Medcem
General Manager
Murat Kahya
While the export figures of the sector are increasing, sales in the domestic market are also decreasing. It is obvious that the sector provides added value to our country. What strategies do you follow to increase your sales in the domestic market? What are your expectations from 2020 at the point of increasing export?
2019 was a difficult year for our country and the world. We were expecting a contraction in the domestic market in the industry. Although it varies from region to region, the country average decreased by 29% compared to the previous year in terms of domestic sales. Our forecasts were similar. For this reason, we completed the year with an internal sales amount at the levels we budgeted according to the regional conditions. I think that 2020 will be nearly similar for the domestic market. Our primary goal as companies this year should be to maintain our current positions rather than increasing domestic market sales. In 2020, we made a plan similar to 2019 for the domestic market.
Regarding the domestic market, we should not only look at the shrinkage of 29% for 2019. We had a significant shrinkage in 2018 as well. Our domestic market sales decreased from 72.2 million tons in 2017 to 45.4 million tons in 2019. There is a 37% contraction in total. This situation required us to make new plans as a country. While our clinker + cement export was 13.7 million tons in 2018, it reached 23 million tons in 2019 with an increase of 68%.
As an export-oriented company since its foundation, we have completed the year by increasing our export amount slightly. We changed our market structure rather than quantity. We reduced the amount of clinker in our exports and significantly increased the amount of cement. We focused on more demanding but more profitable markets, especially the US and Israel markets. We have also taken good positions in these markets. We are aiming to improve our position in the existing markets for 2020. We have become the preferred brand for these markets. We have established our long-term customer network. However the COVID-19 virus threatening our world will shape the future of not only our sector but also the global trade
What is the position of Turkey in the cement sector compared to other countries in the world? Could you compare Turkey with other world states on a sectoral basis?
We are the second in the world with 23 million tons after Vietnam, which exported 34 million tons in 2019. The export of Thailand, following us, is 14.5 million tons. We are a very strong country in the world export market. We reached an annual export revenue of 876.5 million USD. Compared to 2018, we increased our export amount by 67.5% and our export revenue by 42.7%. Regionally, we are the leader in both production capacity and cement export. I think that our export income and export amount will continue to grow in 2020. However 2020 will be shaped up to the effects of COVID-19 virus threatening the world.
USA, Ghana, Israel, Ivory Coast, Syria are the most important markets for us. The indicators are that these markets will continue to develop in short and mid term. When compared to other countries in our region, we are much more advantageous in terms of both price and product and service quality. Apart from this, Europe will be an important market for us with the effect of limitations on greenhouse gas emissions in the close future.
However, our most important problem in export is low prices in a competitive environment. We must determine our price levels by taking into account the potentials of other countries. However, from time to time, regardless of the conditions created by other countries, unfortunately we can create low price levels by ourselves. As companies in our sector, we need to make evaluations and establish strategies that will provide gains for our country. While protecting our export markets against other countries, we should also make an intense effort not to export in a way that will increase the export income of our country. Concepts such as R&D, digitalization and innovation are among the most important concepts in the business world all over the world.
Can the cement sector adapt to the trends of the business world? How is the industry at the point of digitization?
In recent years, our sector attaches great importance to digitalization and innovation. Digitalization is among our priorities at every stage of production, quality management, customer relationship management and human resources management. As a country that ranks 2nd in the world in exports and raises its export targets, we have to do this. Our industry has been a pioneer in many subjects in our country. I observe that the large cement companies of the country are paying attention to these issues and doing applications above the world average. As Medcem, digitalization is our main priority. There are many investments that we have made in all matters I have just mentioned and then there are applications We are improving this every passing period. Otherwise, we are aware that we will move away from preference in the global market.
We are almost about to leave the first quarter of 2020 behind. What are your forecasts and expectations for 2020?
There has been a horizontal market in the domestic market as we have expected so far. As we expected in the first three months in exports, we started at a level slightly above. This was caused by increased demands for the first 3 month period in some markets. There are some uncertainties in the world. These uncertainties will shape the future of our sector.
We are now facing a serious threat. The corona virus, which started in China in December 2019 and showed its effect in Europe as of March, is an important threat. It started to be seen and increase its effect in our country as of March. It has serious negative consequences for world health. Another important dimension is the economy. Although every country tries to take big measures economically, we are in a period that will not be easy. Propagation speed is too high. Unfortunately, a medical solution has not been found in terms of both preventing and treating its spread. The only way is to be physically protected right now. Countries closed their borders for isolation. There is an uncertainty. It is promising that the cases will be brought under control and reduced in China. But the increase continues in other countries. In case of long-term continuation of this, trade in the world will also be negatively affected. Breakdowns in the supply chain, slowing trade, and global recession that may occur afterwards will be a risk all over the world. Hopefully, medical solutions will be found in a short time and our world will survive this period with the least loss of life. Otherwise, financially difficult times are waiting for us.
Do you have anything to add?
Even though all risks and threats dissipate, the coming years will not be easy for the sector. Especially in the domestic market, it seems difficult to have a significant recovery in a short time. Concrete roads and concrete barriers are important for the domestic market. We should realize domestic and national concrete road and barrier applications in highways, which are more advantageous in terms of economy and safety. This will prevent our country’s money from going abroad, and it will be beneficial for the continuity of our sector, which provides significant employment.
On the other hand, export markets will continue to be the points of opportunity for our industry. For this reason, we must be a brand with our competitive prices, product and service quality. However, we should not turn our advantages here into disadvantages with export strategies to be set up incorrectly. In recent years, global product prices have fallen around 20% in export markets, while our prices have fallen over 35%. We must establish our plans well.
World markets are in a competitive position. There is a lot of supply compared to demand. Here we need to be competitive in cost. The most important cost of our industry is thermal energy cost. We should turn to alternative fuels instead of coal or petrocoke. The fact that alternative fuel sources are limited here is bringing a disadvantage for us in the global market. For this reason, by making legal arrangements, the import of alternative fuels from abroad should be paved. As the sector, we need such legal support from our state. This issue is also very important in terms of carbon dioxide emissions. Together with alternative fuel to be used instead of fossil fuel, we can reduce our carbon dioxide emissions.
Finally, as the sector I would like to point out, there are difficult times ahead of us. But we can provide advantages with what we do in the export market. All companies must work precisely in this regard.