Turkey’s trade minister tells an Istanbul steel summit that Europe’s halved quotas and carbon levy are costing the country’s largest export market, with shipments to the bloc down 6.7 percent and non-EU sales up 10 percent
ISTANBUL, October 28, 2026 – Turkey’s iron and steel exports to the European Union fell 6.7 percent in the first nine months of this year while shipments to the rest of the world rose 10 percent, Trade Minister Omer Bolat said this week, in the clearest official acknowledgement yet that Europe’s new quota regime is redirecting one of the world’s largest steel exporters away from its nearest market.
Speaking at the Steel Networking Summits 2026 in Istanbul on Monday, Bolat warned that unilateral trade restrictions raise exporter costs and risk disrupting the supply of low carbon steel, and criticised both European and American restrictions on the sector. Our priority is to support the green transition, he said, while arguing that exporters should not face disproportionate costs or new trade barriers.
The remarks, reported on Tuesday, are the first detailed government account of what the European Union’s replacement steel safeguard has done to Turkish trade since it entered into force on July 1.
The numbers Ankara is working with
Turkey produced 38.1 million tonnes of crude steel in 2025, placing it seventh globally and first in Europe. It exported 17.1 billion United States dollars of steel, and the European Union accounted for 42.3 percent of that total.
That concentration is the whole of the problem. No other major steel exporter is as dependent on the European market, and no other major exporter sits as close to it. Turkish mills ship into southern and central Europe on short sea routes with lead times measured in days, a logistical advantage that has underpinned the trade for two decades and that cannot be redeployed quickly to more distant markets.
The 6.7 percent decline in iron and steel exports to the bloc over January to September understates the pressure, because the quota regime only began operating on July 1. Three quarters of the reporting period preceded it. The 10 percent rise in shipments to non-EU destinations over the same window is the counterpart figure, and it is the one that matters for the rest of the world: Turkish material displaced from Europe is already arriving somewhere else.
Exports of steel products covered by the European carbon border adjustment mechanism fell 1.7 percent over the first nine months, a smaller decline that reflects the fact that the carbon levy is still in its early phase while the quota cut is immediate and absolute.
What the European regime actually did
The European Union’s previous steel safeguard expired on June 30 after reaching the eight year maximum permitted under World Trade Organization rules. Rather than let protection lapse, the bloc legislated a replacement regime under Regulation 2026/1384, which entered into force on July 1.
The replacement is substantially tighter than what it succeeded. Duty free tariff rate quotas were cut to roughly 18.3 million tonnes a year across all origins, a reduction of close to half against the previous arrangement. The duty applied to volumes above quota was raised from 25 percent to 50 percent. Country specific allocations were drawn principally from import patterns over 2022 to 2024, generally for origins holding at least a 5 percent share in a given product category.
Turkey was among the hardest hit. Industry estimates circulated before the regime took effect put the potential reduction at around 3.5 million tonnes of annual European sales and roughly 3 billion dollars of revenue. Ugur Dalbeler, chairman of the Turkish Steel Exporters’ Association, has said the new quotas could cut Turkish shipments to the bloc by about 56 percent against the 7.9 million tonnes sent in 2025.
The evidence from the first quarter of operation supports the concern. On July 1, the quarterly quota for category 1A hot rolled coil was 160,574 tonnes. Requests for clearance against it reached 229,564 tonnes, 43 percent above the available volume. Turkish plants have been reported running at approximately 55 percent capacity utilisation.
The carbon layer on top
Bolat’s second target was the carbon border adjustment mechanism, which began taking effect at the start of this year and requires importers to measure, verify and report the embedded emissions of covered goods.
Turkey’s exposure here is unusual, and it cuts against the intuitive expectation. Roughly 78 percent of Turkish steelmaking capacity runs on scrap based electric arc furnaces rather than integrated blast furnace and basic oxygen routes. The country imported 18.8 million tonnes of scrap and produced 27.5 million tonnes of crude steel by that method.
Electric arc steelmaking from scrap is among the lowest emission routes available at commercial scale. On the logic of a carbon border levy, Turkish material ought to be advantaged relative to higher emission competitors. Bolat’s complaint is therefore not that the mechanism discriminates against Turkish carbon intensity but that the compliance architecture itself imposes costs, and that it lands on top of a quota cut that has already removed the volume against which those compliance costs would be amortised.
That is a reasonable objection in administrative terms. Emissions measurement and verification carry fixed costs per installation and per product line. A mill that has lost half its European allocation bears the same verification burden across a smaller base.
The wider Turkish exposure extends beyond steel. Analysts tracking the mechanism have put Turkish exports at risk across cement, aluminium, fertiliser and electricity in the current scope, with figures in the region of 19 billion dollars of annual exports affected as scope broadens, and have begun flagging exposure in downstream industrial categories beyond basic metals.
How the quota cut landed across the field
Turkey’s complaint reads differently when set beside the treatment other suppliers received, because the European allocation was not uniform and the variation is instructive.
South Korea fared comparatively well. Its dedicated allocation of roughly 2.073 million tonnes represented a cut of about 19.7 percent against the previous safeguard level, far milder than the overall reduction of close to 46 percent, and Korean industry publicly welcomed the outcome. The Korean government has separately estimated more than 510,000 tonnes of additional domestic demand coming from shipbuilding, defence and renewable energy, which cushions the loss further.
Japan fared poorly and said so. Five Japanese steel associations issued a joint statement calling the quotas inappropriate and regrettable and noting that the two sides are free trade agreement partners. Japan’s allocation sits at roughly 800,000 tonnes against average imports of about 1.5 million tonnes in the reference period, and its hot rolled coil quota of roughly 551,000 tonnes carries 30 percent European anti-dumping duties on top. The associations said that unfair trade measures taken by the EU have been creating a serious situation.
India’s engineering export body has estimated that Indian iron and steel shipments to the bloc could fall about 40 percent, an annual loss in the region of 1.36 billion dollars, with gains in some stainless categories offset by heavy cuts elsewhere. Brazilian officials argued that the bloc acted without proper negotiation with Mercosur and without offering compensation under Article XXVIII of the General Agreement on Tariffs and Trade, with a Brazilian allocation of roughly 227,000 tonnes against 293,000 tonnes of 2025 exports. Malaysia’s steel federation noted that it received an individual quota in only one of twenty six product categories.
Turkey sits at the harsh end of that distribution, and the reason is arithmetic rather than policy animus. Allocations were drawn from historical shares, and Turkey’s historical share was the largest. A proportional cut applied to the largest supplier removes the largest absolute tonnage.
The renegotiation Brussels has opened
There is a further dimension that gives Ankara’s objection more legal purchase than a simple complaint about quota size.
In moving from a temporary safeguard to a permanent quota regime, the European Union has had to confront the fact that its bound tariff commitments at the World Trade Organization do not accommodate a standing 50 percent duty on steel above quota. The Commission has signalled that it intends to renegotiate those commitments under Article XXVIII, the provision that allows a member to modify or withdraw a concession subject to negotiation with, and compensation of, the members holding negotiating rights in the affected products.
That process gives principal suppliers a formal seat. Turkey, as the bloc’s largest third country steel supplier, holds substantial negotiating rights in the relevant tariff lines, as do Korea, India, Japan and others. Compensation under Article XXVIII can take the form of improved access in other products or, failing agreement, the withdrawal of substantially equivalent concessions by the affected member.
This is the mechanism through which Bolat’s objection may eventually acquire teeth. It is slow, technical and conducted away from public view, and it does not restore the lost tonnage in the current quota year. But it is the one forum in which a supplier inside the customs union can press a claim without the awkwardness of industrial retaliation.
The strategic position Turkey occupies
Turkey’s relationship with European trade policy is structurally different from that of any other third country supplier, and that difference shapes what Ankara can do about this.
Turkey has been inside a customs union with the European Union for industrial goods since 1996. That arrangement eliminates tariffs on industrial trade in both directions and obliges Turkey to align its external tariff on third countries with the European common external tariff. It does not, however, protect Turkish goods from European trade defence instruments, and it does not give Turkey a seat at the table when those instruments are designed.
The result is an asymmetry that Turkish officials have raised repeatedly. Turkey carries the obligations of alignment without the protections of membership, and when the European Union negotiates trade agreements with third countries, Turkish industry is exposed to the resulting imports without automatically gaining reciprocal access.
That asymmetry explains the tone of Bolat’s remarks. A supplier with alternative leverage might threaten retaliation. Turkey’s position inside the customs union makes retaliation on industrial goods legally awkward and commercially self defeating, since the European market remains 42.3 percent of its steel exports even after the cut.
The available responses are therefore diplomatic and commercial rather than retaliatory: pressing for quota reallocation and for exclusions in the periodic reviews the regulation permits, pursuing the modernisation of the customs union that both sides have discussed for years without concluding, and redirecting volume.
Where the volume is going
The 10 percent rise in Turkish shipments to non-EU destinations is the most consequential number in Bolat’s account for anyone outside Turkey.
Turkish mills have historically served North Africa, the Gulf, sub-Saharan Africa, Southeast Asia and Latin America alongside Europe, and those are the markets absorbing the redirected tonnes. Several of them have limited or no trade defence capacity. Others have been building it rapidly.
This is the same dynamic now visible across the global steel trade. European and British quota cuts, American section 232 measures and a dense layer of Asian anti-dumping duties have between them removed a substantial volume of accessible demand from the world’s three largest importing blocs. The displaced tonnage does not disappear. It arrives in markets with thinner defences and less established domestic industries, where it depresses prices and triggers the next round of investigations.
Turkey itself is both a cause and a casualty of this pattern. It has been among the more active users of trade remedies in its own right, maintaining measures against imported steel while protesting measures imposed on its exports. That is not hypocrisy so much as the standard position of a mid-sized producer caught between larger ones.
Implications for importers and supply chains
Several practical conclusions follow for firms buying or selling steel across these routes.
European buyers should expect continued tightness in the categories where Turkish material was the marginal supplier. The pro rata allocation mechanism used in the European quota system means that when demand for clearance exceeds the quarterly tranche, as it did in category 1A on July 1, importers receive a partial duty free allowance and pay the out of quota rate on the balance, producing a blended effective rate. That is cheaper than the headline 50 percent but still a material cost increase, and it introduces uncertainty into landed cost that cannot be resolved until clearance.
Buyers in the markets now receiving redirected Turkish volume should expect downward price pressure in the short term and rising trade remedy risk in the medium term. A supplier relationship established during a period of displaced volume can become expensive when the receiving jurisdiction responds with duties. The sequence is predictable enough to plan for.
Firms with carbon border exposure should note the compliance asymmetry Bolat identified. The mechanism’s reporting burden falls on European importers, who must obtain verified emissions data from their suppliers. Suppliers with genuinely low emission processes, such as scrap based Turkish mills, represent an advantage under the mechanism but only if the data to prove it is available in the form the regulation requires. Importers should be auditing their suppliers’ verification readiness now rather than at the point of declaration.
Finally, origin documentation is becoming the controlling variable. The European regime applies a melt and pour requirement, in force since October 1, which determines quota eligibility by where the steel was melted and poured rather than where it was last processed. A Turkish rolling operation working imported substrate may find its output attributed to the substrate’s origin, with quota consequences that differ sharply from the commercial expectation.
The capacity problem Bolat did not mention
One element absent from the ministerial account deserves attention, because it determines how much of Turkey’s difficulty is attributable to European policy at all.
Turkish mills have been reported operating at around 55 percent capacity utilisation. That is a low figure by any standard, and it predates the July quota cut. Turkey built substantial steelmaking capacity through the 2010s on the expectation of regional demand that construction cycles in Turkey, the Gulf and North Africa did not sustain, and the country’s own macroeconomic conditions, including currency volatility and high domestic financing costs, have compounded the difficulty.
A producer running at 55 percent is highly sensitive to any loss of volume, because fixed costs are already spread thinly. The European quota cut is therefore both a genuine shock and an accelerant of a condition that existed beforehand. Distinguishing the two matters for anyone forecasting Turkish export behaviour: a mill with idle capacity and a closing primary market will price aggressively into whatever market remains open, which is precisely the behaviour that triggers trade remedy cases elsewhere.
It also matters for the diplomatic argument. European producers pressing for the tighter regime pointed to exactly this pattern of global overcapacity as the justification for it, and Turkish utilisation figures do not help Ankara’s case that the measures are disproportionate.
A note on sources and figures
The export percentages, production tonnage and scrap figures quoted here come from Minister Bolat’s remarks at the Istanbul summit as reported in Turkish trade press on October 27. Government statements at industry events are advocacy as well as information, and the selection of comparison periods in such statements is rarely neutral.
The quota volumes, out of quota rate and allocation methodology come from the European regulation and its implementing acts. The estimates of lost Turkish tonnage and revenue originate with the Turkish Steel Exporters’ Association and are projections rather than realised outcomes. The capacity utilisation figure is a trade press estimate.
Readers pricing commercial decisions on any of these should work from the regulation’s published quota tables and their own clearance experience rather than from either side’s characterisation of them.
What comes next
The regulation permits review, and the Commission is required to assess by June 30, 2028 whether country of melt and pour should determine quota eligibility outright. Turkey will press its case in that process and in the parallel discussions on customs union modernisation.
More immediately, the quarterly quota tranches reset at the start of each quarter, and the pattern of oversubscription seen on July 1 will repeat. Turkish exporters and their European customers have now had two quarters of experience with the mechanism and will position accordingly, which tends to intensify the first day rush rather than smooth it.
The structural question Bolat did not address is whether a 42.3 percent dependence on a market that has halved its intake is sustainable at all. The 10 percent growth in non-EU shipments suggests Turkish exporters have already answered it in practice, and the markets receiving that growth are the ones that should be reading the figure most carefully.