Referring to the new system set to begin as of July 1, Kutay Kenan Ülkü stated that quotas will be significantly reduced and that the tariffs to be applied in cases of quota overruns have been finalized. He noted that there is currently a great deal of speculation and unverified claims in the market, and due to this information pollution, both as a company and personally, they prefer to remain cautious and wait until the situation becomes clearer. Emphasizing that traders’ primary responsibility is to absorb risk on behalf of both customers and producers, Ülkü said that under current conditions, the risks being taken exceed rational limits.
Highlighting that it is still unclear how the European Commission plans to distribute quota restrictions across product groups, Ülkü recalled that since 2018—particularly after the United States implemented Section 232 measures—the EU has been trying to decide on its own course of action. He stated that the U.S. decisions have eliminated market uncertainty and allowed all players to see ahead more clearly, whereas Europe has left Turkish producers and traders in a continuous state of uncertainty.
“Europe May Soon Be Left Without Steel”
Drawing attention to structural problems and infrastructure deficiencies in Europe, Kutay Ülkü noted that while prices on the continent are rising, capacity restrictions continue due to logistical and infrastructural limitations. He described Europe as an aging continent with significant infrastructure gaps in many regions, arguing that the consequences of this will emerge within the next one to two years and that Europe could be left without steel.
He added that because the automotive sector is the most influential in the market, all planning is centered around it, but the real major risk and disruption will be seen in construction steel and commercial-grade products. Ülkü argued that European producers will no longer want to produce commercial-grade materials, and by restricting imports from nearby regions such as Turkey and Egypt, a supply crisis in the commercial market will emerge.
High Stocks, Buyers on Hold
Commenting on the current state of the European steel market, Ülkü said that buyers, especially end users, are staying away from imports due to fear. He explained that even delivered (DDP) offers are not receiving positive responses at the moment, as factories already hold sufficient stocks to last until October and November. He also noted that warehouses at the Port of Antwerp are full, and material can still be sourced even for very short-term shipments from European producers. While the first quarter of the year was strong, he expects the slowdown that began in the second quarter to negatively affect the third and fourth quarters as well. He added that once domestic demand recovers and fear subsides, he expects upward price movements after September and October.
“Melt Pour” Rule Will Further Tighten Steel Trade
Referring to the upcoming “Melt Pour” rule, which is expected to be introduced and is based on the casting location, Kutay Ülkü said this regulation will make trade significantly more complex. He explained that if implemented, manufacturers who import raw materials from one country and process them into finished products will no longer be able to sell those goods into the EU, as the product will be deducted from the quota of the country where the raw material originated. Giving India as an example, he said that a country whose quota is insufficient would no longer supply raw materials to pipe or cold-rolled sheet producers in other countries, fundamentally reshaping global trade flows.
Finally, Ülkü stated that barriers placed in front of trade will eventually be overcome in some form, and he expects that under pressure from steel users and distributors in Europe, these strict measures will have to be relaxed within one to two years. Otherwise, he warned, high tariffs would directly lead to inflation, creating a new economic burden for consumers in Europe, and concluded his remarks.
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