Turkish cement – little delight for local producers
The prospects for the Turkish cement market are looking increasingly dim, at least over the next 2-3 years. Domestic demand for 2009 is expected to have fallen by around 10 per cent to approximately 38Mt, while capacity on the other hand, shows now sign of easing and is, in fact, likely to increase to 60Mt by 2012. A further four new works had been scheduled for completion in 2010, but most of these projects are now likely to be delayed by a further year. On top of this, there are the two new 2.0Mta works that the Spanish Essentium Group plans to build in Turkey by 2012, the financial logic of which is, under the circumstances, somewhat debatable.
While cement and clinker exports in the first half of this year rose to 7.23Mt, which is just in excess of the 7.20Mt that was exported on the whole year 2006, these higher volumes have only been possible at the expense of lower prices. The important export markets of the recent past in the form of Russia, Italy and Spain have all collapsed. Iraqi cement production has risen strongly as new works in that country have been completed and others have been refurbished, reducing the need for imports. Syria, another important export market has imposed bans on imports from Turkey from time to time, and new capacity is now being built there with largely Arab money.
So even if Turkey succeeds to sell 14Mt of cement and clinker into export markets in 2009, that would still leave some 8Mt of capacity idle. This is likely to leave Turkish cement prices under pressure for some years, and could well force the eventual consolidation of the highly fragmented Turkish cement market and indeed the departure for some of those players whose main business is far removed from cement and other heavy building materials.
While Lafarge has successfully managed to sell all of its wholly-owned capacity in Turkey, it still has to find a buyer for its 23.2 per cent stale in Baltiçim Andalou, and on this topic, Italcementi, having also failed to complete the sale of Set Çimento to Sibirskiy Cement last year, now also needs to sort out what to do with its 34.0 per cent interest in Göltas Göller. All these assets are now worth somewhat less than they were a year or two ago.
The eventual sale of the stakes in Baltiçim Andalou and Göltas Göller could well set in train the start of a long overdue consolidation of the Turkish cement market that could restore the industry to an eventual financial stability, provided the government finally tightens up on the criteria for granting planning permission in a country with an abundance of limestone reserves.
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re: Turkish cement – little delight for local producers
I agree on the above terms especially all new market in africa or arab countries as syria, libya, west africa, are building new plants to be self producer of cement.
than where turkish will be sold in 2012, this is a real question.