EU's steel quotas and global overcapacity challenge Turkish exporters, impacting trade dynamics and operational capacity.
Global overcapacity, protectionism, and carbon costs are narrowing the operational space of the flat steel sector.
The Market Talks organized by SteelOrbis on September 8, 2026, at Elite World Grand Sapanca brought together industry players with over 650 participants. The event, primarily sponsored by Yıldız Demir Çelik, also had sponsors including Seçkin Metal, Yatırım Finansman, Ağır Haddecilik, Galva Metal, and Yametaş. The meeting addressed changing balances in global steel trade, the EU's new protectionist measures, energy and logistics costs, the trend of flat steel demand in Turkey, financing pressures, and expectations for the second half of 2026.
The main issue in the global steel sector is overcapacity.
Yıldız Demir Çelik General Manager Selçuk Yılmaz stated that the fundamental problem in the global steel sector is not the fluctuations in demand but the rapid increase in production capacity, noting that global overcapacity is expected to reach 750 million tons by 2030. He highlighted that India is leading in new capacity investments, while China is increasing price and competitive pressure in international markets by directing its production surplus towards exports, pointing out that China's steel exports reached 75 million tons in the first eight months of 2026.
Yılmaz expressed that the increasing capacity and export volumes are prompting countries to adopt stronger protectionist measures, mentioning that the EU's reduction of steel import quotas by approximately 47% and the increase of the over-quota tax from 25% to 50% has significantly narrowed the operational space for Turkish exporters, with the decrease in quotas allocated to Turkey calculated to be around 36% based on current data.
He reminded that the quota contraction in the UK market is also limiting the export opportunities for Turkish producers, emphasizing that Turkey needs to protect its domestic market against low-priced imports that do not meet standards while combating trade barriers in foreign markets.
Stating that trade policies are no longer just about quotas and anti-dumping duties, Yılmaz expressed that the 'melting and casting' rule and carbon costs have changed the entire value chain from purchasing decisions to supplier selection. He pointed out that the trading levels of the same hot-rolled sheet at approximately $500/mt in China, $600/mt in Turkey, $850/mt in the EU, and $1,300/mt in the US clearly illustrate the divergence created by protectionist measures in the global price structure. He added that despite the 50% Section 232 tariff, exports to the US are still possible, indicating that high protection walls also create high-priced markets.
About one-third of flat steel capacity in Turkey is unusable.
Yıldız Demir Çelik Sales Director Vedat Acar stated that although there has been an annual increase in Turkey's flat steel production and consumption in the first seven months of 2026, the conditions in the field have not been equally positive. He noted that the capacity utilization rate in Turkey's flat steel sector has mostly remained in the range of 60-65% in recent years, achieving approximately 66% in the first seven months of 2026, which roughly means that one out of three machines in the sector is not operational. Acar mentioned that low domestic demand, import pressure, and protectionist measures in export markets have intensified price competition, stressing the need to focus on value-added coated products, import substitution, high-strength lightweight steels, and products for the solar energy sector for growth.
In domestic supply, delivery reliability is as important as price.
Ram Dış Ticaret General Manager and TURKTRADE Vice Chairman Murat Urun stated that Turkish steel producers have significant competitive strength in terms of price and product quality but need to improve in terms of delivery reliability and predictability. He pointed out that a product's low price loses its meaning if it is not delivered on time, stating that delays create higher stock, working capital, and financing costs for customers. Urun emphasized that domestic producers should offer lower minimum order quantities, timely delivery, regular production information, and stronger customer communication, highlighting that competition should be conducted not only on product price but through a service approach that encompasses the entire value chain from order to after-sales.
Protectionism does not stop trade; it changes its direction.
Yıldız Demir Çelik Export Manager Hakan Bozoğlu stated that protectionist measures have not ended global steel trade but have only changed the direction of trade flows, indicating that producers need to position themselves correctly in this change. He expressed that Turkey's share in total exports of quota-restricted steel products to Europe has generally been around 30% over the last six years, noting that it is not possible to withdraw from export markets due to weak demand and low capacity utilization rates; rather, the customer and market pool needs to be expanded. Bozoğlu pointed out that the tonnage coming from China and South Korea due to trade measures applied in different countries will increase competition in export markets for Turkish producers, stressing that Turkey's logistical advantage in nearby markets should be utilized more effectively in this process. He identified making the value chain traceable for commercial compliance, including information on the country where the steel is melted and cast in purchasing decisions, and optimizing logistics processes as priority steps, stating that the most significant risk in the next 12 months is the deteriorating navigation safety in the Black Sea and increasing port delays, while the most concrete opportunity is the reconstruction process that could accelerate with the gradual easing of sanctions in Syria.
Information on the country of melting and casting is becoming decisive in exports.
Trade Resources Company Managing Partner Bülent Hacıoğlu stated that under the EU's new import regime, exporters are required to declare the country where the steel product is transformed into its first semi-finished form. He noted that this information could be used in quota, anti-dumping, and countervailing tax applications in the future, emphasizing that the origin of inputs must be fully tracked in cold-rolled or galvanized sheets produced in Turkey using imported hot-rolled sheets. Hacıoğlu pointed out that practices aimed at preventing the circumvention of trade measures in the US and the EU are becoming increasingly widespread, stating that the country where the product is ultimately processed may not be considered sufficient on its own, and the origin of the raw materials may become decisive.
Carbon management is now part of finance and purchasing processes.
Yıldız Demir Çelik SEÇ and Sustainability Manager Figen Tabak Balbal stated that verified real emission data could provide manufacturers with a significant cost advantage compared to the EU's assumed values. Balbal mentioned that Yıldız Demir Çelik has conducted a preliminary verification study for direct and indirect emission data for 2025, expressing that the company has started to consider verifiable emission data alongside quality and price in its supplier selection. She regarded the establishment of a legal framework for the emission trading system in Turkey as a positive step, stating that Turkey needs to rapidly implement its own border carbon adjustment mechanism to protect domestic producers. Balbal summarized the sector's priority with the words, 'Those who cannot manage their data cannot manage their market.'
Timing is critical in emission verification.
CARES Chief Technology and Sustainability Officer and Board Member Ladin Çamcı stated that the overlap of the EU's new protection measures with the Border Carbon Adjustment Mechanism will create a significant cost burden for exporters. He emphasized that Turkish producers should not view carbon accounting merely as a compliance or reporting issue, highlighting the importance of including verified data in commercial strategy, contracts, and market selection processes. Çamcı expressed that if Turkey's high share in electric arc furnace production is documented correctly, it could create a significant competitive advantage, urging companies to complete their data infrastructure and verification processes in the short term and to develop a comprehensive strategy encompassing energy efficiency, clean energy use, and decarbonization investments in the long term.
The meeting concluded with presentations by Dr. Barış Esen, Corporate Communications Director of Yatırım Finansman, explaining how recent geopolitical developments have affected Turkey's industrial sector, and Prof. Dr. Hakan Kara from Bilkent University, who evaluated the current state and future of the Turkish economy.
Source: SeaNews Türkiye
