KPMG Turkey: Possible restrictions on scrap trade may affect Turkey’s competitiveness negatively

Friday, 02 September 2022

Global crude steel production rose by 4.7 percent in 2021 despite China’s decision to cut production and focus on its own domestic market, while the decline in China was offset by increases recorded in other major producing countries,?according to the “Steel Sector Overview 2022” report published by audit, tax and advisory services agency KPMG?Turkey. On the other hand,?Turkey’s crude steel production in the given year increased by 12.7 percent year on year to 40.4 million mt, thanks to the partial recovery in the market, following the production declines recorded since June 2020 due to the impact of the pandemic. The country maintained its seventh place in world crude steel production and its position as the largest steel producer in Europe as in 2020.

In 2021,?Asia’s crude steel production increased by only 60 basis points, while China’s crude steel production fell by three percent. Looking at the countries with increased production, with the easing of the effects of the pandemic on the global economy, India increased its crude steel production by 17.8 percent, Japan by 14.9 percent and South Korea by 5.2 percent in 2021. Crude steel production in the EU and the US increased by 15.4 percent and 18 percent, both year on year, respectively.

Meanwhile, the Turkish steel industry entered 2022 with high demand from both domestic and foreign markets. As a result of Russia’s invasion of Ukraine and the sanctions imposed on Russia, European demand for Turkish steel has increased. The increase in steel prices in the first six months of this year resulted in a 25-30 percent increase in Turkey’s exports. In contrast, the country’s steel production in the first half of the year was 18.9 million mt, down by 4.6 percent year on year. Global crude steel production declined by 5.5 percent compared to the first half of 2021 due to the ongoing strict pandemic-related measures in China and the slowdown in the construction sector, the global effects of the war in Ukraine, recession concerns in the US, and European demand contractions.

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