Posted on 13 Oct 2022
More Turkish mills are considering production halts in the near term due to high energy costs, Veysel Yayan, general secretary of the Turkish Steel Producers’ Association (TCUD), tells Turkish newspaper Cumhuriyet.
Yayan says that a 600% rise in energy costs is not sustainable and Turkish steel producers are unable to reflect this rise in their prices. “Mills have started to think whether they should make a loss either by working or by halting production.”
Emphasising the decline in crude steel production, Yayan observes: “The last quarter of the year does not look good. Energy hikes are negatively affecting our competitiveness.”
Mills were expecting a 10% on-year increase in production at the beginning of the year, but the year will close most probably with a decrease of more than 10%, Yayan adds.
“In the last three months, there has been a decrease of 18.3% in monthly average production and 14.3% in exports. These decreases do not reflect the 50% hike in electricity and natural gas prices on 30 August and the negative impact of the new regulation implemented by [Turkish state gas distributor] Botas on 29 September. This situation reveals that the last quarter of the year will be more difficult for our steel industry,” Yayan warns.
Meanwhile, Turkish mills’ capacity utilisation rate, which was 75% last year, decreased to 60% in the last three months. It is expected to fall further in the last quarter. In the first quarter, while world steel production shrank by 5.5%, Turkey’s production fall was limited to 2.5%, Kallanish notes.
“But, today, we are falling behind them [the rest of the world]. The EU provides energy support to its producers. Our government also needs to support the producer. 600% of energy hikes are not sustainable. It should be normalised as we cannot reflect this rise in our producers' prices,” Yayan laments.
“If producers decide to make a loss without working, this will be a great loss for the economy. Production should not be unsustainable. While trying to improve the situation of Botas, we need to be careful not to complicate the situation of other institutions,” he concludes.
Source:Kallanish
