Green transition is changing international trade

Allianz Trade focused on the Metal Industry in the world and in Turkey in its new industry report. According to the report prepared by Allianz Trade economists; Among the main risk factors that the metal industry may face in Turkey are; economic conditions, global metal prices, regulatory changes, energy costs, raw material supply, environmental concerns and lack of talent in the workforce. However, among these, environmental concerns appear on a remarkable scale.

Allianz Trade, the world leader in trade receivables insurance, has published the Metal Industry Report. The report also included the evaluation of the metal sector in Turkey. According to the report; Currently, approximately 150,000 people are employed in approximately 31,000 workplaces in the Turkish metal sector. The metal sector is one of the most important sectors in the economies of countries, as it provides input to many sectors, especially the automotive, defense, construction and energy sectors.

In the report; It is reported that the global metal market has increased from 3940.17 billion dollars in 2022 to 4230.27 billion dollars in 2023 with a compound annual growth rate of 7.4 percent. While it is emphasized that the Russia-Ukraine war negatively affects the chances of global economic recovery in the short term, it is stated that the war led to economic sanctions against more than one country, increase in commodity prices and supply chain disruptions. Another noteworthy point in the report is that global metal prices have approached their pre-pandemic prices due to shrinking demand, recession expectations and monetary tightening.

According to the Allianz Trade Metal Industry Report, environmental concerns are among the important determinants of the metal industry. Among the information provided in the report is that international trade is expected to undergo a change with the impact of the increasing demand for green transformation around the world. The report also draws attention that countries are starting to implement their decisions regarding climate and environment in the field of international trade and industry, and this situation strengthens the concerns that possible foreign trade restrictive practices will increase.

What will be the impact of environmental sustainability on the metal industry?

On the other hand, the report also mentions that the share of products that are described as “environmentally friendly” and have a positive impact on the protection of the environment in the total foreign trade volume is gradually increasing. It is thought that increasing awareness and regulations regarding environmental sustainability may affect the metal industry. The importance of companies investing in cleaner technologies is emphasized and it is stated that they may face reputational risks if they do not address their environmental concerns.

Adaptation to geographical conditions reduces risks to the producer

Water management and biodiversity are rapidly becoming urgent priorities in changing climate conditions, and it is included in the Allianz Trade report that this global uncertainty directly affects the geography of Turkey. The report emphasizes the need for metal producers to better evaluate risks and opportunities and express them through transparent, result-based measurement and assurance. While it is pointed out that more meticulous reporting will become critical for the metal industry, the February 6 earthquake is also reminded. After the devastating earthquake that also affected Iskenderun and caused a force majeure for the factories in the region; The report also highlights the fact that steel trade and production in the east of Turkey has come to a halt, and therefore how critical it is for producers to adapt to geographical conditions.

According to Allianz Trade Metal Sector Report; Turkey’s export data showed an increase of 12.9 percent compared to the previous year, with 254.2 billion dollars at the end of 2022. Ferrous and Non-Ferrous Metals sector exports amounted to 14.66 billion dollars in the January-December period of 2022, with an increase of 16.8 percent compared to the same period of the previous year. The report points out that despite the 0.2 percent increase in exports in the first 5 months of this year, the exports of the Ferrous and Non-Ferrous Metals sector decreased by 16.4 percent compared to the same period last year. It is stated that the economic contraction in the European Union, the monetary tightening cycle, the exchange rate not being at a competitive level in Turkey and the tightening in credit conditions compared to the previous year were effective in this decline. In addition, it is emphasized that the technical recession of Germany, which has the largest share in Turkey’s exports in the iron and non-ferrous metals sector, has greatly affected the Turkish Metal Industry.

The talent gap in the metal industry is significant

Among the striking information in the Allianz Trade Metal Sector Report is that a huge wave of retirements and resignations is awaiting companies globally. The industry is facing its biggest talent shortage ever; It is pointed out that it needs to undergo a radical transformation in order to reach skilled workforce. The experts who prepared the report also said; Turkish businesses, together with young workers, that they have to double their efforts to create a purposeful brand that is compatible with today’s values.

To access the details of the report: https://www.allianz-trade.com/tr_TR/economic-arastirmalar/sektor-risk-raporlari/metal.html#link_internal_1