record high levels when Section 232 first announced. Therefore it is now not possible for Türkiye to export to the US with 25% tax. The EU is also struggling with domestic demand and as a countermeasure they are putting safeguards in place to try and protect the domestic market; for instance producers are cutting capacities to limit supply and stop price decreases. However prices are not high enough to support export to the EU, so Türkiye is struggling to balance domestic and export markets and it seems that this will continue at least until mid 2020.

For Turkish producers it is not easy to generate alternative export markets for tubes, pipes and flat steel, so these sectors will struggle unless EU and US markets become more open.

Fastmarkets: As a pipe manufacturer, does Borusan Mannesmann foresee continued demand for these products? Is this domestic demand?

Ali Okyay: There will always be global demand for tubes and pipes. We see the current problems in the market as temporary, and as soon as they are solved we can see a fast recovery in the steel sector. Türkiye is an emerging country and has the ability to accelarate the recovery very quickly, and as such Türkiye will continue to grow and therefore there will be demand for steel tubes and pipes.

As Türkiye’s leading steel pipe manufacturer, Borusan Mannesmann always keeps balance between export and domestic sales. We have been engaged in export activities since the 1960’s, and I can say that we have made very important moves in this field, especially in the last 20 years.

In this context, we are not only exporting, but we also took important steps towards becoming a global brand.

77% of our current total consolidated revenues comes from sales to clients outside Türkiye and we have reached this point by both exporting from our plants in Türkiye and conducting sales from our local production plants in US and Europe. Despite current negative conditions, Borusan Mannesmann continues to invest. Our investment for automotive tubes continue, in particular the development of a $75 million facility investment in Gemlik, which we started at the beginning of 2018. Currently part of it is completed and we have started work that we will ensure completion of the whole facility in 2020. We are increasing our capacity although the market is shrinking: our strategy is longterm and we are very hopefull for the future of Türkiye. We think that this investment will also increase our position among the top 5 producers in Europe.

Fastmarkets: What do you hope attendees of your panel on the Turkish steel market will learn from the discussion?

Ali Okyay: Türkiye is an important player in the steel sector both regarding the capacity and geographic location. Therefore the development of the Turkish domestic and export markets is important for global steel companies. I believe attendees will benefit from the panel and they may make their strategies accordingly.