US embassy cable - 04ANKARA5771

UNCLAS SECTION 01 OF 02 ANKARA 005771 
 
SIPDIS 
 
DEPT PASS ITC LYN SCHLITT 
 
E.O. 12958: N/A 
TAGS: ETRD, TU 
SUBJECT:  INFORMATION ON TURKISH FOUNDRY PRODUCTS 
 
Ref: Secstate 157426 
 
1. Reftel requested information on the Turkish foundry 
industry, specifically metal castings gray iron, 
ductile iron, all other iron, steel, aluminum and 
copper.  Unfortunately, neither the GOT nor the 
relevant industry association could provide this 
information.  An iron and steel sector expert in 
Foreign Trade Undersecretariat (FTU) told us that the 
USITC request was also made through the Turkish Embassy 
in Washington, and that FTU had carried out a sector- 
wide research for information from industry 
representatives.  Our source said that due to highly 
segmented nature of the industry, detailed information 
was unavailable.  In addition, FTU told us that it was 
more difficult to obtain process-oriented data, as 
requested reftel, than information on actual metal 
products.  We will continue to seek further information 
on the foundry industry.  In the interim, Embassy is 
providing general statistics on Turkey's iron/steel 
industry below. 
 
------------------------------- 
Turkish Iron and Steel Industry 
------------------------------- 
 
2. Turkey's crude steel production increased to 18,299 
thousand tons in 2003 from 14.3 million tons in 1999, 
showing a significant increase in 2002 (16.5 million 
tons) and also in 2003 due to increased domestic 
demand.  FTU officially reports excess production 
capacity of 5.5 million tons in long-steel products 
supporting exports.  ERDEMIR, ISDEMIR and KARDEMIR and 
16 smaller companies are the major producers and 28,000 
workers are employed in the iron and steel industry. 
 
3.  According to the FTU, iron and steel foundry 
products are mainly used in the machinery, white 
household goods and automotive industries.  About 
30,731 businesses currently operate in the sector, 
employing 130,000 workers. Today, there are 1,163 
companies producing foundry products, and of which 128 
are exporting companies.  According to the Turkish 
Foundry Industrialist Association (TFIA) data, a total 
of 876,600 tons of foundry products are produced in 
2002, employing 17,944 workers. 
 
4. Pipes:  According to a State Planning Organization 
(SPO) sector report, Turkey produced 1.4 million tons 
of iron and steel pipes in 2002.  There are 25 
producers in the sector, including MKEK, CELBOR and 
ERDEMIR.  Exports in the iron and steel pipe sector 
reached USD 377 million in 2003. 
 
5. Cost structure:  In an FTU analysis of cast iron 
production, the cost structure is broken down as 
follows: 40 percent raw material, 30 percent labor and 
20 percent energy.  In steel group products, 35 percent 
of cost is from raw materials, 35 percent from labor 
and 25 percent from energy.  According to the FTU and 
TFIA, shortages and higher prices in global raw 
material market in 2003 also had a negative impact on 
Turkish industry. 
 
--------------------------------------------- ---- 
Turkey's Trade in Iron and Steel/Foundry products 
--------------------------------------------- --- 
 
6. Turkey exports about 65 percent of its crude steel 
production every year. In 2003, crude steel exports 
amounted to about 12.3 million tons.  Turkey's raw iron 
and steel, and steel-based commodity exports reached 
USD 4.3 billion in 2003, increasing 29 percent from 
2002 exports. 
 
Turkey's Iron/Steel Exports (USD million) - Category, 
2001, 2002, 2003, Change (03/02 pct), Main market (pct 
share) 
------ 
 
Cast iron      11    0.6   0.7   17       Italy (49) 
Scrap          16     19    35   84       Spain (41) 
Block         390    510   728   43       China (18) 
Flat          366    343   384   12       China (24) 
Long        1,219  1,136 1,650   45       UAE (19) 
Special. Steel 51     67    94   40       Romania (45) 
Pipes         424    551   377  -32       U.S.A. (17) 
Construction  108    130   171   32       Iraq (7) 
Radiators      50     81   140   73       U.K.(28) 
Kitchen appl.  76     91   131   44       Germany (12) 
Others        334    409   602    -        - 
 
Total       3,045  3,338  4,312  29       UAE(9)* 
 
(*)Turkey's main export markets for iron and steel 
products: UAE (9), Italy(7), U.S.A.(7), China (5), 
Spain (5), Israel (5). 
 
Source: FTU 
 
Turkey's Iron/Steel Imports (USD million):  Category, 
2001, 2002, 2003, Change (03/02 pct), Countries (pct 
share) 
------ 
 
Cast iron      22     40    49   23       Russia (54) 
Scrap         477  1,006 1,833   82       Russia (16) 
Block         180    170   374  120       Russia (48) 
Flat          692  1,031 1,537   49       Russia (18) 
Long           90    130   194   49       Germany (22) 
Special. Steel 239    347   519   50       Germany (22) 
Pipes         445    231   317   37       Germany (44) 
Construction  152    125    64  -49       Austria (26) 
Radiators       7      5     5    0       Italy (44) 
Kitchen appl.  11     13    18   38       China (35) 
Others        326    458   601    -        - 
 
Total       2,641  3,556  5,511  55       Russia(15)* 
 
(*) Turkey's main import partners for iron and steel 
products: Russia (15), Ukraine (11), Germany (11), 
Romania (8), U.K.(6), Belgium (5). 
 
Source: FTU 
 
7. The Embassy is not aware of any industry-specific 
government incentives affecting the Turkish iron and 
steel industries. 
 
Additional Sources of Information 
--------------------------------- 
 
8. Further (but somewhat limited) background on the 
Turkish iron and steel industry is available at: 
www.dcud.org.tr.  USG economic reports on Turkish 
Government economic (including trade) policies - such 
as the Investment Climate Statement, Country Commercial 
Guide, and National Trade Estimate, can be accessed 
through Embassy Ankara's website:  www.usemb- 
ankara.org.tr or through other USG agency websites. 
 
9. Embassy's points of contact on these issues are 
Economic Officer Aldo Sirotic and Economic Specialist 
Defne Sadiklar.  Both can be reached at telephone 90 
312 455-5555, fax 468-6138 or email 
(siroticaj@state.gov, sadiklard@state.gov). 
 
EDELMAN