Turkiye: CBAM-induced export slowdown impacts steel production in 2026

• • Steel exports in Jan-Feb drops 14% y-o-y to 2 mnt

• • Energy, freight surges push hot-rolled steel costs higher

SteelOrbis: Despite production cut targets announced at the beginning of last year, China’s steel production increased during the year but ended at 960 mnt, reflecting a decline of approximately 45 mnt by the year-end. This decline was more a result of weak domestic demand than a planned measure. China began 2026 with more aggressive production cuts, resulting in a production volume of 75.3 mnt in January, a 14% y-o-y decline.

China’s production decline also affected global production, with a 6.5% y-o-y decline observed worldwide in January. Signs of weakening production and capacity utilisation in Turkiye, as per SteelOrbis, have their roots in these factors.

Weak exports:

Turkish liquid steel production had reached its peak in 2021, experienced a significant decline during 2022-23 and then entered a growth trend again in 2024 and 2025 with the addition of new capacity, surpassing 38 mnt. However, production in January 2026 stood at 3.39 mnt. While this represented a 5.8% increase y-o-y, it marked a decline compared to previous months.

The primary reasons cited for this decline include export difficulties resulting from the implementation of CBAM and weak domestic demand. Exports in January-February fell 13.5% on an annual basis to 2 mnt, while declining 15.2% in value to $1.3 billion.

The upward trend in electric arc furnace and blast furnace production observed in the second half of 2025 gave way to a decline at the start of the current year. A downward trend in production had emerged due to the decline in exports and the weak performance of the domestic market. Looking at capacity utilisation rates, SteelOrbis notes that flat products saw a level above 80% in January but declined to around 75% in February due to weak exports. The situation is even weaker for long products, with the capacity utilisation rate falling below 60%.

Cost pressures rise:

Costs have begun to rise again following the low levels seen in mid-2025 on the raw materials side. Changes in iron ore and coal prices have increased blast furnace costs, while, on the scrap side, freight costs in particular have been the determining factor. Hot rolled coil production costs declined for both electric arc furnaces and blast furnaces during the January-February period but rose again in March due to increases in energy and freight costs.

Hot rolled coil production costs for blast furnaces rose from $564/t in February to $587-588/t in March, while costs for electric arc furnaces rose from $588/t to $604/t. The EU remains the largest supplier of scrap imports to Turkiye, with the US in second place.

As rising energy and fuel costs impact freight rates, making imports more difficult, it is critically important that no new restrictions are imposed, particularly on the EU side. Slab imports have gained prominence during periods of high liquid steel production costs, with the primary suppliers in recent times being Russia, Malaysia, and Algeria.

Significant increases in flat steel production capacity have been introduced over the past two years; while production reached 16.7 mnt in 2024 and 16.5 mnt in 2025, it was noted that, while a slowdown may be observed in the first months of 2026, production levels for the year as a whole could reach a higher level compared to pre-2024 levels.

Hot rolled coil is the most important export item and galvanised sheet ranks second. The main reason for the decline in exports in the first two months of the year was CBAM. The primary product in imports is hot rolled coil, and anti-dumping measures and changes in the inward processing regime in Turkiye have limited imports.

Trade balance:

Nevertheless, imports continue to exceed exports in Turkiye’s trade balance. Last year 6.5 mnt of exports were made against 8.94 mnt imports, and that this balance has remained unchanged for the past seven to eight years.

Looking at the data, it appears that monthly flat steel consumption has followed a fluctuating trend; while it has occasionally exceeded the 2 mnt level, a slight slowdown has been observed over the past three months.

Rising protectionist trends on a global scale are one of the most significant pressures on the sector. The process initiated by the US is being continued by other countries as well. The effects of CBAM, import pressure, and rising energy and freight costs will continue to be decisive factors for the sector. Price increases are not demand-driven but largely cost-driven.

This article is published as part of an article sharing agreement between SteelOrbis and BigMint.