SteelOrbis talked to Tolga Kısacıkoğlu, CEO of Galva Metal, about the latest situation and the challlenges in the flat steel segment.
How do you assess the current situation in the flat product market?
The flat product market has been going through a very challenging period since the beginning of 2025. Unfortunately, the general outlook of the country's economy is directly reflected in the sector. The decline in industrial production, coupled with falling demand in key sectors such as automotive and white goods, is putting serious pressure on costs.
The current state of the market involves serious difficulties not only in terms of access to raw materials but also in financial terms. The loss figures announced by many companies listed on the stock exchange in the first quarter were also felt in our sector. The fact that some companies in the sector have filed for bankruptcy or reached a concordatum agreement in just the last few weeks clearly demonstrates how fragile the market is.
Despite all these challenges, we are continuing our investments with a long-term perspective. Our goal is to emerge from this crisis with a stronger and more efficient structure, through automation and modernization projects that will increase efficiency, as well as new production lines. Under the current economic conditions, it is not possible to survive with low-efficiency systems without increasing production speed and quality. We are also moving forward with all our investments in this direction.
In summary, the flat product market is currently undergoing a test of resilience. High efficiency and strong cooperation seem to be essential to survive this process.
What can you say about the trend in demand and prices?
Unfortunately, we are experiencing a very difficult period in terms of both demand and prices in the first months of 2025. Our plans at the beginning of the year anticipated a more stable economic landscape and gradual interest rate cuts. However, developments have moved in the opposite direction to our expectations; interest rates had to increase, consumption and industrial production declined, and this has seriously impacted the market.
While we anticipate that the challenges will continue for at least another three months in the short term, we believe that positive developments such as the implementation of antidumping decisions, the acceleration of reconstruction activities, a possible decline in interest rates, and the establishment of regional peace will revitalize the sector in the latter part of the year.
What is the state of domestic consumption, and what are your expectations for the coming period?
Sadly, domestic consumption is experiencing a serious decline. In particular, the slowdown in industrial production, declining consumer confidence, and high financing costs are suppressing demand in many sectors. We are observing a decline in production volumes in areas with high steel consumption, such as automotive, white goods, and construction. This naturally has a negative impact on domestic demand for flat steel products and puts pressure on prices.
The reconstruction process in the earthquake zone kept the domestic market somewhat alive last year. However, since November, we have seen a significant slowdown in demand in that region as well. Developments such as public projects that will pick up speed again in the second half of the year, legal and financial incentives for urban transformation, and the antidumping decision protecting domestic producers may support domestic consumption.
How are Trump's protectionist moves affecting the sector?
In March 2025, US President Donald Trump imposed a blanket 25 percent tariff on steel and aluminum imports, causing a significant change in global trade dynamics. This measure, which covers all countries, has had notable consequences, especially for countries like Turkey that were previously subject to the same tariff rate.
With this new regulation, Turkey's competitive conditions in the US market have been equalized with other countries. This could create a relative advantage for Turkish steel producers in the US market. However, it is important to note that this development also brings some risks.
The US tariffs could push up global scrap prices. Since Turkey relies heavily on scrap as an input in its production, this increase in costs could put pressure on domestic producers. In conclusion, the US customs policy presents both new opportunities and cost risks that need to be carefully managed for the Turkish steel sector. In conclusion, the tariff application presents a two-sided picture for the Turkish steel sector. While this development provides a competitive advantage in the US market in the short term, it points to a process that needs to be closely monitored in terms of input costs and global price fluctuations in the long term.
The EU reduced its quota tonnages as a result of its review of protective measures. How did this affect or will it affect trade?
With the European Commission's latest decision, significant restrictions have come into effect regarding quota measures for imported steel products. In particular, the reduction of the annual quota increase rate from 1.0 percent to 0.1 percent and the reduction of country-specific quota caps for certain products will have serious implications for Turkish flat steel producers focused on exports.
The Commission's decision to cancel the carryover of unused quota tonnage to the next period and prevent exporters who have exhausted their country-specific quotas from accessing the “other countries” quota further limits the flexibility of the current system. Looking at the overall picture, the EU's move increases the structural barriers faced by the Turkish steel sector in the European market. At a time when the domestic market is shrinking and alternative markets are still limited, these decisions will create additional short-term challenges for the sector.
What do you think will be the impact of Egypt's safeguard investigation into HRC imports?
Egypt's initiation of a safeguard investigation into imports of hot rolled coil (HRC) without regard to country of origin could have significant implications for regional trade balances. Especially in the current environment of increasing competition and price pressure, such protectionist measures directly impact both intra-regional prices and trade flows. Egypt is a major importer of HRC from countries such as China, Turkey, Russia, and Japan. If the investigation results in the imposition of tariffs or quotas, this could lead to a contraction of the Egyptian market for these countries, with competition shifting to other markets. This situation poses an additional export risk for the Turkish steel sector, which is already facing various protective measures in major markets such as the EU and the US. Especially in a period when domestic demand is weak, EU quotas are being reduced, and access to financing is becoming more difficult, restrictions in alternative markets such as Egypt will require producers to reassess their export strategies. Egypt was an important partner for Turkey's HRC exports. Therefore, the outcome of the investigation may directly affect the competitiveness of Turkish products.
Can you comment on the general situation in export markets? Do you expect changes in trade routes due to tax wars or geopolitical developments?
As of 2025, export markets are facing intense uncertainty and volatility. Increasing protectionist approaches, geopolitical tensions, and economic fragilities on a global scale are significantly affecting the direction and functioning of steel trade. The 25 percent general tariff imposed by the US on steel and aluminum imports, the European Union's tightening of its quota system, and Egypt's recent initiation of a safeguard investigation into imports of hot rolled coil sheet point to a period of reshaping trade routes. The European Union's decision to reduce its annual quota increase rate from 1.0 percent to 0.1 percent and narrow country-specific caps has severely limited the maneuvering room of Turkish steel producers in the European market. Similarly, protective measures emerging in regional markets such as Egypt are forcing exporters to seek new markets.
China continues to pose a threat to global markets. What are your expectations for Chinese exports?
Following the contraction in domestic demand in China, the country's decision to export its surplus production at low prices is putting serious pressure on the domestic markets of many countries, including Turkey. Looking specifically at Turkey, the entry of Chinese products into the market at low prices poses a serious threat to local producers. This is because Turkish producers have to produce at higher costs than their Chinese competitors in terms of both energy costs and environmental and social obligations. We are seeing that low-priced imports are causing a shift in domestic demand. While this may seem attractive to end-users in the short term, in the long term it is putting pressure on local manufacturers and creating risks in areas such as employment and production continuity. China's strategy not only keeps prices low but also negatively affects Turkish producers' investment decisions. Constantly changing market conditions are discouraging producers from making new investments or increasing capacity. Taking measures to protect Turkish producers as quickly as possible is emerging as one of the most important issues for the sector.
How is the economic situation affecting your business?
Over the past two to three years, interest rates have been high, inflation has been high, general expenses have been steadily increasing, and the system has been further strained due to currency depreciation. In my opinion, there are two or three possible solutions to this situation. One is to increase internal efficiency within the company. Everyone must maximize labor productivity. Otherwise, it will be very difficult to cope with current expenses. The other is to increase efficiency outside the company. Due to low demand or rising costs, instead of two companies doing the same job inefficiently because of low demand, mergers and strategic partnerships should be used to increase efficiency. We cannot increase our profitability without increasing our capacity utilization rates. Mergers and strategic partnerships, which are common in Western countries such as Europe and America, are unfortunately very rare in our country's culture. While we see companies in the same industry that face similar challenges as competitors or with negative feelings, we forget that we are colleagues with similar concerns. This shortage of demand and excess capacity now requires us to abandon this mindset and embrace business partnerships, collaborations, and mergers.
Instead of two or three companies working inefficiently and at a loss, it is in the best interest of both businesses and the country as a whole to establish an efficient and profitable system under one roof. We want to be pioneers in this regard. We are currently in ongoing discussions. Our doors are open to everyone.
While I have the opportunity, I would like to make another suggestion. We cannot raise the exchange rate because inflation will increase further. However, we cannot be competitive without the exchange rate. Therefore, the Central Bank of the Republic of Turkey (CBRT) could solve the problem by selling the amounts received from abroad to exporters at a certain premium. The exchange rate remains fixed, but exporters can convert the incoming payments into Turkish lira with a premium of 5-10 percent. Eximbank has a similar system, but most companies cannot take advantage of this opportunity because the conditions of the commitments you provide are too stringent. Another idea I have is to reduce social security premiums in proportion to exports for companies that cannot operate abroad due to current labor costs. If you export 30 percent, the tax burden on labor costs is reduced by 30 percent, opening the door for the country to regain competitiveness in exports. Turkey became a net exporter of investment for the first time last year. In other words, Turks invested more abroad than foreigners invested in Turkey. I believe it is very important to reverse this situation.