Turkish Trade Delegation Markets
Their Wares, Appeals for Fairness

On the global trade front, China undeniably gets the bulk of the attention—much of it unfavorable. Similarly, Turkish steel mills are often ranked by the U.S. industry among the world’s most opportunistic traders. To dispel this notion and to promote free and fair trade between Turkey and the United States, three representatives from the Turkish steel industry visited New York and Chicago last month as part of a 60-person trade delegation.

Turkey is already a sizable trading partner with the United States—in steel and a host of other markets—and as one of the more successful economies in the Middle East is poised to become an even bigger player.

Hoping to market their products and bolster trade relations were three representatives of Turkey’s steel industry, interviewed by Metal Center News: Coskun Kirlioglu, deputy secretary general of Istanbul Minerals and Metals Association; Yilmaz Aslan, vice chairman of Istanbul Iron and Steel Exports Association; and Cavat Kir, chairman of Kir Metals.

“Turkey has experienced unprecedented growth in the last four years and we are eager to grow our longstanding business relationship with the United States,” said Kursad Tuzmen, Turkey’s minister of state for foreign trade and customs, who led the multi-industry delegation to the United States.

The Turkish government has declared 2006-07 “The Year of Turkey in America,” and plans to implement a trade development strategy that focuses on increasing trade between the countries and attracting new American investment in Turkey.

Relative to other developing countries, Turkey has been a success story, averaging more than 7 percent GDP growth in the past four years. While not quite the rapid rate of China, Turkey’s economy has grown from $145.9 billion at the end of a disastrous 2001 to $382 billion in 2006. Turkish leaders expect that figure to top $1 trillion by the next decade.

Overall, Turkish exports totaled $73.4 billion in 2005, representing an increase of more than 100 percent over the previous three years. The United States was the recipient of $4.9 billion of Turkish goods, while Turkey imported $5.3 billion of U.S. products.

The Turkish steel industry has been a key driver of the country’s surge. Its mills produced 20 million tons of steel in 2005, primarily from two long producers and one flat-roll producer. One of those long-product producers is in the process of converting to flat products, however. The Turks currently produce 4 to 5 million tons of flat-roll—well short of the 6 million tons their own economy requires, the steel delegates said.

However, a substantial amount of Turkish steel ends up in the U.S. market each year. Through seven months of 2006, Turkey ranked behind only Canada, the EU, China and South Korea among exporters of steel into the United States. Turkey is on pace to deliver 2.8 million tons this year, a 112 percent jump from the 1.3 million tons of exports it shipped to the U.S. market in 2005, according to American Iron and Steel Institute data.

Most of the Turkish mills’ steel is delivered to the U.S. market through traders, though they also sell directly to some distributors and end-users.

“We would like to be preferred,” Kirlioglu told Metal Center News. “If the distributors prefer the Turkish materials, our agents are able to sell the Turkish materials. We want to put it in the distributor’s mind that there are good providers of materials here.”

While the Turkish steel representatives hoped to use the trip to forge new relationships with distributors and end-users, they didn’t have the same expectations as others in the trade contingent. With its rapidly growing economy at home and its impending entrance into the European Union, Turkey does not anticipate any further increase in steel exports to the United States in the next few years. It already exports 54 percent of its products to the EU, a number unlikely to dip as it becomes a part of that alliance of European countries, according to the steel executives.

Just as important is the country’s booming economy, which already consumes more than the Turkish steel industry produces.

“Since 2004, the construction sector has grown 20 percent each year, and the same growth rate is expected. Exports are expected to decrease,” Kirlioglu added.

With its status as the bridge between Europe and the Middle East, Turkish officials believe the country is in prime position to take advantage of any growth going on in the Middle East and Northern Africa. Chief among the opportunities is the eventual rebuilding in Iraq.

“There are certain markets we are expecting to kick in, such as the Iraqi market,” Kirlioglu said. “They will be a very big importer of rebar products for restructuring after the war. We believe that, as time goes by, with less terrorism, they will concentrate on rebuilding what they lost in the war. Since Turkey and Iraq are neighboring countries, considerable tonnages of materials will flow into Iraq.”

Dubai, Kuwait, Qatar in the Middle East and Egypt, Algiers and Morocco in North Africa are also markets targeted by the Turks.

Turkey’s long products are led by rebar, as it serves as one of the leading rebar exporters in the world market. The country’s long products mills also produce wire rod, tubes and pipes.

Two mills, Icdas and Isdemir, currently produce the country’s long products. But Isdemir will be converting to a flat products mill in the near future. This will reduce the country’s long products capacity, though the officials said a new producer could emerge to fill the void.

Currently, Turkey’s flat-roll mill, Erdemir, sells most of its products to automotive customers and service centers. The quality of Erdemir’s steel is well known around the world, said the executives.

Like some other major exporters to the United States, Turkish steelmakers have been accused of dumping by domestic steelmakers. At the end of 2005, five domestic producers filed antidumping petitions against Turkey, China and Germany after imports from those three countries nearly doubled over a two-year period.

In a surprising decision, the U.S. International Trade Commission voted 6-0 against the domestic industry.

The Turkish steelmakers “take the utmost care when we price our material,” Kirlioglu said. “Most of our companies have come out with zero antidumping margins. We are very cautious of these kinds of lawsuits.”

While understanding the United States’ need to protect its domestic market from dumping, the Turkish steelmakers would like to see a system where filing cases against foreign companies requires more care.

“We feel it should not be so easy to open a case,” which is often prolonged, Kirlioglu said. “Even when zero dumping is evident, the producer who got involved in the case loses out for a whole year. Even a rumor about a company having to go through an antidumping case makes them lose market share.”

He’d like to see some system of restitution implemented when antidumping petitions are found to be without basis. “When these kinds of cases are open, and zero dumping is defined, the producer that has to go through the case should be awarded some losses, so these kinds of cases are not opened so frivolously.”

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