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The answer to this question is the most significant issue for the Turkish
iron and steel industry. As most analysts state, one of the best ways to
overcome the global crisis would be for the Far East, and China in particular,
to spend the foreign exchange they have been accumulating over many years as a
result of their foreign trade surpluses. Arguments have even been heard that
they should also go as far as incurring trade deficits so that a balance between
East and the West is secured.
Our main focus is steel, so let's see how
the above scenario would impact the industry in which we are interested. If the
money is to be spent, then the West will have to sell goods to the East. The
West does not have many products which the East cannot produce itself. Fifteen
years ago, the situation was different; however, today all Western products can
be produced in the East. As a result, the only thing the West can offer to the
East is raw materials.
Ferroalloys, scrap, ore, coal and so on. And right now these are the only
materials the East is buying. I do not personally believe that they will turn
these raw materials into products and export them. I am basing my case on two
factors:
First of all, in such an event, the western economies would collapse and the
world economy cannot allow this to happen. Secondly, investments in the Far East
are made not considering exports but considering requirements in their own
markets. Only Japan can be considered an exception. Thus, it is highly possible
that the East will exert an enhancing effect on raw material prices, as they
already have funds to spend on raw materials.
How will Turkey be impacted by such a situation? If we focus on scrap, we see
that the priority source for the Far East is Japan and the US. They do not need
European scrap in terms of quantity. Consequently, we can say that Europe and
the US have separated in terms of raw materials. However, if the scrap producers
reflect the Far East's price movements in Turkey and its neighboring region, the
situation might get worse. This is because Turkey is producing steel in excess
of the levels required in the region, and so it also needs to export to the Far
East.
In short, if Turkey and Europe can detach themselves from the Far
East in terms of raw materials and can integrate themselves with the Far East in
terms of product sales, the crisis will be overcome. Otherwise, Turkish
producers will be seriously affected. When Turkey is badly hit, European scrap
suppliers will also be hit as Turkey is still their biggest
buyer.
Extraordinary decisions should be made in extraordinary
situations. If European scrap suppliers and Turkish producers do not discuss the
matter and find a solution, even if temporary, the system that has been
developed and improved over the years will be irreparably damaged.
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