Turkey's steel sector is caught between three simultaneous pressures. Energy prices are pushing production costs higher, a wave of protectionism from the EU to the US is narrowing export channels, and the Carbon Border Adjustment Mechanism (CBAM) along with the Emissions Trading System (ETS) is turning low-carbon production from an option into a prerequisite for market access.
In an industry assessment, Hasan Akbulut argues that Turkish steelmakers now operate in an "era of multiple fractures." Competition no longer hinges on cost per tonne alone — carbon intensity, supply chain security and political risk management have become equally decisive factors.
Energy and raw material costs squeeze margins
Electricity and natural gas prices remain the most sensitive cost driver for Turkey's electric arc furnace (EAF)-dominated steel production. Escalating geopolitical tension between the US–Israel axis and Iran carries the risk of a fresh volatility spike in energy markets. Should prices climb further, Turkish producers' already-thin cost advantage will erode.
The raw materials picture is no less precarious. Swings in scrap, iron ore and coking coal prices keep the cost structure fragile. Turkey's heavy reliance on scrap imports means global price movements translate directly into margin pressure at the mill level.
Protectionism has become the new normal in steel trade
Anti-dumping duties, import quotas and supplementary tariffs are no longer exceptions — they are permanent fixtures of global steel commerce. The EU maintains its safeguard measures; the US has raised its additional steel duty to 50 percent. The UK and other markets are moving in the same direction.
For Turkish steel exporters, the consequence is a shrinking share in traditional markets. Diversifying into new export destinations and strengthening trade diplomacy have moved to the top of the sector's agenda.
CBAM turns green steel into a market access condition
With CBAM coming into force, steelmakers exporting to the EU will bear the cost of their carbon footprint directly. ETS regulations aim to accelerate the shift toward low-carbon production. Green steel is no longer a marketing label; it is the price of entry into Europe's largest import market.
Turkey, however, holds structural advantages in this race. Its EAF-based production already carries a lower carbon footprint than blast furnace-dependent competitors. A strong recycling infrastructure and high scrap utilization rates give the sector a head start on the decarbonization path.
Opportunities are as real as the risks
Flexible production capacity, a strategic geographic position bridging Europe, the Middle East and Africa, and short delivery times form the other side of the equation. Product diversity and logistical proximity to major consumption centres remain powerful cards in Turkish steelmakers' hand.
In the period ahead, securing energy supply, accelerating green transition investments, diversifying export markets and deploying effective trade diplomacy will determine the sector's trajectory. Crises also create windows for repositioning — how Turkey's steel industry manages this turbulent chapter will shape not only the sector's future but the broader direction of Turkish manufacturing.