How does Turkey's recent earthquake impact steel industry?

Turkey's steel industry plays an essential role in the country's economy and international scenario. According to the World Steel Association, Turkey was the world's eighth-largest steel producer, with 35 million metric tons of crude steel manufactured in 2022. The country is also a major exporter: last year, Turkey's iron and steel exports were worth $14.63 billion, a figure reported by the United Nations' COMTRADE database on international trade and cited by Trading Economics.

It goes without saying that the recent earthquake in Turkey on February 6, in addition to its tragic loss of human lives, has also impacted the steel industry in the country, affecting the global supply chains. Many steel mills in the struck area have declared force majeure and halted operations; it is estimated that steel mills in the affected region may need to remain closed for up to a month until issues with workforce, logistics, and power are resolved.

As reported by MEPS, the port of Iskenderun, a relevant gateway for steel exports, was severely damaged, leading to diversions of inbound cargoes and disruptions to port operations. According to the forecast, as a result, finished steel exports from Turkey will be drastically reduced, which could tighten availability in the global steel market and potentially push up prices. In the short term, the reduced availability of finished steel from Turkey could ease - says MEPS - the current oversupply pressures in the European and Asian long-product sectors.

According to a recent article from S&P Global, the Turkish Steel Producers Association has confirmed that there has been no severe damage to production facilities in the aftermath of the recent earthquake. Although the affected region contributes over 30% of Turkish steel production, steelmakers in other areas can meet the demand in the interim; plus, the country has sufficient production capacity to fulfill an anticipated increase in internal demand as rebuilding efforts commence. Moreover, domestic demand is expected to take priority over exports to prevent a significant increase in steel prices within the country.

Disaster costs, including reconstruction, could reach 5.5-10% of the national GDP, resulting in a loss to the country's economy of up to $84 billion. As of today, the death toll from the earthquake has increased to more than 44,000 people in Turkey alone. We recall that the two quakes that occurred on February 6 also affected large neighboring areas of Syria.

The image was generated with the assistance of AI.