CURRENT SITUATION IN TURKISH STEEL INDUSTRY & OUTLOOK

82nd OECD Steel Committee Meeting

Dr. Veysel Yayan Secretary General

Turkish Steel Producers Association

23-24 March 2017 Paris

2

Development of Turkish Economy, Construction, Manufacturing and Steel Industries (%)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

GDP* 8,4 6,9 4,7 0,7 -4,7 9 8,8 2,2 4,0 2,9 4,0 2,5

Construction* 21,5 19,4 5,7 -8,1 -16,3 17,1 11,5 0,6 7,2 2,2 1,8 4,0

Manufacturing 8,2 8,4 5,6 -0,1 -7 13,3 10 1,9 3,8 3,7 3,7 1,9

Steel Industry 2,4 11,8 9,9 4,1 -5,6 15,2 17 5,2 -3,4 -1,8 -7,4 5,2

-20

-15

-10

-5

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

GDP Construction Manufacturing Steel Industry

* 2016 estimated

3

Steel Using Industries - Construction

-20

-15

-10

-5

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*

* estimated

4

Steel Using Industries - Manufacturing

* estimated

-10

-5

0

5

10

15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*

5

Crude Steel Production of Turkey (Mt) & yoy Growth (%)

26

.8

25

.3

29

.1 3

4.1

35

.9

34

.7

34

.0

31

.5

33

.2

4.1

-5.6

15.2

17.0

5.2

-3.4

-1.8

-7.4

5.2

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

Production Change (%)

6

Turkey’s Crude Steel Production Capacity, Production (mt) & Capacity Utilisation (%)

83.4 84.6 80.5

78.6

66.1 68.2

72.4 73.2 70.4

67.8

62.5 64.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Capacity Production CU %

7

Turkey’s Finished Steel Production (Mt)

19.6

23.4

26.1 26.7 25.1

26.3

31.9

34.3 36.4 36.1 36.9 36.9

19.2

11.6

2.4

-5.8

4.6

21.5

7.3 6.2

-0.9

2.3

-0.2

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Production Change %

8

Turkey’s Finished Steel Consumption (Mt)

18.4

21.2

23.8 21.5

18.0

23.6

26.9 28.5

31.3 30.8

34.4 34.1

15.1

12.0

-9.7

-15.9

30.8

14.2

5.6

10.0

-1.8

11.7

-0.8

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Consumption Change %

9

Turkey’s Total Steel Trade (million tons)

0.0

5.0

10.0

15.0

20.0

25.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Import

Export

10

Turkey’s Net Total Steel Export (milion tons)

8.4

-2.3

-0.6

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

11

Turkey’s Total Steel Export/Import Ratio, %

146.6

135.6

108.0

151.0

140.5

152.5

87.9

99.1

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

12

Turkey’s Steel Consumption & Import (‘000 tons), Share of Import (%)

26.9 28.5

31.3 30.8

34.4 34.1

10.7 11.9

14.9 13.8

19.1 17.5

39.6 41.6

47.5 44.9

55.5

51.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2011 2012 2013 2014 2015 2016

ConsumptionImportImport Share %

13

Mega Projects up to 2023

Urban Transformation

80 Billion US$

Mega Projects

150 Billion US$

Energy

115 Bilion US$

Highways

16 Billion US$

Aviation

17 Billion US$

Railways

19 Bilion US$

Maritime Sector

19 Billion US$

~120 Billion US$ until 2020

~280 Billion

US$ until 2023

14

Conclusion

• Turkish steel industry entered growth trend in 2016 after continued drop in the

previous 3 years.

• The global efforts on decreasing market distorting practices, leaving support

and incentives for inefficient capacities and eliminating surplus capacity

contributed to increasing steel prices globally to a level which can be more

comparable with production costs. All these efforts to stabilize the markets,

allowed also Turkish steel industry to enter growth tendency again.

• Despite all those efforts to establish balance in the world steel industry, global

capacity surplus and market distorting practices in the world steel markets are

still an important concern for the Turkish steel industry.

• In addition to the improvement in those global factors, it is expected that the

mega projects developed by the Turkish government will increase domestic

steel demand and thus support Turkey’s steel production growth.