"The Turkish Steel Industry Has Shown Outstanding Performance"

The World Steel Association represents approximately 180 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. World steel members produce around 85% of the world's steel.

Turkey has also been an important player in the international steel trade. In 2009, Turkey’s finished and semi-finished steel products exports amounted to around 17.5 million tons (the 7th largest in the world).  Nicholas Walters, Communications Director of the World Steel Association, talked to TURKOFAMERICA.

Could you give us some idea of the industry outlook for 2010?
Global steel demand in 2010 is forecast to grow by 9.2% to 1,206 mmt, which is a recovery to the level of 2008. World Steel forecasts that global steel demand will return to growth in 2010 but this is expected to be moderate. As before the financial crisis, the emerging economies, especially China, will be the critical factor in driving world steel demand in the near future.

Apparent steel use reflects the deliveries of steel to the marketplace from the steel producers as well as from importers. This differs from real steel use, which takes into account steel delivered to or drawn from inventories.

Is the financial crisis over for global steel industry?
The global economy is on the road to recovery and so is the global steel industry. Global steel production has shown a steady increase over the last few months but not all major steel producing countries have yet reached pre-crisis levels.

Although a positive growth in steel demand has been projected for 2010 and 2011, uncertainty still remains, in particular in Europe and North America.

As steel demand growth increases in emerging countries, how will this shape the growth rate between BRIC countries and the rest of the world?
Steel demand is closely linked to economic growth. Key drivers for steel demand are automotive, construction, transport and energy. There are large variations globally depending on the state of economic development of a country and its pattern of industrial production.

Countries with large scope for economic growth would have growing steel demand which would help develop the steel industry. Emerging markets have been forecast to experience bigger economic growth than already developed nations like Germany, the US, Japan, etc.

Could you share your prediction of growth rate for the region in the next 10 years?
World Steel does not issue a forecast on steel demand looking 10 years ahead. Global steel production has been growing for the last 50 years. In the 1950s, world steel production was about 200 mmt. In the last 10 years, the pace of growth has accelerated and in 2009, the figure stood at 1,220 million metric tons.

The future growth in demand for steel will be driven mainly by the needs of the developing world. The steel industry must continue to grow by 3-5% worldwide and by 8-10% in China, India and Russia to satisfy these needs.

What is the importance of the Turkish steel industry for the world steel industry?
Turkey is now the world’s 17th biggest economy with a GDP per capita surpassing USD 12,000 (at purchasing power parity). Since 2002, the Turkish economy has experienced a very high level of growth that has come with a low and decreasing level of inflation. A long list of reforms, re-structuring and stability programs has been implemented as a response to the financial crises the country had experienced in the late nineties and in 2001. With its diversified economic base and stable banking system, Turkey is expected to be among the first to recover as credit market and global demand conditions stabilize in 2010. 2011-2012 growth rates may reach pre-crisis record levels of over 6%. However, the Turkish economy may also be faced with more negative conditions in 2010 if the global economic crisis, in particular the recent European debt crisis, leads to a continued decrease in the demand for Turkish exports.

By the close of 2009, Turkey was the world’s 10th biggest steel producer with a total production of around 25 million ton, 2.2% of global steel production. The Turkish steel industry has shown outstanding performance and growth over the last 10 years and the industry continues to grow fast. Crude steel production capacity has grown from about 20 million ton in 2002 to around 35 million ton in 2009, while its production grew by more than 50% during the same period.

How do you see Turkey’s position as an international steel trader?
Turkey has also been an important player in the international steel trade. In 2009, Turkey’s finished and semi-finished steel products exports amounted to around 17.5 million ton (the 7th biggest in the world).  The primary export markets for the Turkish steel industry are the European Union, MENA and Gulf countries. The industry is well positioned with its status as the bridge between Europe and the Middle East and hence is in prime position to take advantage of any growth going on in the Middle East and Northern Africa. One of the main opportunities is the ongoing rebuilding in Iraq.

Turkey’s steel consumption has grown even faster than production since 2001. Turkey’s steel consumption per capita has more than doubled since 2001, from a poor 137 kg per year to over 300 kg in 2007. The consensus among the local experts is that Turkey has the potential to reach a per capita consumption of 600 kg per year.

2008 and 2009 have been very hard years for the steel industry worldwide. However, Turkey's recovery appears to have started in the third quarter of 2009 and is expected to be rapid and strong. Turkey’s major steel-using sectors are forecast to grow more than 10% both in 2010 and 2011. As a result, steel consumption in Turkey, which dropped by 9.5% in 2009, is forecast to recover strongly by 13.5% in 2010. A strong growth of 13% is forecast for 2011, which would enable Turkey to reach a record high.

What are the major concerns for the world steel industry?
The two major concerns for the global steel industry are climate change and raw materials. The first one is climate change. To address the issue, World Steel has established four building blocks for its climate change policy, which involves actions by the world steel industry and may have policy implications for governments. They are 1) actions to reduce the CO2 intensity of steel 2) sharing best practices within the industry, 3) research and development on new breakthrough technology and 4) use of steel and new steels to save energy in transport, power generation, buildings, machinery and appliances as well as mitigating activities to manage the impact of climate change.

The second one is raw materials. The stability of the raw materials supply is a key issue for the steel industry. Iron ore and coking coal are essential materials for steelmaking and the purchase of these two material amounts to more than a half of the overall steelmaking production cost.

The recently imposed price increase by the iron ore suppliers could hinder the recovery of the global economy.  World Steel supports free and fair trade in steel. Competition between steel companies promotes innovation and efficiency. It promotes growth in steel use and serves steel’s customers and society as a whole. World Steel has also supported the consolidation of steel businesses but not to the extent of endangering competition. Even the largest steel company in the world today accounts for less than 15% of total world steel production.

ABOUT WORLD STEEL
World Steel represents its member companies worldwide and acts as a forum for discussions and best practice.  World Steel represents and speaks for the steel industry on issues which affect the industry. These include climate change, sustainability, technology, safety, and health. As the industry becomes more global, there are more issues out there that have to be treated globally.

The World Steel Association represents approximately 180 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. World Steel members produce around 85% of the world's steel.