Elif: Welcome to Argus Metals Movers, the podcast where we unpack the trade flows and policy shifts driving today's global metals market. I'm Elif Eyüboğlu, senior reporter at Argus Media, and today we're taking a close look at Turkey's fuel sector at the moment of change from swelling imports of Russian HRC to tightening European trade measures to Turkish anti-dumping margins and, of course, potential fallout from regional geopolitical risks due to US-Iran war. And to help us unpack what all of this means for Turkish producers, exporters, and downstream buyers, we are joined by Tolga Yigit Cekicler, direct procurement manager at Tatmetal, and let's get started.
Thank you very much for joining us today, Tolga. My first question to you is on Turkish procurement outlook for this year. The European Union is becoming more stricter on origin and imports of Russian HRC and slab rolls show up in 2025. Do you think Turkish mills will start looking for alternative procurement options this year?
Tolga: Hello, Elif. So first of all, I'd like to thank you for the warm introduce. So answering your question to be honestly, exporting Russian origin material to Europe is already not really feasible. So the stricter EU origin rules are naturally pushing us to look for alternative sourcing options. Russia is no longer a real option for us as it is already under the sanction. In this kind of uncertain environment, the best approach is the diversify the supplier base and keep multiple procurement option open to manage risk. So more or less, I will make this comment to be honest.
Elif: Thank you very much, Tolga. And my second question to you is that the European Union is planning a major quota cut and higher out-of-quota duties in probably this July and including 47% reduction in tire free volumes and a 50% duty on anything above that. Do you think these cuts will shift Turkish mills export trade patterns this year? And if so, where do you expect the displaced volumes to go?
Tolga: Yes, definitely. Matters like this will surely affect export strategies. The EU has always been a key market for Turkish flat steel producer. But tighter quotas and higher duties will force mills to diversify the options. As Tatmetal, we are leading exporter of quotas still to Europe, and we aim to maintain that position. However, if quotas tighten further, we will likely increase our presence in markets such as North Africa, the Middle East, West Africa, and Latin America. That can be other options. So it is like that.
Elif: It's going to be really interesting to observe all the redirected volumes to North Africa and Middle Eastern markets as you mentioned. And looking at the UK, which is expected to remove Turkey's exemption on galvanized imports this year, do you anticipate Turkish mills to change their shipment plans to the UK market once galvanized imports will start falling under tight quota allocation?
Tolga: For UK market, if the exemption is removed and quota are introduced, it will definitely have an impact, first of all. But the key factor will be the size of the quota. The last year, for example, last year, Turkey exported close to 85,000 tons in galvanized material to the UK. And the highest quarter volume was around 50,000 as it is the fourth quarter of the last year, as far as I recall. So everything will really depend on how restrictive the quota turns out to be. So if the quota quantity is very small, it will be a bit problematic for Turkish market, of course.
Elif: And circling back to the domestic market, slightly over a week ago, Turkey announced anti-dumping margins on cold-rolled galvanized and PPGI imports from South Korea and China. The announcement came after over a year-long investigation. And which impacts do you expect to see in the market? And if Ankara were to introduce another trade measure this year to better protect Turkish steelmakers, which measure do you think will have the strongest impact?
Tolga: Under normal conditions, I wouldn't say restriction measures are beneficial for the industry. But given the current environment where we are facing numerous restrictions and barriers, some level of balancing is necessary. The recent anti-dumping measures against China and South Korea were quite critical in this regard. Especially since our export is under real pressure by Europe in galvanized, cold-rolled, and pre-painted materials, it is equally important to manage also import side. Otherwise, re-roller wouldn't have any chance to survive.
Elif: And a follow-up question on that. If this Strait of Hormuz stays closed or restricted, do you expect any steel disruption in steel flows into GCC? For example, would Chinese volumes into the Gulf end up being redirected to Turkey? Because just this week we heard some HRC vessels from China en route to the Gulf being redirected to India and being sold there.
Tolga: We are already starting to feel the impact to be honest. The freight rates have already increased significantly and if the situation goes on, the effect will be growing for sure. It's not just about higher costs, there are also serious concerns about supply chain. China is the biggest player production capacity-wise. If exports to the Gulf decline, they will naturally try to redirect volumes elsewhere. However, in a situation like this, it is hard to assume that any route or market will remain completely safe or stable. As a Turkish importer, I already have concerns about sourcing material from Asia under current conditions.
Elif: And if the situation in Iran continues and energy markets tighten again, are Turkish mills prepared for another jump in electricity and natural gas prices, especially after the coal surge in late 2025?
Tolga: As you know, Turkey is still fighting inflation with a target below 20% by end of 2026. Since late 2023, we have been in a high-interest-rate environment, although rates start to ease gradually from mid of 2025, more or less, and are currently around 27%. At the same time, demand in the industrial sector remains quite weak and fragile. Any further increase in energy costs would push production costs even higher. It could also slow down the cutting rate, or we might even see interest rate going up again, which would create a very negative environment for the industry in Turkey.
Elif: That brings us to the end of this episode of Argus Metals Movers. Thank you to Tolga Yigit Cekicler from Tatmetal for sharing his insights on how Turkish steel markets are adapting to shift in trade patterns. If you would like to explore more coverage on steel and steelmaking raw materials, feel free to reach out to us. And don't forget to subscribe to Argus Metals Movers, wherever you get your podcasts. And thank you for listening, and until next time.
Tolga: Thank you, Elif. Thank you.
