How do you interpret current steel demand in the automotive industry?
The automotive sector ranks second in terms of flat steel usage, following the Turkish pipe/profile sector. The Turkish automotive industry has recorded over 50 percent growth over the last ten years, with higher production and new investments. Although the output volume has decreased slightly over the past two years due to the falling demand in both domestic and foreign markets, it is expected to recover rapidly in the coming period. Despite the decision to put it in cold storage right now, the Volkswagen investment is actually taken for granted and, with anticipated new projects added to this, demand from the automotive industry will continue to increase. Investments in re-rolling and galvanization concluded in recent years form part of this forecast. Since approximately 80 percent of the vehicles produced in Turkey are for the export markets, the automotive sector has a strong demand structure, which is reflected positively in the steel market.
What are your expectations for automotive pipe demand?
Pipe is one of the most important inputs for the automotive sector. Pipe parts are used in many places due to their lightness and endurance. Particularly, flat steels with high strength and of moldable nature, produced via evolving steel technology, are helping to reduce the weight of vehicles, and also it is possible to increase strength and life-span. Steel pipes continue to be the most favored materials up to the present, though many alternative products have come to the fore. In parallel with the developments observed in automotive demand, a significant increase in the automotive pipe demand will certainly occur.
What are your thoughts on competition in the automotive pipe segment?
Since the automotive industry has its own dynamics, competition in the market is a combination of diverse parameters. Although price is an important criterion, the quality of the product, delivery performance and sustainability are the leading factors in competition. Increased automotive production has attracted new investments and caused new competitors to emerge. The pressure on the automotive industry to produce more with lower costs is complicating things for sub-industries, which reflects similarly on pipe producers. As a result, I foresee stronger competition in the coming period. However, I believe this will not be long-lived. Since managing the quality-delivery-sustainability components requires serious experience for this sector, I believe competition will be balanced in time.
What would you say about the European automotive industry in terms of its current situation and exports amid the protectionist measures? What can be done in order to strengthen collaboration between the auto and steel industries?
I think the discussion that the US may apply duties against automobiles imported from the EU is now off the table. The weakness of auto demand in Europe is more about economic reasons. As the current monetary policy reflects the efforts to improve demand, we may expect demand in the local European automobile sector to increase in the coming period. Consequently, this will be in favor of auto exports from the Europe and from the automobile sub-industry in Turkey. As for exports from Turkey, only pipes and tubes are being impacted by the safeguard quotas in question. In order to avoid any possible interruption in the supply chain, government agencies and the European Commission welcome collaboration with companies on the safeguard issue.
How would you evaluate 2019 and what is your expectation for the current year?
As 2019 was really a tough year for both our country and main sectors, it was also not exactly a perfect year for us. Protectionist measures significantly affected our exports. Although it feels like this year will not be easy either, our goal is to consolidate our position in all the markets we serve and to increase our market share by focusing on the production of value-added products.
Do you have any plans for the short-term period?
Our investment in Gemlik still continues. As you know, Gemlik is our biggest production area and we are in the process of building our third facility there. We expect this investment will provide significant growth for our automotive and high value-added products segment. While this new facility becomes one of the most technologically advanced automotive pipe production mills in the world with its fully automatic production lines and surface preparation lines, it will also have an important role in terms of occupational health and safety.