Cement, Glass, Ceramic and Soil Products Exporters Association which has a deep-rooted history of more than a quarter of a century is the sole and the coordinator union of the cement, glass and ceramic sectors which are the biggest users of local resources and which carry a strategic importance for the Turkish economy with their net foreign currency inflow.
Being within the body of the Central Anatolian Exporters Association and having close to 10 thousand members, Cement, Glass, Ceramic and Soil Products Exporters Association provides direct employment for 65 thousand persons and continues to contribute towards Turkey’s foreign trade balance by exporting our products to more than 200 countries.
Turkey ranks 2nd in cement exports, 4th in ceramic exports and 17th in glass exports in the world.
We aim to maintain this trend with our Union whose export performance increases generally every year, and to achieve exports amounting to USD 7.3 billion in the year 2023 with an average growth rate of 7 percent per year.
In this context, let us first look at the year-2014 performance of our Association.
Having exhibited a rising trend in exports every year, our Association experienced a 1 percent decline in its exports in the year 2014 due particularly to the cement sector being affected negatively by the political crisis in the Middle East, in spite of continuing increase in the ceramic and glass sectors, resulting in exports amounting to USD 3.3 billion in 2014.
The most notable characteristic of our exports in the last year was the decline in our exports to Iraq, Libya and Russia, our biggest markets, while recording increases at high rates to developed countries such as Germany, England and the USA.
The decline in our Union’s exports to the Middle Eastern countries was affected by the European producers experiencing a contraction in their domestic market due to the EU crisis and therefore searching new markets and becoming our competitors in our export markets, as well as by our target countries introducing new import barriers due to the Arab Spring and the lobby of the local producers. Therefore, we experienced a loss of exports worth USD 600 million to the countries in the region in cement sector alone since the year 2008 to date.
Our exports to Iraq, the biggest market of our Union, which had continued to increase until the year 2012 entered a downward trend in the same year depending on the conjuncture, declining by 10 percent in the year 2012, 8 percent in the year 2013. The decline in the exports to Iraq reached 30 percent last year due to the political chaos and the new producers coming into play within the country, as well as due to the Iranian cement imported at a low price.
We experienced the biggest export loss last year in our exports to Libya, which declined by 37 percent due to the impact of the civil war prevailing in the said country. On the other hand, our exports to Russia fell by 30 percent with the effect of both economic sanctions and devaluation of ruble and the decline in oil prices. Difficulties in the Russian economy grew and halted our exports. We predict that we will have difficulty in exporting to the said country for at least three years.
In spite of the negative course of events experienced in the Middle East and Russia, our Association’s exports to developed countries such as Germany, England and the USA recorded increases of up to 30 percent, strengthening our motivation.
Let us consider separately the export performance of our three sectors in the last year.
The exports of our cement sector which account for 23 percent of the Union’s exports declined by 14 percent on value basis to USD 645 million, fell by 10 percent on quantity basis to 10 million tons. With the impact of political disorders and the decline in oil prices, our loss reached 40 percent for Iraq, Libya and the Russian Federation, which are our biggest markets. While economic risk in the said regions continued, our exports surged by 73 percent to Syria, by 383 percent to Egypt, which are among the biggest markets.
Although our product which is heavy in weight but light in value has managed to reach the American continent, it is extremely difficult to realize sales to such markets as East Africa and the Far East. Our main market is the Mediterranean basin and West Africa, which is the new alternative. However, local players in West Africa, though being unable to meet the demand, prevent our sales by having barriers put against our exports.
In West Africa, which is an important market for the world cement sector, there occurred a decline in demand, an increase in freight due to Ebola virus. Ebola’s impact has begun to diminish these days relative to a couple of months ago.
The exports of our ceramic sector which account for 32 percent of the Union’s exports increased by 2 percent to USD 1.1 billion. The low rate of increase was affected by Iraqi crisis and the Russian factor affected by the fall in oil price in the second half of the year. Still, high increases in exports to the developed countries demonstrated our success in ceramics, with the increases averaging 10 percent in the exports to our biggest markets, namely, England and Germany, 22 percent to the USA, 35 percent to Sweden and the Netherlands.
Our exports to the world-giant USA rebounded to the pre-crisis level due to the recovery in the US economy and our firms attaching importance to the US market with fairs and promotional activities. We, as the Turkish ceramic companies, realize production at the EU standards in particularly ceramic coating both aesthetically and from the standpoint of technical quality. There being no challenging country other than China in terms of production capacity enhances our competitive advantage.
Parallel to the course of cement exports, ceramic exports also fell by 54 percent to Libya, by 17 percent to Russia. In ceramics, we experienced problems as well as surprises in our near geography, with the export increase reaching close to 80 percent to the United Arab Emirates with the effect of the fairs as well.
The exports of our glass sector which account for 24 percent of the Union’s exports increased by 8 percent on value basis to USD 880 million, by 6 percent on quantity basis to 614 thousand tons last year, maintaining our success in our glass sector whose production capacity exceeds 5.8 million tons, including the investments in Turkey and in the surrounding countries, placing it among the top five in the Europe.
Our glass sector exports 30 percent of its production. Exports of our glass sector increased by 17 percent to Germany, by 15 percent to England, by 17 percent to the USA, which are the biggest export markets, and by 38 percent to Iran.
With our glass sector which has become influential in the world by nearly doubling its production in the last decade, we have made a difference in Brazil in which we plan to become a local producer in the direction of our strategic goals. Thanks to our large product range, exports to Brazil rose by 17 percent. We believe that the increase in the exports to Brazil will continue this year as well due to the anti-dumping tax imposed on some Middle Eastern producers in December.
Due to the increased investments in such local markets as Russia and Bulgaria, we experienced a decline in our exports to such regions.
Let us consider the year 2015 targets of our Union.
This year started with a loss in Turkey’s exports with the effect of, inter alia, the parity downturn, but we, as the union of cement, glass and ceramics, would like to provide net value added to Turkey’s growth. In this scope, we, as the Union, plan to realize exports amounting to USD 4.2 billion.
Now let us share our sectoral targets.
Our expectation for the exports of our cement sector is abolition or reduction of the customs duty applied to Turkish goods by some countries such as Algeria. Algeria continues to apply a very high tax (15 percent) to our country which is a member of the Customs Union, while applying zero customs duty to the products imported from the European Union. It could not be possible to persuade the said country in spite of the close follow up by our Ministry of Economy. In case of abolition of the customs duty for our exports to Algeria, it is possible to realize additional exports worth around USD 100 million every year.
Egypt has introduced restrictions to her imports from Turkey with a political decision, as in the case of EU countries. In addition, there are difficulties in the external payments to Turkey. These two factors have begun to decrease the exports to Egypt.
Exports to Syria are being made to the region seized by the rebels in the north. Other gates, particularly Nusaybin, cannot be used. We believe that we will make additional exports worth around USD 200 million corresponding to 3 million tons every year if a permanent peace agreement is made in Syria.
In our ceramic sector, we aim to raise the exports by 12 percent to USD 1 billion 250 million. The USA, England, Germany and France will be the markets where we will continue to grow through promotions. In this scope, we are making preparations to host more than 100 American distributors in Turkey in June.
This year we will carry out activities also in the Design Market where one-third of the business deals of the Ceramic industry are made. Considering our successful promotional activities in London last year, we will be carrying out effective communication activities geared towards the consultancy, architectural and contracting companies that dominate the design market in near geography.
Similarly, our projects directed towards England, which is among our biggest markets, will continue. In this scope, we are sponsoring the summer exhibition of the Royal Academy, the most prestigious art platform of the country. We would like to spread the quality of Turkish ceramics around the world with the sponsorship project that will be put into application with the proposal of the architects who are the founder and permanent members of the Royal Academy and who realize the best-quality projects worldwide.
In our glass sector, the export target for this year is USD 1.2 billion. We would like to contribute towards the year 2023 target at a magnitude of USD 2.5 billion with 10 percent growth every year.
In glass sector, we will organize 16 seminars this year on the subject of Glass in Energy Efficiency for PVC joiners in Balkan countries such as Romania, Bulgaria and in Russia. Furthermore, we will participate in fairs in Russia, Serbia, Romania, Hungary, Bulgaria, Germany and the United Arab Emirates. We will continue rendering service with a product range suitable for demand in markets where energy savings gain importance, where there is a high awareness of environmental protection.
We would also like to draw attention to a development in the domestic market: the development in the building sector plays a determining role in the field of sheet glass which makes up more than half of the glass production. Population increase, urbanization, renewal-based housing requirement, and the projects executed under urbanization are the factors that support growth. Parallel to continuation of the dynamism in urban transformation projects, we expect an increase in the consumption of sheet glass.
In the past January-September period, the licensed building area increased by 39 percent, which means that there will be 20-25 percent increase in the year 2015 relative to 2014 in the number of buildings that will be brought to glass-fitting stage. Although the rate of house purchases develop slower than the supply, the downward trend in the bank credit interest rates and the government-launched support projects for those intending to own a dwelling house are likely to have a positive effect on the sector.
Let us consider our problems that have a direct effect on the sustainable growth of our three sectors.
As is known, the cement, glass and ceramic industry realizes its production with high energy and labor costs. Since fossil fuels are used in production, energy accounts for around 30 percent of total costs. Considering the indirect dependence on energy in the transportation and inputs, the trend of energy costs is very important and decisive for our three sectors.
We experience difficulties and lose markets due to the special energy pricing or the subsidies applied in many economies with which we compete in exports.
The decline in oil prices will initially give rise to positive results for our sectors. However, the lower cost reflected in oil and its derivatives has not yet been reflected in natural gas.
Consequently, abolition of additional taxes in energy prices for the sake of exports and special pricing on the basis of industrial plants constitute one of the most important items of our agenda.
Another very important matter for us is a railway network infrastructure to be built between port-raw material-production locations from the logistic standpoint.
On the other hand, we are witnessing the rise of the Dollar vis-à-vis Euro and other currency units. Our activities will remain under the threat of a serious importation from the Europe due to the low Euro. A similar assessment may be made for Ruble and Russia as well.
It should be pointed out that we should have control over such subjects as high technology, cost and efficiency in order to do away with the negative effects of both parity and high energy costs. Inclination towards innovative culture, i.e. R&D; design, technology production, new products, is of importance in order not to be affected by such cost volatility in the medium and long term. We will focus on reducing the risk and lowering the costs by achieving market diversity in our activities.
Today when the global economic conditions change rapidly, achieving sustainable growth of the Turkish economy is the common goal of our cement, glass and ceramic sectors, as is the case with all sectors. We will continue our activities with the same goal.