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Development of Iron and Steel Supply and Demand

In order to be able to calculate the true iron and steel demand of the country, every economy sector needs to know one by one. However, since no such statistics have been made in Turkey until now, the actual iron-steel demand in the past of the country can not be determined precisely.

However, the analysis of market price movements in the past years gives an idea in this regard. The amount of iron-steel exported to the market, in contrast to the steady development of domestic production, shows extraordinary fluctuations due to imports that occasionally have been curtailed due to exchange difficulties.

The inflationary development of the economy resulted in an abrupt decline in imports, particularly in the 1955-59 period when iron and steel prices rose abnormally. It can be said with certainty that consumption is often below demand. It shows the share of domestic consumption in this consumption by iron and steel consumption since 1950. In 1950, only 40% of consumption was covered by domestic production. In 1967, this rate increased to over 90% with continuous production increase and the establishment of the second iron and steel industry.

The total iron and steel consumption which fluctuates due to the above mentioned imbalance of imports has not started to increase continuously since 1963 due to investments in the planned turnover and the consumption per capita which was 18 kg in 1962 increased to 33 kg in 1967 However, today’s consumption per capita is somewhat wider in comparison to industrialized countries’ consumption (615 kg in 1964, 579 kg in Germany, 438 kg in the UK). This consumption has fallen behind even some of the countries consumed by the economists of the world in terms of economic development and industrialization (Mexico 65 kg, Colombia 35 kg, Greece 40 kg). The structure of iron – steel consumption is generally related to the development phases of the economy. Since a large part of the investments in developing or industrialized countries are spent on building infrastructure, construction steel and profiling in these countries; machinery, transportation vehicles and some metal goods consumption commodities are consumed more than flat products used in the industry.

As income per person increases, the proportion of construction steel and section consumption in total consumption falls, while the consumption of flat products increases. The rate of marginal increase in the consumption of flat products is greater in the early stages of development. According to the average of 1962-64 in Turkey, the consumption rate of flat products is still around 21%, although the ratio of construction steel and profile consumption to general consumption is 43%.

Within ten years, the rate of construction steel and section consumption has slowed by 8%, while the consumption of flat products has increased by as much as 78%. On the other hand, the rate of consumption of special machine steel has also increased by 2.5 times in the mentioned cycle, so that the Turkish iron and steel economy has entered a phase in which the consumption of flat products, which is considered as a sign of industrialization movement, has accelerated. This consumption rate will increase further in the coming years, especially after the establishment of the Eregli factories, as flat products are being received on time. Normally, the most demanded product from the iron and steel industry is rolled products. However, if the inputs-outputs of the production stages of this integrated industry branch are followed, it can be seen that in almost every production stage, a part or semi-finished product goes to other sectors for processing. For example, cold rolling, wire drawing, reprocessing of pipes, as well as peak and raw steel blocks to the casting sector.

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