Rebuilding boosted Turkey cement in 2023 and expected to be key driver in 2024

Domestic cement sales in Turkey came in at 5.602Mt in December 2023, down 5.5 per cent MoM and 14.9 per cent YoY, according to Turkey’s cement manufacturers association, Türkçimento. Cement production fell 7.6 per cent MoM but rose 1.1 per cent YoY to 6.653Mt. Cement exports were up 5.5 per cent MoM but down 27.3 per cent YoY to 1.042Mt while clinker exports jumped 98.2 per cent MoM but were down 19.4 per cent YoY to 0.582Mt. 
 
January-December 2023
Turkey’s cement industry reported a strong end to 2023 driven by domestic sales on the back of rebuilding following the twin earthquakes in the southeast of the country in February. For 2023 as a whole, domestic cement sales rose 19 per cent YoY to 64.992Mt from 54.610Mt a year earlier. Cement production rose 10.5 per cent YoY to 81.451Mt from 73.708Mt in 2022. Meanwhile, cement exports fell 17.6 per cent to 15.223Mt from 18.476Mt, while clinker exports dropped 53.4 per cent to 3.958Mt from 8.485Mt in 2022. These sharp contractions likely reflect cement supplies remaining in the country to help with rebuilding efforts, as well as difficulties key export markets, Israel, Syria and Haiti.
 
Outlook
Reconstruction will remain a key driver of domestic demand in 2024. A Turkish parliamentary inquiry has estimated the damage from the earthquakes amounted to US$148.8bn, while the government has promised the construction of over 600,000 new homes. As the largest cement producer in Europe and fifth-largest globally, Turkey is well placed to meet demand and suppliers, such as Medcem, are continuing to invest in capacity expansion while working towards reducing carbon emissions.   
 
However, severe inflationary pressures and rising interest rates are downside risks to investment and demand. The annual rate of inflation, according to the CPI from the Turkish Statistical Institute, Turkstat, was 67 per cent in February and is forecast to peak at around 80 per cent by mid-2024, according to the central bank. While the main monetary policy rate was raised to 50 per cent from 45 per cent in March, and has jumped 41.5 basis points from 8.5 per cent in early 2023.