Examination of the effects of change in global metal prices on Turkish basic metal production and exportation

Balıkçıoğlu, Cem
The basic metal production industry constitutes up 11% of Turkish manufacturing industry which makes it the second largest industry in manufacturing after food manufacturing with 15.6%. Basic metal production is the second largest industry for Turkish export and import, with 11-13% and 11-14% share respectively. However, the literature lacks studies in terms of the effects of change in basic metal prices on basic metal production industry in Turkey. The thesis contributes to literature by explaining the effects of global price changes on Turkish metal production industry and the effects of Turkish basic metal production industry to global basic metal prices. The thesis also investigates the volatility impact of global variables on basic metal production in Turkey. The methodology starts with the vector autoregression models, proceeds with the interpretation of impulse response functions, and the evaluation of forecast error variance decompositions. Examination period is considered as from January, 2005 to December, 2016. The thesis concludes that there is a significant effect of global metal prices on Turkish basic metal production. In addition, Turkish basic metals export volume affects global scrap prices. It is also concluded that the basic metal prices are the main driver on scrap price changes. Also, evidence is found on the volatility effect of the exchange rate and basic metal price on Turkish basic metal production.