Uğur Cengiz, General Manager of Bilecik Demir Çelik, emphasized that global balances in the steel industry are being reshaped by geopolitical risks and the green transition. In exclusive remarks to SteelRadar, Cengiz pointed out the pressure that tensions in the Middle East are creating on logistics and energy costs, noting that Türkiye is emerging as a reliable supply hub in this process.
The war and regional tensions in the Middle East are creating significant effects on both demand and logistics in steel trade. How are these developments affecting the Turkish steel industry?
Tensions in the Middle East, particularly the rising strain along the Iran–U.S.–Israel axis and the potential risk of the closure of the Strait of Hormuz, represent not only a regional security issue but also a potential global turning point for steel trade and industry.
The Strait of Hormuz is a critical energy corridor through which approximately 20% of the world’s oil trade passes. Any disruption or closure could trigger chain reactions in many areas, from energy costs to logistics. Since steel production is an energy-intensive industry, increases in oil and natural gas prices directly affect production costs.
From a logistics perspective, security risks in key transit routes such as the Persian Gulf and the Suez corridor are extending shipment times and increasing costs. For example, while a shipment from the Persian Gulf to Europe normally takes around 20 days, alternative routes can extend the duration to 30–35 days. This situation can directly affect price formation, particularly for high-volume and low-margin steel products.
On the demand side, war and uncertainty may slow investment decisions in the short term and lead to lower demand in sectors such as construction. However, in the medium term, reconstruction and development processes could stimulate regional steel demand.
From Türkiye’s perspective, although rising energy costs affect all producers, the country’s strategic location between Europe, the Middle East and North Africa offers a significant advantage. Türkiye is among the production centers capable of reaching many markets within 7–10 days, allowing it to emerge as a fast and reliable alternative supply point during disruptions in global supply chains.
Looking at industrial history, major transformations have often been driven not by technological innovations but by logistics and supply disruptions. Therefore, developments such as tensions in the Strait of Hormuz may challenge the sector in the short term through higher energy and logistics costs, but in the medium and long term they may further increase the importance of regional production hubs such as Türkiye. When managed properly, this process should be viewed not merely as a crisis but as the beginning of a reshaping of global trade balances.
“We treat carbon management as a strategic field of competition”
Your sensitivity regarding carbon management is well known. What concrete steps has Bilecik Demir Çelik taken to reduce carbon emissions in its production processes, and how have these efforts affected costs and efficiency?
At Bilecik Demir Çelik, we view carbon management not only as an environmental responsibility but also as one of the new determinants of industrial competitiveness. In the European market, the key question is no longer simply “How much does it cost to produce?” but rather “What emission level do you produce with, and how do you certify it?” For this reason, we approach carbon management as a strategic competitive field.
Within this framework, we measured and verified our carbon footprint in accordance with the ISO 14064 standard across three scopes (Scope 1, Scope 2 and Scope 3). Today, our total carbon footprint stands at approximately 0.72 tons of CO₂ per ton of final product, which places us among the lowest levels within the Turkish steel industry.
We achieved this result not only through technical investments but also through a transformation in our management approach. Renewable energy investments, energy efficiency projects, lean production practices, a scrap-based circular production model and digital process optimization form the foundation of this process.
We have never viewed decarbonization merely as an environmental obligation. Instead, we place it at the very center of efficiency and cost management. Many initiatives that reduce energy consumption have also lowered our production costs and improved operational efficiency.
This approach has also been recognized at the sectoral level. In 2025, we were awarded third place in the Environmentally Friendly Application category at the Istanbul Chamber of Industry Green Transformation Awards with our refractory recovery project.
Therefore, for us decarbonization is not a cost burden; when managed correctly, it is a strategic transformation area that provides sustainable competitive advantage for industry.
“This development also changes the criteria of competition”
Do you think the European Union’s ‘Made in Europe’ approach and industrial policies will create an opportunity or a new competitive pressure for Turkish steel producers?
The European Union’s “Made in EU” approach was initially seen as a policy designed to protect European industry. However, an important development emerged with the latest draft regulation. According to this proposal, products manufactured in countries within the Customs Union, including Türkiye, may be considered of European origin under certain conditions.
This creates a significant window of opportunity for Turkish industry. In strategic sectors such as steel, Europe increasingly wants to maintain production with geographically closer and more reliable partners following the energy crisis and disruptions in supply chains. With its strong production infrastructure, logistical advantages and decades-long integration with European industry, Türkiye is naturally positioned as part of this ecosystem.
However, this development also changes the criteria of competition. In the European market, competition is no longer determined solely by price but also by carbon footprint, traceability and regulatory compliance. Therefore, this new framework could create a significant competitive advantage for Turkish producers that operate with low-carbon and sustainable production models.
“Türkiye is a country that has learned to live with crises”
Cheap steel exports from China are putting pressure on many producers worldwide. How do you position yourselves in this competitive environment?
In the global steel market, export pressure from China has long been one of the main factors shaping prices. The structural problem lies in China’s excess capacity. Although China’s total steel production has declined from around 1 billion tons to approximately 960 million tons, its exports have risen to around 130 million tons.
The main reason is that domestic demand has contracted faster than production, pushing surplus capacity toward export markets. This creates significant price pressure in global markets. When aggressive pricing policies from Russia and Iran, partly driven by sanctions, are added to this picture, competitive conditions become even more challenging.
Many producers in these countries operate under direct or indirect state-supported production models. In contrast, producers in Türkiye operate entirely under market conditions.
In such an environment, we do not believe that building competitiveness solely on price is sustainable. Our management philosophy focuses on understanding the entire steel value chain and responding quickly through production flexibility.
In a sense, Türkiye is a country that has learned to live with crises, and its industrialists are well-trained in dealing with such fluctuations. Therefore, our strategy is based on efficiency, cost discipline, operational flexibility and low-carbon production. In the long term, we believe that competitive advantage will come not from the lowest price but from the right cost structure and sustainable production model.
Energy costs, scrap supply and production challenges
Energy costs and scrap supply are frequently mentioned by steel producers in Türkiye. What are your views on their impact on cost structures?
In fact, there is a third cost item often mentioned as well, but let us start with the first two. In Türkiye, the most critical cost components in steel production are energy and raw materials, particularly scrap.
In facilities operating with electric arc furnaces and induction furnaces, these two elements constitute a major share of total production costs. Approximately 70% of steel produced in Türkiye is manufactured using scrap-based production technology.
While this model provides significant environmental advantages, it also makes the sector highly dependent on the global scrap market. Türkiye currently consumes around 31–32 million tons of scrap annually, more than 20 million tons of which is imported. Therefore, any fluctuation in global scrap prices directly affects production costs.
However, a different picture may emerge in the long term. Based on projections considering Türkiye’s historical steel consumption and stock structure, the country could potentially generate 24–28 million tons of domestic scrap annually by 2060. With the right scrap collection and recycling policies, this could significantly reduce Türkiye’s dependency on imports.
On the energy side, the issue is not only the price level but also predictability. Rapid and sharp fluctuations in energy costs make production planning more difficult and complicate cost management.
In recent years, another cost item has become increasingly visible: labor. Wage increases and social security burdens have risen along with inflation. When selling prices do not increase at the same pace, labor costs become more prominent within unit production costs. In many production facilities today, salary and employee expenses account for nearly 15% of total costs.
Under such circumstances, employment losses can become a real risk. However, the key is not suppressing wages but increasing productivity to achieve higher output and greater added value with the same workforce. Lean production, digitalization and process optimization are therefore becoming increasingly important.
Ultimately, competitiveness in the steel sector is no longer determined solely by energy and raw material prices but by efficiency. Countries or facilities that manage scrap, energy and labor more efficiently will take the lead in this race.
Outlook for steel prices in 2026
How do you expect steel prices to evolve in 2026 considering global demand, excess capacity and trade measures?
As we enter 2026, three main factors will shape global steel price trends: weak demand recovery, global excess capacity and increasingly strict trade measures.
Considering these factors together, a rapid and sustained upward trend in prices does not appear very likely in the short term.
Today, the most fundamental structural issue in the global market is excess capacity. At the same time, trade policies are making the market increasingly regionalized. New protective measures in the European Union, high tariffs in the United States and rising trade barriers in many countries are fragmenting global steel trade.
This means that prices are now determined less by a single global balance and more by regional cost structures and trade policies. Currently, steel prices are around $1,000 in the United States, $800 in Europe and about $550 in Türkiye.
The problem is that while prices remain under pressure, production costs do not decline at the same pace. Energy costs remain high, labor costs have increased significantly in recent years and financing costs continue to weigh on industrial companies.
Therefore, I do not expect 2026 to be a year of rapid price increases in steel. Rather, it will likely be a year of volatility, regional divergence and increasingly critical margin management.
In other words, the winners will not necessarily be those who sell the most tonnage but those who manage their costs, energy use and financing most effectively.
In summary, steel prices in 2026 will not be determined solely by demand. Excess capacity, trade policies and cost structures will jointly shape price formation. The real challenge for the sector is not what the price level is but how to maintain both production and financial stability in such a volatile environment.
The Turkish steel industry has strong crisis management experience, and I believe we can navigate this process with the right strategies.
“My management philosophy is 70% field, 30% desk”
Bilecik Demir Çelik has received many awards in recent years in efficiency, digital transformation and green production. What motivated these projects?
I believe that in industry, real knowledge often emerges not from reports in meeting rooms but from the production line and the experience of operators. For this reason, I define my management approach as “70% field, 30% desk.”
It is impossible to make the right decisions without understanding the rhythm of the factory and the realities on the ground. Managers must stay connected with production lines, listen to information coming from the field and reflect it in management decisions.
Another important element for us is the heritage of knowledge. Industrial organizations survive not only through machines but through knowledge and experience transferred across generations. When you combine this accumulated experience with the energy and perspective of younger generations, a powerful synergy emerges.
Therefore, behind many transformation projects lies not the idea of a single person but the collective intelligence of a well-functioning team.
The motivation behind Bilecik Demir Çelik’s recent awards in efficiency, digital transformation and green production stems directly from this management philosophy. Our aim has not simply been to produce more, but to produce more efficiently with the same resources, make processes more transparent and traceable, and reduce environmental impacts.
Lean production practices, digital process monitoring systems, energy efficiency projects and circular production approaches emerged naturally from these needs. Many of these initiatives developed from ideas originating on the shop floor and were implemented with the contributions of our teams.
However, sustainable success in industry cannot be achieved through operational strength alone. Operational process management, risk management and financial discipline must be balanced together. Even a small deviation in one of these areas can quickly affect structures built over many years.
For this reason, alongside operational excellence, we attach great importance to financial discipline and risk management.
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