Veysel Yayan: CBAM, quota pressure, and Türkiye's EAF advantage shape the 2026 roadmap

Noting that the Turkish steel sector's capacity utilisation rate remained low in 2025, primarily due to reduced domestic consumption in China, Russia, and Far Eastern countries, Yayan said: "Despite the multifaceted difficulties with the EU, we foresee that 2026 will be a year when indicators improve more quickly. We expect the production increase that began in the last quarter to continue in 2026, with crude steel production exceeding 40 million tonnes."

How do you assess Türkiye's steel production and capacity utilisation in 2025?

In 2025, the Turkish steel sector produced 34.6 million tonnes of crude steel in the January-November period against a capacity of 59.6 million tonnes, with capacity utilisation at 63.3% — well below the 74.8% achieved in 2021. The low rate was driven by the growing weight of exports at dumped and state-subsidised prices, primarily from China, Russia, and Far Eastern countries whose domestic consumption was declining.

China has become the primary threat to the global steel sector

China continues to intensively utilise its production capacity and redirect surplus production to international markets. A 1% decline in Chinese steel consumption translates to approximately 10 million tonnes of additional exports to global markets. Under these conditions, no country operating on free market principles can effectively compete with Chinese producers that have been shown to receive ten times more state aid than OECD countries.

China's exports by year reached: 53.1 million tonnes in 2020, 66.2 million in 2021, 68.1 million in 2022, 94 million in 2023, and 118 million tonnes in 2024. Contrary to expectations of a decline by end of 2025, exports are expected to continue rising, reaching 120 million tonnes by year-end. Chinese export pressure is not expected to ease in the short term.

CBAM will provide an important long-term competitive advantage for the sector

At a time when global steel demand is being reshaped around rapid decarbonisation, Türkiye's production capacity, technological infrastructure, and strong trade integration with the EU place it at the centre of this transformation. About 70 percent of production is based on EAF technology, which structurally positions the Turkish steel sector at a lower carbon point than many countries producing with coal-based blast furnaces. This provides an important competitive advantage against carbon-based regulations like CBAM.

Renewable energy must be increased, and low-carbon electricity must be provided to industry at competitive prices

However, sustainably maintaining this advantage is directly related to reducing the carbon intensity of energy sources. The still-high share of fossil fuels in Türkiye's electricity generation is one of the main factors limiting the sector's indirect emissions. Therefore, increasing access to renewable energy and providing low-carbon electricity to industry at competitive prices stand out as strategic priorities.

Many steel producers are investing in renewable energy, signing green electricity supply agreements, and taking concrete steps to reduce emission intensity. R&D activities toward future low-carbon production solutions, particularly hydrogen-based DRI technologies, have also accelerated. While green hydrogen's cost and infrastructure requirements limit widespread application in the short term, the sector is preparing through pilot projects and international collaborations.

The most important agenda item for the sector will be the EU's new safeguard measures

As of 2026, the new safeguard measures the European Commission plans to implement in the second half of the year are among the most important agenda items. The proposed measures envision reducing total steel import quotas by 47% to 18.8 million tonnes and raising the duty on above-quota exports from 25% to 50% — effectively halting above-quota trade.

Domestic consumption should be met by domestic production

The sector can overcome these problems by urgently taking decisions in response to EU actions and directing domestic consumption toward domestic production. The production increase that began in the last quarter is expected to continue in 2026, with crude steel production exceeding 40 million tonnes.