Aluminium manufacturing in Turkiye

Aluminium is a cornerstone of modern industry, integral to sectors ranging from automotive manufacturing to construction and aerospace. Its lightweight yet durable nature makes it indispensable in producing vehicles, aircraft, packaging, and infrastructure. The European Union (EU), with its robust industrial base, relies heavily on a consistent and reliable supply of aluminium to maintain its manufacturing prowess and economic stability. In this intricate supply chain, Turkiye has emerged as a pivotal player, serving as both a significant importer and exporter within the aluminium industry. According to a market analysis by Technavio the Turkish aluminium manufacturing market size is forecast to increase by USD 2,81 billion at a CAGR of 6,78% between 2023 and 2028.

Overview

Over the past decade, Turkiye’s aluminium industry has experienced substantial growth, evolving into a critical component of the nation’s industrial sector. In 2023, Turkiye’s aluminium exports reached approximately USD 5,3 billion, marking a significant increase from previous years. This upward trajectory underscores the country’s expanding influence in the global aluminium market.

The industry’s growth is not only evident in export figures but also in domestic production and consumption patterns. In 2023, Turkiye produced approximately 1,92 million tons of aluminium products, reflecting the material’s importance in various domestic industries. The construction sector, for instance, utilizes aluminium extensively in building facades, window frames, and structural components due to its strength and corrosion resistance. The automotive industry also relies on aluminium for manufacturing lightweight vehicles that meet stringent fuel efficiency and emission standards. Additionally, the packaging industry benefits from aluminium’s properties, using it in applications ranging from beverage cans to foil packaging. This diverse application base has fueled the industry’s expansion and solidified its role in Turkiye’s economic development.

Production capacity

Despite its impressive production figures, Turkiye remains heavily reliant on imported raw materials to meet its aluminium production needs. In the first half of 2024, Turkiye imported approximately 984 000 tons of aluminium, with primary aluminium accounting for 71% of this volume. This reliance on imports exposes the Turkish aluminium industry to global market fluctuations, including price volatility and supply chain disruptions. For instance, geopolitical tensions or trade policy changes in supplier countries can directly impact the availability and cost of aluminium in Turkiye. To mitigate these risks, there is a pressing need for Turkiye to invest in domestic production capabilities and explore alternative sources of raw materials. Enhancing domestic recycling efforts could also play a crucial role in reducing import dependency and promoting sustainability within the industry.

Trade relations with the EU

The trade relationship between Turkiye and the European Union in the aluminium sector is both robust and multifaceted. In 2022, the EU imported aluminium worth approximately USD 4,05 billion from Turkiye, underscoring Turkiye’s role as a key supplier to European markets. Conversely, the EU exported aluminium valued at around USD 990,36 million to Turkiye in the same year, indicating a trade surplus in favor of Turkiye within this sector.

This dynamic reflects the complementary nature of the two economies, with Turkiye supplying semi-finished and finished aluminium products to meet the EU’s industrial demands, while importing certain specialized aluminium products and raw materials from EU member states.

The EU – Turkiye Customs Union, established in 1995, has facilitated this bilateral trade by eliminating tariffs on industrial goods and aligning Turkiye’s trade policies with those of the EU. This arrangement has enabled Turkish aluminium producers to access European markets more easily, fostering closer economic integration and cooperation between the two parties.

Challenges and opportunities

Despite its growth and increasing integration into the European market, Turkiye’s aluminium industry faces several challenges that could impede its future development. One of the primary challenges is the heavy reliance on imported primary aluminium, which exposes the industry to global market fluctuations and potential supply chain disruptions.

For instance, geopolitical tensions, trade disputes, or economic sanctions involving key supplier countries could lead to sudden shortages or price spikes, adversely affecting Turkish manufacturers. Additionally, the industry faces challenges related to energy consumption and environmental sustainability.

The Turkish aluminium sector requires significant technological transformation to align with national and international environmental goals. Strengthening efforts in energy efficiency and transitioning to decarbonization are of utmost importance for the sector. Advancing production technologies, improving process efficiency, adopting emission-reducing techniques, and enhancing access to finance will move the industry forward. These efforts will ensure the sector not only meets stringent environmental standards but also improves its competitive position in the global markets.

To enhance its competitive edge in the global market and ensure sustainable growth, Turkiye’s aluminium sector must develop innovative solutions and strategic collaborations. This transformation is a critical step towards achieving decarbonization and emission reduction targets. However, this process necessitates substantial investment. To successfully implement technological transformation, the aluminium sector needs to modernize its existing infrastructure and invest in innovative technologies. The cost of this technological transformation is considerable, and appropriate financing mechanisms need to be developed to cover these costs. At this point, it is crucial for policymakers to collaborate with industry stakeholders and provide new financial resources.Additionally, prompt and effective actions must be taken to implement large-scale investment plans.

Incentive measures that provide public subsidies, facilitating renewable energy investments, and mobilizing private capital will support the adoption and dissemination of low-emission technologies. This collaborative approach will help ensure the successful technological transformation of Turkiye´s aluminium industry, aligning it with global environmental standards and enhancing its competitive edge in the market. By focusing on these areas, the Turkish aluminium industry can continue to grow sustainably while contributing to global environmental goals.

Despite the challenges, Turkiye’s aluminium industry is poised for significant growth and collaboration opportunities, particularly in the context of its relationship with the European Union (EU). The EU – Turkiye Customs Union, established in 1995, has been instrumental in facilitating trade between the two parties. In 2023, bilateral trade reached a record high of nearly EUR 206 billion, with Turkiye becoming the EU’s 5th largest trade partner, accounting for 4,1% of the EU’s total trade in goods.

While the EU remains a significant partner, exploring new markets can mitigate risks associated with over-reliance on a single region. Regions such as Asia and Africa present emerging opportunities for aluminium exports. Investing in R&D can lead to the development of high-value aluminium products, such as specialized alloys for aerospace or automotive applications, thereby increasing export value.

Turkiye’s aluminium industry holds a pivotal position in the EU’s supply chain, contributing significantly to various sectors, including automotive, construction, and packaging. While challenges such as import dependency and environmental concerns persist, the industry’s growth trajectory remains positive. By leveraging opportunities for technological advancement, sustainability, market diversification, and R&D, Turkiye can strengthen its role in the global aluminium market and foster deeper collaboration with the EU.