A LOOK FOR IRON-A LOOK FOR IRON-STEEL SECTOR IN STEEL SECTOR IN

TURKEYTURKEYMuhammet Ali Baştın 2001431005Muhammet Ali Baştın 2001431005

Eyüphan Özyurt 2001431036Eyüphan Özyurt 2001431036

Soner Turhan 2001431034Soner Turhan 2001431034

IRON-STEEL SECTOR IRON-STEEL SECTOR

Turkey is one of the few countries that possess Turkey is one of the few countries that possess a vast and diverse mineral resource base. a vast and diverse mineral resource base.

Excluding resources of oil and coal are about Excluding resources of oil and coal are about 4.500 mineral deposits in Turkey. 4.500 mineral deposits in Turkey.

The Turkish iron and steel industry was The Turkish iron and steel industry was dominated by state-owned or partially state-dominated by state-owned or partially state-owned integrated facilities and dominantly owned integrated facilities and dominantly private sector electric arc furnace plants private sector electric arc furnace plants

HISTORY OF IRON-STEEL HISTORY OF IRON-STEEL SECTORSECTOR

Turkey’s first steel factory was established in Turkey’s first steel factory was established in 1928 for military purposes1928 for military purposes

Turkey has 3 integrated plantsTurkey has 3 integrated plants

In 2002, the İskenderun Iron and Steel Factory In 2002, the İskenderun Iron and Steel Factory

was tied to Erdemir was tied to Erdemir

THE STRUCTURE OF IRON – THE STRUCTURE OF IRON – STEEL SECTOR STEEL SECTOR

The Turkish iron-steel sector has completed its The Turkish iron-steel sector has completed its infrastructure, capital structure and infrastructure, capital structure and technology. It is highly competitive in the technology. It is highly competitive in the world, both in terms of price and qualityworld, both in terms of price and quality

Next to big companies, many small and Next to big companies, many small and medium-sized enterprises produce iron and medium-sized enterprises produce iron and steel. steel.

The Sector Companies in TurkeyThe Sector Companies in Turkey

Iron and steel production was first started in Iron and steel production was first started in Kirikkale, which is now known as MKEK, in 1928 Kirikkale, which is now known as MKEK, in 1928

The first integrated plant, Karabük Iron and Steel The first integrated plant, Karabük Iron and Steel Works (KARDEMIR) began to operate in Karabük in Works (KARDEMIR) began to operate in Karabük in 1937 1937

Eregli Iron and Steel Works (ERDEMIR) started Eregli Iron and Steel Works (ERDEMIR) started production in 1965. production in 1965.

In 1977, Iskenderun Iron and Steel Works In 1977, Iskenderun Iron and Steel Works (ISDEMIR)(ISDEMIR)

Size and Capacity of CompaniesSize and Capacity of Companies

The production capacity of the Turkish iron The production capacity of the Turkish iron and steel industry reached to 4.2 million tons and steel industry reached to 4.2 million tons in 1980in 1980

At present, Turkish steel sector, with its At present, Turkish steel sector, with its around 15 million tons of crude steel around 15 million tons of crude steel production and 9.5 million tons of total export, production and 9.5 million tons of total export, ranks in the 15th in the global steel output ranks in the 15th in the global steel output

Products in SectorProducts in Sector1000 tons 2002 2003 2004

Products Production Consump. Production Consump. Production Consump.

Tinplate 146 234 179 239 220 287

Galvanize 489 637 588 772 904 1016

Cold Rolled 1116 1186 1375 1615 1443 2188

Hot Rolled 2130 3386 2146 3858 1915 3891

Plate 53 287 46 269 50 391

Other 65 140 90 129 100 174

Total Flat Steel 3999 5870 4424 6882 4632 7885

Total Long Steel

11230 6906 12265 7605 13932 8619

Seamles Pipe 3 85 3 103 4 142

Grand Total 15232 12861 16692 14590 18568 16646

www.mesteel.com

Other ProductsOther Products Steel ProductsSteel Products

* * BloomsBlooms* * BilletsBillets* * Beam Blank Beam Blank

Rolling Mill ProductsRolling Mill Products * * Hot Rolled Round Steel (Bars)Hot Rolled Round Steel (Bars)* * Hot Rolled Round Steel Hot Rolled Round Steel (Deformed Bars)(Deformed Bars)* * Steel Nip BeamsSteel Nip Beams* * Steel Npu Profiles Steel Npu Profiles * * Equal AnglesEqual Angles* * GI ProfileGI Profile* * RailsRails* * BilletsBillets

Coke ProductsCoke Products * * Coke Plant ProductsCoke Plant Products** Ammonium Sulphate, Pressed Ammonium Sulphate, Pressed Naphthalane, Tar PaintNaphthalane, Tar Paint* * Carbolic Oil, Grude Benzole, Carbolic Oil, Grude Benzole, Refine Washed OilRefine Washed Oil* * Crude TarCrude TarOther ProductsOther Products * * Pig IronsPig Irons* * Granule SlagGranule Slag* * Oxygen, Nitrogen, ArgonOxygen, Nitrogen, Argon

THE CONDUCT OF IRON – THE CONDUCT OF IRON – STEEL SECTOR STEEL SECTOR

The iron and steel market is The iron and steel market is large and set to grow further large and set to grow further

Turkey was the world’s 13th Turkey was the world’s 13th steel producer with a total steel producer with a total production of 18.3 million production of 18.3 million tonnes in 2003, with an tonnes in 2003, with an impressive growth rate of impressive growth rate of 11.1% over 200211.1% over 2002

Foreign Trade Of Iron Steel Sector Foreign Trade Of Iron Steel Sector

Turkey exports almost half of its total Turkey exports almost half of its total production, it meets domestic demand for flat production, it meets domestic demand for flat products mainly through imports products mainly through imports

Economic crises in Southeast Asia and Russia Economic crises in Southeast Asia and Russia and the recent one in Turkey has had negative and the recent one in Turkey has had negative effects on the sector, exports have recovered effects on the sector, exports have recovered

Foreign Trade Of Iron Steel SectorForeign Trade Of Iron Steel Sector

Turkey exports steel products to about 151 Turkey exports steel products to about 151 countries and its major export partners are countries and its major export partners are USA, Italy, Greece, Israel, UK, Germany and USA, Italy, Greece, Israel, UK, Germany and the Middle East. the Middle East.

Turkey's number one steel export partner; the Turkey's number one steel export partner; the US, has currently launched the Bush Plan US, has currently launched the Bush Plan which entails the implementation of new tax which entails the implementation of new tax and tariffs up to 30 percent on steel imports and tariffs up to 30 percent on steel imports

State Planning Organization (SPO)

PERFORMANCE OF THE PERFORMANCE OF THE SECTOR SECTOR

1. Profitability of Sector’s Companies1. Profitability of Sector’s Companies 2. Growth of Sector’s Companies2. Growth of Sector’s Companies 3. Other Ratios about Sector Companies3. Other Ratios about Sector Companies

Profitability of Sector’s Companies Profitability of Sector’s Companies

COMPANYNET PROFIT(2005/6)

YTLRatio Of Profitability %

YTL

EREGLI IR.STE.CO300.172.619 4.49

IZMIR IR. STE.CO8.946.166 3.39

KARDEMİR IR. STE. 11.693.804 1.97

TOTAL320.812.589 2.40

FINNET2000

Growth of Sector’s Companies Growth of Sector’s Companies

COMPANYTotal Assets in

1999YTL

Tot Asset in (2005/6)

YTLGrowth Ratio %

EREGLI 629.360.108 6.678.181.758 1077

IZMIR 91.928.004 264.095.463 287

KARDEMİR 111.679.568 593.256.776 531

FINNET2000

Debt Ratios (2005/6) Debt Ratios (2005/6)

COMPANYDebt

Ratio(%)

Short-term Debt/Total Debt

(%)

Capital Sufficiency Ratio(

%)

Long-term Debt/Total Debt(%)

EREGLİ 46.02 53.46 67.32 46.54

IZMDC 38.48 76.59 72.21 23.41

KARDEMİR 77.45 40.97 56.35 59.03

AVERAGE 84.55 71.14 56.78 28.86

FINNET2000

Other Profit Ratios (2005/6) Other Profit Ratios (2005/6)

COMPANY

Gross profit

Margin (%)

Net Profit Margin (%)

Cost of Sales/Net Sales

Profit/Capital Ratio

MV/BV

Net Profit 2005-6/Equity

EREGLİ 16.03 14.74 84.27 6.68 0.63 6.68

IZMDC -1.65 4.33 101.65 4.69 0.90 4.69

KRDMR 11.36 4.72 88.64 3.50 1.48 3.50

FINNET2000

Price-Earning Ratio,Market Price-Earning Ratio,Market Value,Book ValueValue,Book Value

CompanyNet Profit

year 2004

Paid-in Capital

YTL

EquityYTL 

MarketValue YTL 

Market ValueUSD

MV/BV P/

E 

EREGLI 496,189,112 487,872,000 4,542,585,909 4,366,454,400 3,234,410,667 0.96 8.8

IZMDC 12,716,310 62,250,000 189,899,229 195,465,000 144,788,889 1.03 15.3

KRDMR 10,163,825 115,935,970 70,637,582 106,661,092 79,008,216 1.51 10.4

FINNET2000

CONCLUSION CONCLUSION

Erdemir’s privatisation Erdemir’s privatisation Mortgage Market,will effect the Iron-Steel Mortgage Market,will effect the Iron-Steel

sector positivelysector positively Turkish steel producers are one of the best Turkish steel producers are one of the best

suppliers for the restructuring investments in suppliers for the restructuring investments in Iraq and Middle EastIraq and Middle East

The iron and steel industry will continue to The iron and steel industry will continue to growgrow

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