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Turkish Steel Industry in 2013
World crude steel production reached 1,607 billion tons % in 2013 up by 3.1 % yoy, after growing 1.5% in the previous year. The production growth pointed out continued recovery in the world steel markets. However, when the growing role and share of Asia and China in the world steel production considered, it is clearly seen that the improvement in the world steel markets was resulted from Asia region. In 2013, crude steel production of China increased by 6.6 % to 779 million tons; and production of Asia reached 1,081 billion tons up by 5.3 %. When the production of China excluded, world crude steel production stayed stable at 828 million tons. It is calculated that world crude steel production excluding Asia fell by 1.3 %. In contrast to strong expansion in the production of Asia, production dropped in all other regions including EU-28, Other Europe, CIS, North America and South America.
Compared to the pre-crisis level of 2007, total crude steel production of the EU is down by 21 %, CIS is down by 12 %, North America is down by 10 % and South America is down by 4.6 %. Although production is lower than 2007 level in many regions, China’s 2013 production is 59 % higher and Asia’s production is 43 % higher in the same comparison, which brings world crude steel production up 19.2 % over 2007 level. While world crude steel production increased by 19.2 % during the last 6 years period, world steel production excluding China dropped by 3.6 % and excluding Asia down by 10.7 %. The sharp drop in world crude steel production excluding Asia and China reveals the determining role of the region in the world steel production growth. According to the production figures in 2013, EU region is the one which has at the lowest level compared to the pre crisis, whose production dropped from 210 million tons to 166 million tons.
China, with its production of 779 million tons up by 6.6 % yoy, kept its position as the largest crude steel producing country in 2013. After China, which accounted for 49 % of the global steel production, Japan ranked as the second largest steel producer with its 111 million tons of production and USA ranked third with its production of 87 million tons. Despite dropping by 3.4 % to 34.65 million tons, Turkey kept its position as the 8th largest steel producer of the world. In spite of being the first country in terms of production growth rate among the top 10 steel producing countries in the years 2011 and 2012; and third country after China and India during the last 10 years period, Turkey became the second country to show the worst performance after South Korea in 2013.
Crude Steel Production
In the whole of 2013, despite growth expectations, Turkey’s total crude steel production dropped by 3.4 % to 34.65 million tons, negatively separated from the world. Turkey’s billet production fell by 2.8 % to 26.3 million tons and slab production went down by 5.3 % to 8.36 million tons. Slab production, which increased at record rates in the years 2010 and 2011, continued to drop in 2013 after the 9 % fall in 2012. Crude steel production of the EAF mills dropped by 6.9 %, while production of the facilities with BOF technology increased by 6.5 %. In 2013, billet accounted for 76 % of the total crude steel production in terms of products and EAF mills accounted for 71 % of the total.
Despite the drop in 2013, Turkey’s crude steel production is 35 % higher than pre-crisis level in 2007. Turkey’s production growth during the last 6 years is 80 % higher than the world average. With its production growth performance of 35 %, Turkey comes as the third country among the top 10 steel producers after China, up by 61 %, and India, up by 49 %.
Capacity and Capacity Utilization
Finished Steel Production & Consumption
Turkey’s finished steel consumption reached 31.3 million tons up by 10 % which can be considered comparatively a high rate on the world average. Long steel consumption rose by 12.3 % to 16.67 million tons and flat steel consumption increased by 7.4 % to 14.63 million tons.
On the other hand, Turkey’s flat steel production/consumption ratio reached 67 % in 2013 from 40 % level in 2005. Production/consumption ratio in long products dropped to 159 % in 2013, which was 170 % in the previous year. In terms of total finished steel products, Turkey consumed around 86 % of the tonnage produced domestically in 2013. In this respect, Turkey produced more steel than its consumption and structurally net steel exporter.
Although inflation rose in 2013, the rate stayed at one digit levels. At the end of the year, PPI and CPI increased to 6.97 % and 7.4 % respectively. Unemployment rate was 10 % at the end of the year.
As total export of the Turkish economy dropped slightly by 0.4 % to 151.8 Billion USD and import increased by 6.4 % to 251.7 Billion USD, Turkey’s total steel trade deficit increased by 18.7 % from 84.1 Billion USD in 2012 to 99.8 Billion USD in 2013. High growth in foreign trade deficit resulted in sharp rise in Turkey’s current account deficit which is considered as the most fragile part of the Turkish economy. In 2013, current account deficit of Turkey, increased by 36.1 % (17.3 Billion USD) from 47.8 Billion USD to 65 Billion USD.
In 2013, EU was the only region where Turkey’s steel export tonnage increased, which grew by 30 % to 3.3 million tons as a result of the increasing activity in the EU steel using sectors. Export to the Middle East and Gulf Region, which is the largest export destination for Turkey’s steel products, plunged to 7.58 million tons down by 15.4 % and export to the North Africa was 2 million tons, which is 4.7 % lower than 2012 figure. In 2013, EU-28, Middle East & Gulf and North Africa accounted for 67 % of Turkey’s total steel export.
In terms of regions, Turkey’s total steel import from the EU and CIS regions kept increasing trend putting Turkey’s steel production under pressure. Turkey’s total steel import from the EU region reached 6.06 million tons up by 16 % yoy, import from the CIS reached 6.6 million tons up by 39 % and import from the Far East & SE Asia to 1.5 million tons. EU and CIS regions accounted for 85 % of Turkey’s total steel import in 2013.
Steel Trade Balance
Turkey gave steel trade surplus with all regions except for EU and CIS regions. Net steel import from the EU increased from 2.4 Billion USD to 2.5 Billion USD and net steel import from the CIS Region rose from 1.7 Billion USD to 2.4 Billion USD.
In addition to the 7.5 Billion USD worth scrap import in 2013, Turkish steel industry also imported 8.2 million tons of iron ore (1.16 Billion USD), 983.000 tonnes of pig iron (414 million USD), 419.000 tonnes of ferro alloys (550 million tons) and 5.1 million tons of coking coal (811 million USD). Total value of steel industry’s raw material import was 10.4 Billion USD in 2013.