It is estimated that the EU's revised safeguard quota regime, which took effect on July 1, could result in a loss of around 3.5 million mt in Türkiye's steel exports. Do you agree with this assessment? How do you evaluate the potential impact of the new measures on the Turkish steel industry?
The EU's revised safeguard quota regime, effective as of July 1, 2026, limits imports of finished steel products to 18.3 million mt, representing an import reduction of approximately 37% compared to 2025 levels. In addition, the out-of-quota duty has been increased from 25% to 50%. Türkiye supplied around 6 million mt, or 16% of the EU's steel imports, in 2025. Under the revised quota allocation and accompanying trade measures, Türkiye's quota has been reduced to 4.2 million mt. However, with the implementation of the "melted and poured" requirement, which takes into account the use of imported slabs and billets, Türkiye's effective quota is expected to decline to approximately 2.5-2.7 million mt. This forms the basis of projections suggesting that Turkish steel exports to the EU could decline by around 3.5 million mt.
First of all, I do not believe that increasing the out-of-quota duty from 25% to 50% will have a significant practical impact. In my view, no producer would be willing to pay even a 25% safeguard duty to exceed the quota. If such a situation were commercially viable, it would indicate that the industry's challenges are far more severe than we currently assume.
Is it not entirely reasonable for the EU to set its import ceiling at around 20% of its total steel production? Should every country be expected to allow imports to account for nearly 48% of domestic consumption, as Türkiye currently does? What is truly surprising is not the EU's decision, but the expectation that such measures should be considered unusual.
"Both the country and steel producers must undergo the necessary transformation."
With the introduction of the EU's new trade measures and the "melted and poured" requirement, which structural challenges have become the industry's main priorities? Which areas should be addressed first to resolve these issues?
This example clearly demonstrates that the industry's primary challenge is the competitiveness of the Turkish steel sector. We are effectively unable to utilize nearly 40% of the quota allocated to Türkiye because of our reliance on imported slabs and billets. The underlying reason is our inability to compete with slab- and billet-producing countries in terms of production costs, together with insufficient domestic production of low-residual-element slabs required for flat steel manufacturing. Due to both the cost and quality limitations of imported scrap, our production costs remain elevated and our product portfolio is constrained. This has been one of the industry's fundamental structural challenges for many years.
Another manifestation of this issue is the country's dependence on imported flat steel products. Türkiye imported 18.9 million mt of steel in 2025, of which approximately 9.5 million mt consisted of flat products. Despite having around 28 million mt of flat steel production capacity, actual output reached only 15 million mt.
This raises an important question. Which is the greater concern: losing 3.5 million mt of exports to our largest export market, the EU, or having to import 18.9 million mt of steel into our own domestic market? That is the issue we should be focusing on. We need to identify the root causes and turn this challenging situation into an opportunity.
Declining exports to the EU, record-high steel imports into Türkiye, imports accounting for 48% of domestic consumption, the "melted and poured" requirement—currently limited to the EU—the implementation of the Carbon Border Adjustment Mechanism (CBAM), increasingly demanding decarbonization requirements, challenges in securing high-quality steelmaking raw materials, and low capacity utilization rates all represent the Turkish steel industry's key structural issues.
Rather than highlighting only our strengths while avoiding discussions about our weaknesses, we need to ask the right questions, adopt a realistic perspective, and accurately assess the direction in which the industry is evolving.
Issues such as production scale, economies of scale, product diversification, decarbonization, operational efficiency, the exceptionally high indirect and direct tax burden, financing costs, raw material security, our cost structure, and management practices should all be debated more openly. Both the country and steel producers must undertake the necessary transformation. Changing global market conditions are placing increasing pressure on an industry that was built for a very different environment. Unless we adapt, our discussion will remain limited to blaming external factors rather than addressing our own structural shortcomings.
What are your expectations for the second half of 2026? How do you see market conditions evolving in terms of domestic demand, exports, raw material costs, and overall demand fundamentals?
I do not expect the overall market environment in the second half of 2026 to differ significantly from current conditions. I do not foresee any major changes in either production or market activity. However, it is becoming increasingly clear from both the industry's performance and the challenges we face that the Turkish steel sector must enter a new phase and create a new growth story.
Finally, I would like to emphasize that many of the challenges we are facing today are not primarily the result of external developments, but rather of structural transformation that has been postponed for many years. In today's global steel industry, competitiveness is no longer measured solely by production volume or installed capacity. It is increasingly defined by low-carbon production, operational efficiency, technological capability, financial resilience, and the right product strategy.
It is easy to criticize protectionist measures. The more important question is whether we are prepared for a world in which those measures have become the new reality. The Turkish steel industry possesses the industrial know-how, manufacturing expertise, and production capabilities required to successfully complete this transformation. What matters now is replacing short-term reactions with bold, realistic decisions that will shape the industry's future. Going forward, the sector's success will be determined not by external conditions, but by how quickly it adapts to change.
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