Turkey Investigates Steel Imports from China and South Korea, Morgan Stanley Weighs In

Turkey has initiated an antidumping investigation into the import of certain steel products from China and South Korea. The investigation, which will examine the period from July 2023 to June 2024, focuses on cold-rolled coil (CRC), galvanized, and painted steel sheets.

It is also possible for Turkish authorities to implement temporary measures during this period and retroactively apply final measures. According to Morgan Stanley, this investigation is part of a broader trend towards the "regionalization" of steel trade flows. The firm noted that South Korea and China are significant steel exporters to Turkey, with South Korea accounting for approximately 33% and China about 31% of Turkey's total CRC imports during the period from January to October 2024.

Similarly, during the same period, South Korea and China were responsible for approximately 36% and 25% of Turkey's total galvanized steel imports, respectively. This new investigation complements Turkey’s recent actions targeting hot-rolled sheet imports from China, Russia, India, and Japan.

Morgan Stanley suggests that if these measures are implemented, they could strengthen the domestic industry and particularly benefit Erdemir, a major Turkish steel producer. The flat steel products, which constitute about 90% of Erdemir's shipment volumes (with approximately 20% being CRC), may enhance the company's pricing power.

Despite these potential benefits for Erdemir, the market consensus has already priced in a significant recovery in the company's EBITDA for 2025. Morgan Stanley's adjusted EBITDA estimate for Erdemir is $0.96 billion for 2025, while the Visible Alpha consensus estimates it at $1.15 billion and around $0.7 billion for 2024. The firm maintains its Underweight rating on Erdemir shares, emphasizing that evidence of the market impact of these measures is needed.