02.12.2010

1

RECENT DEVELOPMENTS IN TURKISH STEEL

INDUSTRY

Dr. Veysel Yayan

Secretary General

Turkish Iron and Steel Producers Association

02 December 2010

Paris

Developments in GDP and Construction Industries (%)

2

8

13

16

-20

-15

-10

-5

0

5

10

15

20

25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Development of Economy, Construction, Manufacturing and Steel Industries (%)

GDP Construction Steel Industry

02.12.2010

2

Developments in GDP and Construction Industries (%)

3

8.1

4.1 3.3 3.6

7

2.6 0.9

-7

-14.6

-7.6

-2.7

6.0

11.7

10.3 11.0 8.8

7.5

4

0.5 -3.1

-5.0 -9.6

-14.1

-18.5 -20.9

-18.2

-6.4

8.3

21.9

15.1

-25

-20

-15

-10

-5

0

5

10

15

20

25

2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010-H1

Quarterly Development of GDP and Construction Industries (%)

GDP Construction

Industrial Production Index (yoy change %)

4

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Jan

.08

Feb

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Jan

.09

Feb

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Jan

.10

Feb

Ma

r

Ap

r

Ma

y

Jun

e

July

Au

g

Sep

Growth of the Industry (y-o-y, %)

02.12.2010

3

Industrial Production Index and Sub Sectors (y-o-y changes)

5

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

Development in Industrial Sectors (y-o-y, %)

Metal Industry Machinery Automotive Industry Total

Capacity Utilisation of the Manufacturing & Metal Industries (%)

6

86 87

90

86 86

88 88 87

84

74

69 68 70

74

65 63

67

72

68

71

74

69

75

73

76

72 73

79 80 78

80

74

77

75

78

50

55

60

65

70

75

80

85

90

95

Manufacturing Industry Base Metals Industry

02.12.2010

4

Turkey's Melting Capacity (million tons)

13.6

18.8

26.1

30.0

34.0

37.6 37.9 38.4 38.4 38.8

6.2 6.3 8.0 8.5 9.4

10.7 11.2 11.3 11.3 12.3

19.8

25.1

34.1

38.5

43.4

48.3 49.0 49.6 49.7 51.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2000 2005 2008 2009 2010* 2011* 2012* 2013* 2014* 2015*

EAF BOF TOTAL

* Forecasted

7

Turkey’s Crude Steel Production (‘000 tons)

0

5,000

10,000

15,000

20,000

25,000

30,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009-10m 2010-10m

LONG FLAT

2005 2006 2007 2008 2009 2009-10m 2010-10m %

(10/09)

LONG 17.869 20.302 22.028 22.650 20.540 17.201 17.979 4,5

FLAT 3.095 3.135 3.726 4.156 4.763 3.776 5.658 49,8

TOTAL 20.964 23.437 25.754 26.806 25.303 20.977 23.637 12,7

8

02.12.2010

5

Monthly Crude Steel Production of the World & Turkey (‘000 tons)

9

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

75,000

85,000

95,000

105,000

115,000

125,000

135,000

Crude Steel Production of the World & Turkey ('000 tons)

World Turkey

Turkey’s Monthly Billet Production (‘000 tons)

10

1300

1400

1500

1600

1700

1800

1900

2000

2100

2200

2300

02.12.2010

6

Turkey’s Monthly Slab Production (‘000 tons)

11

200

300

400

500

600

700

800

Turkey's Finished Steel Production (‘000 tons)

12

0

5,000

10,000

15,000

20,000

25,000

30,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009-10m 2010-10m

LONG FLAT

2005 2006 2007 2008 2009 2009-10m 2010-10m

% change (10/09)

LONG 15.825 19.237 21.810 22.141 20.713 17.613 16.324 -7,3

FLAT 3.768 4.122 4.257 4.543 4.406 3.560 5.094 43,1

TOPLAM 19.593 23.359 26.067 26.684 25.119 21.173 21.418 1,2

02.12.2010

7

Turkey’s Finished Steel Consumption (‘000 tons)

13

0

5,000

10,000

15,000

20,000

25,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009- 10m

2010- 10m

LONG FLAT

2005 2006 2007 2008 2009 2009- 10m

2010- 10m

% change (10/09)

LONG 9.077 10.536 12.110 10.272 9.693 8.061 9.547 18,4

FLAT 9.363 10.686 11.661 11.182 8.334 6.435 9.946 54,6

TOPLAM 18.440 21.222 23.771 21.454 18.027 14.496 19.493 34,5

Turkey's Total Iron and Steel Trade (million tons)

14

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2005 2006 2007 2008 2009 2009-10m 2010-10m

Export Import Net Export

2005 2006 2007 2008 2009 2009-10m 2010-10m % 09-10

Export 13,33 15,35 16,70 19,96 18,74 15,94 14,54 -8,8

Import 10,10 12,31 13,95 13,59 10,44 8,63 9,56 10,7

Net Export 3,23 3,04 2,75 6,37 8,30 7,31 4,99 -31,8

02.12.2010

8

Turkey's Total Iron and Steel Trade (Billion USD)

15

2005 2006 2007 2008 2009 2009-10m 2010-10m % 09-10 Export 7,60 9,41 12,24 20,46 12,01 10,03 10,86 8,2 Import 7,04 8,62 11,48 15,01 7,94 6,38 8,35 31,0

Net Export 0,56 0,79 0,76 5,44 4,07 3,65 2,51 -31,4

0.00

5.00

10.00

15.00

20.00

25.00

2005 2006 2007 2008 2009 2009-10m 2010-10m

Export Import Net Export

Turkey's Total Steel Exports (million tons)

16

16.6

10.6 9.9 12.5 12.9 11.9 21.5

57.6 62.8

65.2

64.8

62.9

63.8

53.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2005 2006 2007 2008 2009 2009-10m 2010-10m

Share of Semis and Long Steel in Total Export Tonnage (%)

Semis Long

2005 2006 2007 2008 2009 2009-10m 2010-10m % 09/10

Semis 2,2 1,6 1,7 2,5 2,4 1,9 3,1 64,2

Flat 1,2 1,4 1,2 1,4 1,6 1,5 1,1 -27,3

Long 7,7 9,6 10,9 12,9 11,8 10,2 7,8 -23,7

Pipe 1,2 1,5 1,5 1,7 1,5 1,3 1,4 7,0

Others 1,1 1,2 1,4 1,5 1,4 1,1 1,2 10,2

TOTAL 13,3 15,4 16,7 20,0 18,7 15,9 14,5 -8,8

02.12.2010

9

Turkey’s Ferrous Scrap Consumption (million tons)

* estimated

17

0.0

5.0

10.0

15.0

20.0

25.0

2002 2003 2004 2005 2006 2007 2008 2009 2010-10m 2010*

14.0

15.4

17.8 18.2

20.9

23.4 23.9

21.4 20.3

24.6

Turkey's Scrap Consumption (million tons)

Turkey’s Ferrous Scrap Import and Domestic Scrap Usage (‘million tons)

* estimated

18

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2005 2006 2007 2008 2009 2010*

13.2

15.1

17.1 17.4

15.6

18.2

5.0 5.8

6.3 6.4 5.8

6.4

Imported Scrap Domestic Scrap

02.12.2010

10

Turkey’s Crude Steel Production & Scrap Consumption (‘million tons)

* Estimated ** forecasted

19

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012** 2013** 2014** 2015**

16.5

18.3

20.5 21.0

23.4

25.8 26.8

25.3

29.0

32.5

35.1

37.5

39.8

42.2

14.0 15.4

17.8 18.2

20.9

23.4 23.8 21.4

24.6

26.6

29.1 31.2

33.0

35.4

Crude Steel Production Scrap Consumption

Current Situation in Turkish Flat Steel Market (‘000 tons)

20

2005 2006 2007 2008 2009 2009-10m

2010-10m

% 09/10

Crude Steel Prod. Capacity/year 3.000 3.200 4.700 11.300 12.200 12.200 12.900 Crude Steel Prod.* 3.095 3.135 3.726 4.156 4.763 3.776 5.658 49,8 Finished Steel Prod. 3.768 4.122 4.257 4.543 4.406 3.560 5.094 43 Finished Steel Cons. 9.363 10.686 11.661 11.182 8.334 6.435 9.946 55 Export 1.188 1.394 1.244 1.368 1.648 1.497 1.088 -27 Import 6.783 7.957 8.647 8.007 5.576 4.372 5.940 36 Share of Flat in Total Crude Steel Prod. 14,8 13,4 14,5 15,5 18,8 18,0 23,9 Share of Flat in Total Crude Steel Prod. Capacity 11,9 11,5 14,7 28,0 27,2 27,2 26,1

02.12.2010

11

Flat Crude Steel Capacity Projections of Turkey (million tons)

* Estimated ** Forecasted

21

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2005 2006 2007 2008 2009 2010* 2011** 2012**

3.0 3.2

4.7

11.3

12.2 12.9

15.3 15.3

Conclusion

22

• Turkey’s total crude steel production in 2010 is expected to rise to around 28.5

million tons level from 25.3 million tons in 2009.

• Crude steel production for flat products is expected increase by around 50 %

due to the new capacities coming on stream.

• Turkey’s total steel consumption is expected to rise by around 30 % in 2010.

• Total steel export declined 8.8 % during the first 10 months of 2010, while

import increased 10.7 % yoy.

• Despite the drop in exports, Turkey’s total crude steel production increased by

12.7 % during the first 10 months of 2010 due to the strong growth in domestic

consumption.

• New capacities also contributed to the steel production rise of Turkey. Athough

Turkey’s crude steel production turned back to the pre-crisis levels, it has mainly

resulted from new capacities.

02.12.2010

12

Conclusion

23

• Considering new capacities started production during the second half of 2010,

capacity utilisation of Turkish steel industry is still around 70 %.

• Crude steel production increased by 12.7 % during the Jan-Oct 2010. Despite

23.7 % drop in long products export and 27 % drop in flat products, steel production

increased with the help of 64 % growth in billet exports and 34.5 % increase in

finished steel consumption.

• Restructuring process in the Turkish steel industry has accelerated for the last 2

years.

• Increasing flat and structural steel production is expected to gradually substitute

the imported material.

• As a result of the new investments, Turkey is expected to be net exporter in flat

and structural steels until 2015.

• Despite weak demand in international markets, strong growth in Turkish steel

consumption is expected to continue supporting the growth in the steel industry.