Istanbul Summit Confirms the Steel Industry's Structural Problem: Capacity Is Being Built Faster Than Demand Can Absorb It

The Turkish Steel Exporters' Association (ÇİB) used the first edition of its Steel Networking Summit in Istanbul on 25-27 October to assemble an unusually senior cast: Turkey's trade minister, the heads of both Turkish steel associations, and both the outgoing and incoming directors general of the World Steel Association. That last detail matters more than it appears. Henrik Adam and Edwin Basson are mid-handover at worldsteel — Basson remains Director General until December 2026, Adam takes over in the fourth quarter — and their joint appearance framed the conference's central message: the industry's capacity problem is now structural, not cyclical, and the policy response to it is making things worse.

The arithmetic behind the headline

Adam put global capacity utilisation at roughly 75-76%. That is consistent with the OECD's Steel Outlook 2026, which estimated global steelmaking capacity at 2,445 Mt in 2025, excess capacity at 640 Mt, and utilisation at 76% — falling to 74% or less by 2028. Adam's range straddles the 2025 actual and that forward path, so it should be read as a trajectory rather than a single 2026 reading.

His second figure — around 140 Mt of additional capacity expected to come online in the coming years — is harder to trace to a published source and is best treated as an industry estimate. But it is the right order of magnitude to explain the OECD's projection: 140 Mt is roughly 5.7% of the existing 2,445 Mt base, and on its own would account for more than the 105 Mt increase in excess capacity the OECD foresees by 2028. Analysis: in other words, the projects already in the pipeline are sufficient on their own to push the world further into surplus over the next two years, before any demand-side disappointment.

On demand, Basson's view that consumption stays broadly flat at around 1.7 billion mt in 2026 before rising in 2027 aligns with worldsteel's own Short Range Outlook: 1,722 Mt for 2026 (essentially unchanged), recovering in 2027. The April SRO put 2027 at 1,762 Mt, a 2.2% increase. The gap between those two numbers and the capacity pipeline is the whole story — demand growing at low single digits against capacity additions that are, in absolute terms, an order of magnitude larger than annual demand growth.

Turkey's argument: Customs Union partner, carbon border payer

The political content of the summit was almost entirely about the tension between the EU's climate and trade architecture and its industrial relationship with Turkey.

Trade Minister Ömer Bolat framed market access as the binding constraint: additional US tariffs on steel, plus EU import quotas and safeguard measures, are squeezing Turkish exporters. His sharper point was that excluding Turkish suppliers from European supply chains damages EU manufacturers too — a competitiveness argument rather than a fairness one.

Fuat Tosyalı, chairman of both Tosyalı Holding and the Turkish Steel Producers' Association (TÇÜD), made the structural case most directly: Turkey sits inside the EU Customs Union with deeply integrated value chains and should not be treated under EU steel policy in the same way as other third countries. That distinction is the crux of Ankara's grievance. Turkey is simultaneously inside the customs area for goods and outside the EU's emissions trading system — which means its exporters face CBAM at the border while enjoying none of the free allocation that cushions EU producers.

Uğur Dalbeler — speaking as ÇİB chairman and, accurately, as worldsteel Vice-Chair for 2026-27 after completing his 2025-26 term as Chairman (Abdulqader Almubarak of Hadeed now holds the chair) — tied the two themes together. Capacity expansions unsupported by demand increase export pressure and feed protectionism; protectionism in turn encourages further capacity building elsewhere. He also warned that decarbonisation policy must account for differences in producers' access to energy, financing and technology, and that carbon rules risk becoming trade barriers rather than environmental instruments.

The emissions-verification uncertainty around CBAM that delegates flagged is not a minor technicality. For a scrap-based producer like Turkey — structurally advantaged on embodied emissions relative to blast-furnace-route Asian suppliers — unclear verification rules risk neutralising exactly the advantage that should make Turkish steel attractive to EU buyers.

Why the venue matters

Holding this debate in Istanbul, under ÇİB's banner, was itself an argument. Turkey is Europe's largest steel exporter and its closest integrated partner; the summit was designed to demonstrate that the Turkish industry can convene the global conversation, not merely react to it.

A few observations on the substance of what was said, and what was not:

• The capacity diagnosis is now consensus and the solutions are not. Both worldsteel figures and both Turkish associations converge on overcapacity as the primary problem. But the OECD's own data show excess capacity rising through 2028 — the dialogue process has not altered the trajectory.
• The scrap advantage is the elephant in the room. Turkey's low-carbon positioning depends on EAF/scrap economics. Trade Minister Bolat specifically warned that restrictions on the circulation of scrap-based, low-carbon steel could undermine green-transition objectives — a defence of scrap trade that deserves more attention than it typically receives in EU policy debates.
• Energy cost has displaced labour and ore as the locational variable. Delegates identified competitively priced energy as increasingly determinative of production costs and plant siting. That is a direct challenge to European producers, whose power costs sit well above those of Gulf and North American competitors.
• The call for mirror measures. Turkish producers are pressing Ankara to adopt import safeguards comparable to the EU's against unfair competition — a notable shift in posture from a country whose model has depended on open export markets.

The takeaway for markets

The practical implication is that the steel price environment into 2027 is more likely to be shaped by trade-policy fragmentation than by demand recovery. Basson's flat-2026 figure and the modest 2027 uptick do not offer enough demand to resolve a 640 Mt surplus approaching 745 Mt. Absent coordinated capacity retirement — which no major producing jurisdiction has committed to — the adjustment will come through trade defence measures, regional premium structures and carbon-cost differentials rather than through the price mechanism alone.

For Turkish producers specifically, the binding question is whether Brussels will grant any recognition of Customs Union integration in CBAM implementation and safeguard allocation. The summit's answer, from Turkey's side, was unambiguous. Whether it was heard in Brussels is less clear — and will show up in the fine print of the EU's steel measures, not in conference communiqués.

References

• SteelOrbis, Steel Networking Summit 2026: Global steel capacity growth outpaces demand, 26 October 2026.
• ÇİB (Turkish Steel Exporters' Association), Steel Networking Summit 2026.
• Steel Networking Summit 2026, official event website and agenda.
• OECD, Steel Outlook 2026.
• OECD, Global steelmaking capacity reaches new highs.
• worldsteel, Short Range Outlook, April 2026.
• worldsteel, 2026 press releases index (October 2026 SRO).
• worldsteel, Governance and Worldsteel Chairmen.