1. EMRAH UĞURSAL
Foreign Trade Manager
Overlook of Turkish steel industry and position in the Middle East: comparison of the position of Turkey with that of Iran in the region OK

2. 11 Million BF Based & 39 Million EAF Based
Turkish Steel Production
50 Million Ton Designed Capacity
11 Million BF Based & 39 Million EAF Based
%22 ORE BASED
%78 SCRAP BASED CAPACITY
Source: TCUD 2

3. Big decrease in Turkish Steel Production
Order of Countries for Crude Steel Production ( months)
Big decrease in Turkish Steel Production
& Increase in IRAN
RANK 2015
COUNTRY
months
months
% change 15/14
% share (2015) 1.
China
-1,3
50,4 2.
Japan
52.635
55.239
-4,7
6,5 3.
India
44.957
43.133
4,2
5,5 4.
United States
39.857
43.611
-8,6
4,9 5.
Russia
35.713
35.418
0,8
4,4 6.
South Korea
34.534
36.300
-4,9 7.
Germany
22.149
22.485
-1,5
2,7 8.
Brazil
17.075
16.746
2,0
2,1 9.
Turkey
16.189
17.163
-5,7
10.
Italy
11.719
13.105
-10,6
1,4
11.
Ukraine
11.258
15.473
-27,2
12.
Taiwan, China
10.644
11.159
-4,6
1,3
13.
Mexico
9.256
9.652
-4,1
1,1
14.
Iran
8.372
8.015
4,5
1,0
15.
France
8.166
8.305
-1,7
16.
Spain
7.830
7.578
3,3
17.
United Kingdom
6.258
6.198
18.
Canada
6.250
6.208
0,7
19.
Poland
4.947
4.207
17,6
0,6
20.
Austria
3.969
3.956
0,3
0,5
Source: WORLD STEEL 3

4. Turkey's Crude Steel Production by Processes ( 2008-2015-6 months )
%66 Scrap Based – EAF Production decreased %11,6 in first half 2015.
%33 Iron Ore Based- BOF Production increased %8,9
Capacity Utilization BOF %98 & EAF % 55
Source: TCUD 4

5. Turkey's EAF capacities getting idle 2015-6 months
Source: TCUD 5

6. Turkey's EAF capacities getting idle 2015-6 months
Source: TCUD 6

7. 605K More Billets imported in first 6 m of 2015
Turkey's EAF capacities getting idle!
months
1.257K Less scrap,
605K More Billets imported in first 6 m of 2015
Source: STEEL ORBIS 7

8. Production of Longs and Flats 8,9 Mt Excess Long Products
Turkish Steel Sector’s Production& Consumption Structure 2015 /6
Production of Longs and Flats
8,9 Mt Excess Long Products
Turkish Steel Sector is one of the biggest long steel producers in the world out of China.
The production methods are not complicated, products are low value added such as reinforcing steel bars which is Turkey’s major product.
Turkey is the biggest reinforcing bars exporter in the world after China.
Source: TUIK 8

9. TURKEY’S REBAR EXPORTS – UNDER PRESSURE
2014/ 6 m m
% Change-15/14 MT
Quantity 1
UAE
14,9 2
USA
101,3 3
Iraq
-25,0 4
İsrael
-23,1 5
Egypt
57,0 6
Yemen
-44,6 7
Kuveyt
45.022
193,8 8
Brazil
-18,1 9
Ethiopia
97.455
-36,9 10
Oman
39.711
92.144
132,0 11
KSA
88.111
-34,0 12
Syria
24.975
71.759
187,3 13
Peru
56.865
65.201
14,7 14
Libya
48.892
-71,6 15
Colombia
9.694
46.151
376,1 16
Costarica
36.723
41.390
12,7 17
North Cyprus
26.054
31.633
55,3 18
Cibuti
2.592
31.177
1.102,6 19
Chile
21.272
25.382
19,3 20
Azerbaijan
18.986
21.100
11,1
Total
-6,3
-%58 of total Turkish rebars exports head to MENA (2141K in first half).
Source: Turkish Steel Producer’s As.

10. TURKEY’S BILLET IMPORTS- SOARING UP
%CHG15/14 MT
Quantity 1
Ukraine
2,4 2
Russia
75,9 3
China 96 ,4 4
Belarus
17.453
504,1 5
Georgia
43.429
47.929
10,4 6
Albania
35.152
38.937
10,8 7
Bosnia
21.046
31.724
50,7 8
Serbia
36.998
17.904
-51,6 9
Libya
12.500
100,0 10
İIran
10.130 11
Germany
7.454
8.875
19,1 12
Italy
10.035
3.888
-61,3 13 UK
655
1.173
79,1 14
Brazil
488
481
-1,4 15
Belgium
355 16
Croatia
292 17
USA
357
279
-21,9 18
France
5.726
237
-95,9 19
Romania
141
192
36,0 20
Spain
120
190
58,3
Total
38,0
Iran would export higher quantities of billes to Turkey due to cost adventage and excess capacity.
Source: Turkish Steel Producer’s As.

11. TURKEY’S HRC EXPORTS- LOOSING WEIGHTm m
%CHG-15/14 Mt
Quantity 1
USA
-11,1 2
İtaly
96.008
86.211
-10,2 3
Spain
35.974
48.633
35,2 4
Portugal
54.013
48.564
-10,1 5
Romania
38.237
42.479
11,1 6
Iraq
15.069
38.557
155,9 7 UK
15.583
38.053
144,2 8
Morocco
29.771
31.979
7,4 9
Algeria
26.093
100,0 10
Tunus
13.544
24.164
78,4 11
Tailand
24.907
22.690
-8,9 12
Syria
2.884
17.953
522,4 13
Local Free Zone
44.169
17.695
-59,9 14
Libya
9.978
15.073
51,1 15
Greece
37.223
14.197
-61,9 16
Nigeria
11.574
11.799
1,9 17
Ethiopia
11.076
11.588
4,6 18
Mexico
11.239 19
Canada
52.219
10.730
-79,5 20
İsrael
8.856
10.210
15,3
Total
-3,6
US decision to investigate AD for HRC exports from Turkey has already started to affect the demand from the top buyer.
Source: Turkish Steel Producer’s As.

12. MENA STEEL PRODUCTION FIGURES- IRAN’S LEADERSHIP MENA Steel 2014-6m
% CHG (15/14)
Rank (2015)
Iran
8.015
8.372
4,5
14.
Saudi Arabia
3.111
3.118
0,2
24.
Egypt
3.362
3.115
-7,3
25.
UAE
1.294
1.483
14,6
35.
Qatar
1.448
1.301
-10,2
37.
Morocco
282
301
6,6
53.
Libya
475
234
-50,8
55.
MENA
17.988
17.924
-0,4
IRAN is the biggest producer in MENA region which is also Turkey’s main trade partner.
IRAN is the only country in the region increased the production in first 6 months 2015.
IRAN has most available sources in the region for steel production. (Natural gas & Iron ore)
The potential will be clearly seen after sanctions removed.
Source: WORLDSTEEL 12

13. NUCLEAR DEAL & WORLDBANK’s Positive Forecasts on IRAN
Lifting sanctions related to Iran’s nuclear program will have a significant impact on the world oil market, the Iranian economy and Iran’s trading partners. Iran’s full return to the global market will eventually add about a million barrels of oil a day, lowering oil prices by US$10 per barrel next year, according to the World Bank, which also expects economic growth in the country to surge to about 5% in 2016 from 3% this year.
The Bank’s report estimates that exports from Iran will eventually increase, too, by about US$17 billion, which is about 3.5% of its GDP. Britain, China, India, Turkey and Saudi Arabia are among the countries most likely to see the largest rise in post-sanctions trade with Iran.
The lifting of sanctions represents an economic windfall to the Iranian economy. Iran’s experience with managing previous oil windfalls is sobering. The real exchange rate appreciated undermining non-oil exports. Governments facing such economic windfalls have the opportunity to put in place a policy framework that puts the economy on a path of sustained growth. 13

14. IRAN- NEW COMPETITOR & PARTNER OF TURKEY
Iran aims to expand its steelmaking capacity to 55 million tpy by 2025 (Reuters, 2014). Most new plants will be based on the DRI-EAF route.
The country has significant resources of iron ore deposits and low-cost natural gas, and these factors are affecting the choice of raw materials used to produce steel in Iran.
Although eight new steelworks have been under construction by state-owned IMIDRO since 2006, and numerous projects have been announced, a number of projects were put on hold because of financing constraints caused by economic sanctions.
Iran is the biggest producer in MENA out of Turkey.
Agreement with Western World will easy payment methods and sanctions.
Source: WORLDBANK 14

15. WORLDSTEEL CHANGED THEIR SHORT TERM OUTLOOK
Iron Ore decreased %42 in one year(98 to 56), at the same period scrap lost %41 (375 to 220)
The difference of the product prices Chinese and Turkish 102 Usd/mt in average.
When the difference is about 60 usd/mt in 2014 First Half, there was not big Chinese exports to Turkish markets.
Scrap Prices started to decrease again due to the severe market conditions, however, EAF mills still not competitive against to ore based producers.
Source: STEELORBIS 15

16. RESULTS
PRODUCTION METHOD HAS TO BE BALANCED
Turkish Steel Sector has a structural case of Scrap Dependency.
Turkey cannot be competitive in worldwide markets by importing semis.
Semi suppliers such as CIS and China are getting to be more active in end product exports.
TRADITIONAL AND NEW COMPATITORS
Chinese first enterence was last year into more or less all Turkish export markets.
China will continue expanding in end product exports
CIS- due to the weak local market and currency-will be more active in end product exports.
AM Ukraine has targetted Turkish rebar markets –Higher activity in Egypt and getting into Ethiopia with once folded material.
Iran’s short term effect will be negative in overall since Iran has an oversupply on long products and cost advantage.
TURMOIL IN MENA REGION
Turkish main business partner MENA countries have unstable situation;
YEMEN: No one knows when this operation will end but the market stopped completely (-650K rebars)
SYRIA: Totally in a mess (Potantial 150K)
IRAQ: Getting better but not yet healed (-700K )
Source: WORLDSTEEL 16

17. IRAN STEEL BUSINESS CONCLUSIONS
Risks
High trade cost- Can be lower after sanctions removed
Absence of know-how and experience for exports
Closed market – Comminication error with international markets
Political barries; Suni & Shia conflict in the region-
Chinese Comptetition
Opportunities
Strong engineering & ability to produce high quality steel
Cost adventage due to local sources and DRI based production
Logistic adventage: near to steel consumers in Middle East
Persian strong culture and backround in politics and trade
High Motivation with removal of sanctions 17

18. TURKISH STEEL BUSINESS
CONCLUSIONS
TURKISH STEEL BUSINESS
Risks
Endless Political turmoil can cause bigger problems. Unemployed young population can cause new uprisings in oil exporters.
Stronger USD- Slowing down emerging markets and local consumption
Structural over supply and raw material dependency
New competitors other than China: IRAN and CIS with cheaper cost structure due to iron ore prices.
Opportunities
Dynamic economy & marketing with growing young Population
Well-known quality and reliability with experience
Flexiable production and administration
Capacity of transformation (Icdas project and DRI projects)
Experienced Engineering 18

19. Thanks for your interest!
İlginize Teşekkürler!
Thanks for your interest!
با تشکر از شما OK
EMRAH UĞURSAL