Turkey’s steel industry struggles with economic slowdown
Türkiye’s economic downturn is creating challenges across the steel supply chain, affecting both local manufacturers and international recycled steel traders. The third quarter saw a notable change as tighter macro-economic conditions, narrowing manufacturing margins and increasingly protectionist trade policies converged.
The Turkish economy continued to weaken in late 2026, with the central bank maintaining strict monetary policies that pushed commercial lending rates to nearly 49%. This development forced steel producers to shift to just-in-time material procurement, limiting their ability to hold inventory. The move also narrowed the price difference between billets and ferrous scrap, as noted by Abhijeet Mahanta, a member of the Bureau of International Recycling’s ferrous board.
Geopolitical tensions, particularly in the Middle East and Black Sea regions, have further complicated trade flows. Since recycled steel accounts for the majority of Türkiye’s raw material imports, disruptions in this area have had a significant impact. Following a steep price decline in July, the market struggled to regain stability in August and September, caught between weak demand from Turkish producers and rising collection and logistics expenses from Western European and U.S. suppliers.
The Turkish lira’s depreciation has compounded economic pressures, while inflation, though slightly easing, remains high at 31.75%. Second-quarter GDP growth of 2.3% on an annual basis shows slowing domestic demand, making it harder for steel producers to offset rising input costs.
Exporters of recycled steel face limited options for price reductions due to slower scrap collection rates and freight cost increases tied to ongoing Middle East conflicts. The sector’s future depends on whether finished steel demand improves and whether Turkish economic conditions improve enough to reduce financial constraints on producers.
