Turkish steel production and exports are seen falling by some 30 percent in 2019, hit by weak domestic demand, protectionist measures in international markets and an increase in China’s steel exports, the head of the steel exporters association said.
Turkey, the world’s eighth-largest steel producer and tenth-biggest exporter, has been battered by a currency crisis this year that saw the lira plunge more than 47 percent against the dollar and sent inflation to 25 percent. The crisis has knocked economic growth and hit domestic demand.
Turkey’s steel market could contract some 30 percent in 2019 due to decreased demand from the automotive, white goods and construction industries, Adnan Aslan, the head of Turkey’s Steel Exporters’ Association (CIB), told Reuters.
He said the capacity usage rate could fall to 60-65 percent from 80 percent this year.
The automotive industry market contracted 32 percent between January and October, white goods sales dropped 17 percent between January and November, while the construction sector contracted 5.3 percent in the third quarter.
Steel exports could drop to around 15-16 million tonnes in 2019 from an expected 20.5 million tonnes in 2018, Aslan said, citing an expected increase in steel exports from China.
“China is lowering its growth data. This means there will be a contraction in the domestic market, therefore it will increase exports again,” he said, adding he expected China to return to an “aggressive” export policy in 2019.
Chinese steel producers ran up losses for the first time in three years in November as prices slid into a bear market on weak demand and near-record supply, ending years of solid profit margins.
Turkey’s steel industry is also facing setbacks due to additional tariffs from the United States on Turkish steel imports, as well as global protectionist policies, Aslan said, adding that Turkish companies would look for opportunities in Latin America.
The United States doubled tariffs on Turkish steel in August, bringing the total to 50 percent, as relations between the NATO allies were strained over the imprisonment of an American evangelical pastor in Turkey.