Türkiye’s weakening economic position is impacting on both the national steel sector and the global recycled steel trade, according to an expert on the country’s ferrous markets.
BIR ferrous board member Abhijeet Mahanta of Stelaris Resources reports the third quarter marked a ‘turning point’ as tighter macro-economic conditions, narrowing manufacturing margins and increasingly protectionist trade policies converged.
‘The slowdown in the Turkish economy became more pronounced entering the second half of 2026, while the tight monetary policy firmly maintained by the Central Bank of the Republic of Türkiye, together with persistently high commercial lending and deposit rates, pushed steel producers towards a “just-in-time” raw material procurement model aimed at minimising inventory-carrying costs,’ Mahanta writes in the latest BIR Mirror.
Protectionist measures
The notes the situation reduced producers’ flexibility in managing raw material inventories while putting pressure on the billet/ferrous metal substitution threshold and the ferrous metal-rebar spread.
‘At the same time, tightening protectionist measures in the global steel market, shrinking export markets and geopolitical risks focused around the Middle East and the Black Sea have reshaped the balance in the imported recycled steel market, which remains the primary raw material source for the Turkish steel industry.’
Mahanta points out that, following a sharp price correction in July, Türkiye’s imported recycled steel market sought to establish a new equilibrium within an extremely narrow trading range throughout August and September.
‘Buying resistance from Turkish steel producers amid high financing costs and weak finished steel margins coincided with the elevated collection and logistics cost base of suppliers in Western Europe and the USA, resulting in a two-sided market squeeze.’
Challenging conditions
While the central bank’s policy rate was unchanged at 37% and annual consumer inflation eased to 31.75% in July, commercial lending rates of around 49% weighed heavily on producers. Meanwhile, the Turkish lira depreciated throughout the period. Mahanta adds that second quarter GDP growth of 2.3% year-on-year and 1.1% quarter-on-quarter point to a moderation in domestic economic momentum.
He concludes: ‘Recycled steel exporters are expected to remain resistant to lower price levels owing to slower collection activity and elevated freight rates triggered by the conflict in the Middle East. Nevertheless, market direction will continue to depend largely on finished steel demand as well as challenging Turkish economic conditions and the prevailing financial tightening environment.’
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