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Cablegate: Information On Turkish Foundry Products

This record is a partial extract of the original cable. The full text of the original cable is not available.

081242Z Oct 04

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

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