At the 16th SteelOrbis Steel Conference “New Horizons in Steel Markets” held today, December 1, in Istanbul with the participation of approximately 900 participants including 300 on-site, Uğur Dalbeler, general manager of Çolakoğlu Metalurji, assessed the latest developments in the global steel industry and shared his expectations.
Pointing out that when the pandemic started to have a negative effect on the global steel industry, both Turkey and the industry had already been struggling with financial crises since 2018, Mr. Dalbeler stated that the situation became more difficult with the measures taken by the US and the EU. “When we look at it today, 80 percent of the US’ overall steel imports are exempted from Section 232 with this agreement. That said, the only threat to America’s national security is Turkey, which has been a NATO ally for 70 years. The EU continues to see Turkey, its 25-year trading partner, as a threat. In this case, neither 70 years of alliance nor 25 years of commercial partnership mattered. When it comes to interests, the rules change,” Mr. Dalbeler said regarding the agreement that the US and the EU reached to replace the Section 232 measures. He went on to say that industry players, who have considered that free trade is beneficial, are gradually moving away from this idea. “The main thing from now on is to be self-sufficient and to reduce foreign dependency,” he added.
Mr. Dalbeler underlined that the US and European manufacturers define imported steel as “dumped” or “subsidized” and they created a perception based on these, and, therefore, the European Commission and the US Department of Commerce made unfair decisions to protect their industries. He said that the steel producers in question, who know that these measures would not last forever, now refer to imported steel as “dirty steel” and they are now focusing on which one produces cleaner and greener steel. “They have created a new playground,” Mr. Dalbeler said, commenting on this situation, and added that, given the fact that it is produced with the same equipment and raw materials, Turkish steel cannot be called “dirty”.
Dalbeler touched upon increasing costs and stated that the Turkish steel industry has disadvantages in electricity and that, although electricity tariffs are high in Europe, they stay ahead of the game thanks to renewable energy sources. He pointed out that gas and electricity tariffs in the US are far below the world average. As a result, these markets are the most attractive for steel industry investments.
Mr. Dalbeler stated that in the current market conditions with scrap export bans/limitations, the most important step that the Turkish steel industry should take is to turn to alternative raw material sources and alternative raw materials. Saying that many manufacturers in the US and Europe have started to increase their investments in electric arc furnaces, “They (US, EU) will feel pressure to reduce emissions in the coming period, and the most practical step to reduce emissions is to increase investments in scrap use in steel production. With the raw material advantage they have, they are in a much better situation compared to other countries and they will use it to the fullest. With the purchases of scrap companies since 2008, we can say that the control of the market is completely in the hands of the US steel producers,” Uğur Dalbeler said.
Addressing the decline in China’s crude steel production and the country’s position in export markets, Mr. Dalbeler said that he does not expect any aggressive moves from China in the coming period, pointing out that the country is acting in a very planned manner, trying different restructuring approaches such as creating mega companies through mergers, and so its crude steel production is not anticipated to register growth.
One month ahead of the end of the year, he noted that the Turkish steel industry enjoyed good times this year, adding that steel prices reached highest-ever levels amid growth efforts, going back to normal with vaccination and the emergence of delayed demand. He stated that the expectations for 2022 in terms of demand are similar with investment programs announced by the US and China expected to contribute to steel demand. On the other hand, the Çolakoğlu official said profitability in the coming year will be different than this year amid the increase in production costs due to raw material and energy prices.
Regarding Çolakoğlu, Mr. Dalbeler said that the company has come a long way in terms of stainless steel production over the last two years, adding that their mid-term plan is to use the existing raw material within the country to serve the industry with added value. Additionally, he stated that the company will also start producing high strength IF steel for the automotive industry.