Difficult years await the steel industry: We have entered a period of decline

Uğur Dalbeler: "Let's implement the same draft prepared by Europe for the steel sector in 2026 in Turkey"

Protectionist measures worldwide gained a new dimension with Trump. By increasing the tax rate from 25% to 50%, Trump made protectionist barriers a dominant instrument globally. In response, Europe announced protectionist measures in quick succession without losing momentum. We discussed these developments on the global stage with Uğur Dalbeler, President of the World Steel Association for the 2025–2026 term, General Manager of Çolakoğlu Metallurgy, and Vice President of ÇİB. Dalbeler states that the increase in protection measures in the two most stable markets for the Turkish steel sector will negatively affect both production and exports.

Speaking to Iron Steel Store, Uğur Dalbeler said, "The most important export market for the Turkish iron and steel sector is the EU. In Europe, quotas are being halved, and a 50% tax is imposed instead of 25% for those exceeding the quota. 40% of our exports go to the EU. Compared to 2025, our exports will be affected by 60% next year. We have already lost the US market. When these come together, there will be serious trouble. The automotive and white goods sectors are not doing well at all, and they all work intensively with Europe; a difficult year awaits us."

Can you evaluate the general outlook of the global steel sector? How do protectionism and tax wars affect the sector?

Protectionist measures worldwide gained a new dimension with Trump. Along with the taxes imposed on the iron and steel sector, there is also uncertainty. Trump first says I am increasing the tax rate from 25% to 50%. Now he says, "I am including steel derivatives in this tax."

New quotas and taxes will affect 60% of our exports

In 2019, Europe switched to a quota application and also took a corona measure. The quota tariff application ends in mid-2026. The sixth year is ending, and this time they have prepared a new draft, which they will send to the parliament in the commission. In the new period, they are halving the existing quotas and imposing a 50% tax instead of 25% for those exceeding the tariff outside of it. The most important export market for the Turkish iron and steel sector is the EU. 40% of our exports go to the EU. Compared to 2025, our exports will be affected by 60%. We have already lost the US market. When these come together, there will be serious trouble. The automotive and white goods sectors are not doing well at all, and they all work intensively with Europe; a difficult year awaits us.

500 thousand tons are imported from China monthly

On the other hand, SKDM, which will come into effect in January, will impose a financial obligation in 2026, and approximately 60 Euros per ton of carbon cost will be added to exports. The carbon tax will only become clear towards the middle of the year. I don't know what we will do under these conditions, of course, on the other hand, you see imports are constantly increasing. China has started importing 500 thousand tons per month. Russians are the same way; some measures must be taken.

We have two problems to overcome;

• Eliminating the unfair competition created by imports and protecting producers in Turkey.

• We need to discuss what actions we should take in the difficult process ahead regarding exports. What should we do to strengthen Turkey's hand? My suggestion is "Let's implement the same draft prepared by Europe for 2026 in Turkey. Let it be implemented in Turkey, even since Turkey has been a member of the ECSC since 1997. Since Turkey has been a member of the customs union since then, let's implement the same within the same customs borders. Let's expand their application limits to include Turkey, and let's not apply anything to each other."

The decline period for the steel sector begins for 2026 and beyond

On the other hand, we have no chance to send the product we cannot send to Europe to another market. Because we cannot compete with China there. While China kept its annual export volume around 50 to 60 million tons for years, it doubled it to 120 million tons in the last 2 years. Now America is closing its doors. It increases the 25% tax to 50%. After the US increased its new taxes, the US market shrank by almost 30%. Imports decreased by 10 million tons. When Europe halves its quotas, there will be a 20 million ton decrease there as well. In other words, the protectionist measures taken by both Europe and the US will result in a total demand withdrawal of 30 million tons in the international market. There is already an excess supply in the world. On the other hand, China is increasing its exports from 60 million tons to 120 million tons. When Russia is added to this, we as the Turkish steel sector have no chance to compete. China and Russia are incredibly advantageous; neither of them is a competitor we can compete with. In other words, they do not give us any chance in the international market. And they come and enter our market. And when we add these together, the future of the steel sector does not look very bright. If the current policies in the world continue like this, the decline period for the Turkish steel sector begins for 2026 and beyond.

Continuously increasing imports put local producers in a bind

In summary, the US and EU are closing their doors. In this case, there are already 2 large stable markets in the world. They have also disappeared. The increase in protectionist barriers in two important markets for the Turkish steel sector will lead to a reduction in the capacities of our producers. Also, continuously increasing imports put local producers in a bind. Trade is conducted under the free trade agreement with South Korea and Malaysia, but we cannot sell them a gram of goods. The countries we mentioned are sending steel here in droves. It will affect us all badly. In addition, increasing energy costs with regional wars, the tight monetary policy implemented against inflation for the last 2 years, and increasing labor costs are negatively affecting producers.

What would you like to say about increasing costs?

The possibility of collective bargaining negotiations going on strike seems high

I want to emphasize one point, there has been a very serious increase in labor costs due to inflation. Costs have tripled in the last 5 years. Now we have a new collective bargaining agreement in January. It will be negotiated. There is uncertainty, layoffs may increase, and there are already layoffs happening right now. Of course, we do not know what the minimum wage will be in the upcoming period? It may become clearer in light of that. But for the first time, I see the possibility of these negotiations going on strike in Turkey this year after many years. So, such a possibility exists at least on paper this year.

Due to costs, a company in Turkey is bringing workers from India

In response to increasing labor costs in Turkey, companies have started bringing in workers from abroad. It has become an interesting situation in Turkey. A company in Turkey has brought workers from India.

Exports may reach 17 billion dollars by the end of the year

Turkey's exports will probably reach 16 to 17 billion dollars with the current trend. We will approach 19-20 million tons; this rate is better compared to 2023 and 2024 but worse compared to 2021-22.

Are there any new rival countries for Turkey in iron and steel?

New competitors with Chinese capital are emerging

Saudi Arabia is not very active at the moment, but new capacities are coming there. Egypt has become a competitor to us in certain markets, and they are even becoming competitors in Turkey because it is outside the free trade agreement. Many new facilities have started to be established in Southeast Asia. In Malaysia, Indonesia, Vietnam, and those setting up factories here are generally Chinese capital. Now it's the turn of the Gulf countries, Oman, the United Arab Emirates, Qatar. These countries have started exporting because they are also experiencing significant declines in their consumption. We have started seeing materials from there, and their advantage is especially that energy costs are close to zero. They are also advantageous in labor.

About the new position

The World Steel Association represents 85% of total world steel production

The World Steel Association represents 85% of total world steel production. There are 16 seats on the executive board. These change according to regions. 2 are North America, 2 are South America, 2 are Europe, one is Russia, 2 are India, one is Korea, 2 are Japan. The rest of the world is also represented. Now Europe has 2 seats, and I sit in one of them. The Chinese wind in the global steel sector continues. They increased exports to 120 million tons. This bothers everyone in the world, the US has closed its doors. Even when Trump came for a second term, Biden had previously granted exemptions to some countries, Japan, Korea, Mexico, Canada, Trump removed all of them. Europe is making it increasingly difficult, and there are many problems related to decarbonization. Now in January, Europe will implement the carbon regulation at the border, but the US says it doesn't concern me. As the World Steel Association, we were doing a lot of work, especially on the standards and principles of calculating these carbon emissions. Now when everyone starts playing their own tune, what happens? It can be difficult to reach a consensus here.

As an association, we value developing consensus and cooperation

As an association, we are working intensively on developing new methods. Many projects are being carried out, especially to improve occupational safety related to education and human resources. On one hand, even if interests do not overlap or conflict, on the other hand, we are trying to develop a common team and cooperation. Ultimately, the material we are talking about is an important material, not everyone can produce everything, cooperation is always a phenomenon that should exist between countries. There must be an exchange for the strengthening of relations between societies and countries so that people listen to each other, and people start to understand each other.

Source: Demir Çelik Store