Turkish steel industry can compete with South Korea

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Mr Zafer Caglayan economic minister of Turkey and his South Korean counterpart Mr Taeho Bark signed a free trade agreement between the 2 countries on August 1st 2012.

Accordingly, Turkey will remove customs duty for South Korea in iron and steel, automotive, electronic appliances and textile products within seven years. In return, South Korea will remove customs duty for Turkey in iron and steel, textiles and ready to wear clothing immediately once the agreement is in effect, while the customs duty in automotive will be removed within 5 years.

Mr Caglayan referring to the free trade agreement which entered into force on July 1st 2011 between the European Union and South Korea said that "We have both closed 'the back door' to the Turkish market for ex-South Korea products from the EU and gained more advantageous conditions than the EU. Last year, 92% of the trade volume between Turkey and South Korea was made up of imports. Imports amounted to USD 6.3 billion against USD 527.8 million of exports. Hopefully we will increase the trade volume to $10 billion within two to three years, balancing the situation as much as possible.

Consulted by SteelOrbis regarding the possible effects of the agreement on the Turkish steel industry, Mr Dr Veysel Yayan general secretary of Turkish Iron and Steel Producers' Association underlined that they appreciate the achievement of the Ministry of Economy in signing the agreement.

Mr Yayan said that South Korea has serious advantages over Turkey mainly in terms of stainless and high quality steel but he said he believes that the Turkish steel industry will be able to catch up thanks to its dynamic structure in the seven years it has to remove the customs duty for steel products.

Mr Yayan also touched upon the stainless cold rolled investment of Turkey's Kibar Holding in the northwestern Turkish city of Kocaeli, jointly with South Korea based POSCO saying "We would like the POSCO-Kibar JV to produce raw material for stainless steel production in Turkey in the coming period."

He stated that the general belief in the industry is that the South Korean companies save the added value they produce for themselves and do not leave any for other markets; however, he believes that POSCO will not act in this way. This kind of relation is not sustainable, because then you will lose your partner.

Regarding the ability of the Turkish steel industry to compete with South Korea, Mr Yayan underscored that the Turkish steel industry has maintained its rapid growth without any government support and that Turkey's steel production has increased by 155% in the last 15 years while global steel production, excluding China increased by 30%. He stated that the Turkish steel industry should be freed from artificial burdens such as state imposed contribution margins and non controllable expenses adding that only then will Turkish producers succeed in competing on more equal terms.

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