Ranking first in the world in cement exports and first in Europe in cement production, Turkiye is preparing to dominate these markets again by reversing the slowdown in some export markets due to macroeconomic and geopolitical developments around the world, especially with the decrease in energy costs and the upward trend in economic activities.
Continuing their activities under the Turkish Cement brand under the Cement, Glass, Ceramic and Soil Products Exporters’ Association (ÇCSİB), representatives of the Turkish cement industry came together at the “Cement Industry Workshop” organized in Sapanca. Abdulhamit Akçay, Vice Chairman of the Board of Directors of ÇCSİB, opened the workshop and exchanged views on export markets, opportunities and obstacles in front of the sector, and the effects of domestic developments, especially the earthquake disaster, on the sector.
Abdulhamit Akçay: “Energy costs have affected our competitiveness”
Reminding that the Turkish cement industry achieved a 24 percent increase compared to the previous year with exports of 1.6 billion dollars in 2022, Akçay said, “Although we have achieved this increase in value due to the reflection of cost increases on our prices, our sales volume decreased by 11 percent due to this cost increase and the decrease in purchasing power worldwide. Last year, especially due to the increase in energy costs, we lost some of our competitiveness against Vietnam, Algeria, Egypt, Pakistan and the UAE, especially in the North African market. As we are an energy-intensive sector, it is not easy for us to compete with the low price policies implemented by countries that produce their own energy or meet it at low cost. However, the decrease in production costs, especially energy costs, this year will allow us to dominate these markets again.”
“Developments in China, Saudi Arabia and the US will give us advantage”
Noting that macroeconomic and geopolitical developments are in favor of the Turkish cement industry, Akçay continued as follows; “With the end of the shutdown process in China, we see that economic activity is increasing again. This situation will enable the producer countries in the region, especially Vietnam, to re-channel to China,
thus reducing their impact on our Western markets, especially the US. There is a similar development in Saudi Arabia. The construction of new generation projects has accelerated in this country. Here, as in the case of China, we expect producers in the region to turn to the Saudi Arabian market. Thus, we will regain the advantages we have lost in our own markets due to energy costs. On the other hand, the increase in freight costs compared to the final quarter of last year will provide an advantage to our country in Western markets as it will negatively affect exporters in the Far East.”
Referring to the developments in the US, Akçay said, “The monetary policies implemented in the US have started to yield results, inflation has entered a downward trend. Interest rates are also expected to fall by 2024, although not in the short term. We expect these developments to have a positive impact on the severely shrinking housing market. The US is already our biggest export market. This year, we have an export target similar to last year. They continue their infrastructure and industrial activities strongly, and we, as the sector, will see their positive reflections on us more, especially from 2024 onwards.”
“We have a production capacity surplus of approximately 40 million tons”
Emphasizing that the main agenda of the cement industry is the domestic market due to the earthquake disaster centered in Kahramanmaraş, Akçay said, “Exports are always very strategic for us, but our main target this year and in the next five years will be to meet the cement required for both the reconstruction of our cities in the earthquake zone and the transformation of other cities in the earthquake zone. However, the fact that we will meet the domestic market demand does not mean that our cement exports, which are also critical in terms of providing added value to our country, will be interrupted. Because our sector has an annual production capacity of 120 million tons. When we look at the figures for 2022, we see that the total domestic and international demand is 82 million tons, which means that we, as the sector, have a production capacity surplus of approximately 40 million tons. Therefore, even when the reconstruction activities in the earthquake zone will be at the highest level, we can both meet the demands of the domestic market and continue our exports. We have the power to do this with our service quality, product range and the reputation of our industry worldwide.”
“Other regions have completed the orders of manufacturers in the earthquake zone”
Stating that there are 10 factories in the cement sector affected by the disaster in the earthquake zone, Akçay said: “This region, especially İskenderun, Adana and Mersin, is one of the key export bases of our country in maritime transportation. After the earthquake, the exports of the factories in our region almost came to a standstill due to both structural and machinery damages and loss of labor force. In this process, our producers in other regions met the demands and fulfilled the orders. Our industry showed great solidarity. Production has now resumed in this region, but the support of other regions will continue in the process of returning to exports. With 56 integrated plants and 23 grinding plants across Turkiye, we look at our country’s production and exports as a whole.”
Emphasizing that the Turkish cement industry closely follows global developments related to climate change, Akçay also provided information on R&D and production development projects and new technology applications such as carbon emission reduction, renewable energy investments, waste heat recovery, and new technology applications in the focus of green and digital transformation carried out by companies in the sector.