Turkish cement industry - The first 100 years

2011 sees the 100th anniversary of the start of the Turkish cement industry. Since 1911 the cement sector has developed rapidly from a production capacity of just 20,000t/yr in 1911 to over 66Mt 100 years later.

In terms of production, the Turkish cement sector is ranked number one in Europe and number four in the world after China, India and the US. In terms of cement exports it is first with a global share of 12%, leaving China and many countries of South Eastern Asia behind.

By 2010 the sector became a vital branch of industry for the national economy, with turnover of around US$4.5bn, exports valued at US$1bn and direct employment of 15,000 people. Based on achievements during 100 years, the sector entered the new millennium with a new vision and mission enabling to serve as a model all over the world.

By 2020 the cement industry will attempt to reach a total production volume of 100Mt/yr by amplifying efforts in both domestic and exports markets and expansion into new markets, while already exporting to approximately 90 countries. During the onset of the global financial crisis in 2008, efforts were accelerated towards exporting to Africa. In particular, countries in western Africa have become significant export markets.

Table 1: Projected cement production and export volume for Turkey 2012 - 2020.

Table 2: Destination of cement exported by Turkey in 2010.

Table 3: Turkish cement production, sales and export in 2009 and 2010 with year-on-year percentage change.

The Turkish cement industry has reached a very significant and respected position in the world with high product quality, high capacity, high export potential and numerous research and development centres. The Independent Council for Quality and Environment is one of the most meaningful precedents of modern high quality and environmental-consciousness.

The global economic crisis that started in 2008 has brought economic devastation in developed economies such as in the US, EU, Russian Federation and Japan. The recession particularly affected construction industries. In 2009 demands on cement in those countries diminished by 20-27% compared to 2008.

Nevertheless high growth rates in the BRIC countries, which share over half of cement consumption in the world, ensured 5% growth in global cement consumption. The positive economic atmosphere in these emerging markets is predicted to ensure cement demand growth of between 8-10% in 2011 and 2012.

Chinese cement consumption is over 1200kg/capita and is likely to continue growing with many new and ongoing public investment projects. Similarly, India, Brazil, Argentina, Poland and the Russian Federation are among the countries with expectations of significant medium-term growth.

The Turkish cement sector performed well in 2010. TCMA member plants increased cement production by over 10% to reach 62.5Mt. Adding production by non-member plants, the total production of the Turkish cement industry was over 66Mt in 2010. These values indicate that Turkey preserved its number four position in production following China, India and the US in 2010, as was the case in 2009.

Clinker capacity of cement industry reached 64Mt with new capacity added in the last six years increasing by 50%. In other words the capacity added during that time was half of that added in the preceding 94 years.

The domestic cement market has become a driving force for production growth in 2010, with domestic consumption rising to over 50Mt. Domestic consumption rose by 16% in 2010 compared to 2009 but a 1-2% slight decrease was realised in cement exports. The decrease in clinker exports was over 30%.

Although 2010 was a brilliant year in terms of production and sales, fuel and transportation costs increased by 40%, resulting in pushing up costs above the level of inflation. As the rising costs were not reflected in cement prices, the financial performance of many companies lagged behind the previous year.

Difficulties in markets resulting from such an increase in the capacity were palliated thanks to high export performance. The sustainability of cement exports will always be a matter of debate and the potential for a collapse in the export market means it is a more realistic approach for Turkey to make forward estimates primarily based on domestic market forecasts. These should be considered in the knowledge that environmental and climate-change legislation may bring new restrictions to the industry. Hence, the industry should focus on sustainable strategies and therefore sustainable development will be the main policy of Turkish cement industry heading into the next 100 years.