Turkish cement sector faces energy cost hit

Turkish cement sector faces energy cost hit
Published: 22 July 2010

Turkey’s cement sector growth could hit double-digits this year on domestic demand, although higher energy prices will likely sap profits, Turkey’s Cement Manufacturers’ Association (TCMA) said.

Chairman Adnan Ignebekcili told Reuters the industry association expected growth of 8-10 per cent to would feed into higher revenues, although profits would lag 2009.
 
"Revenues will rise slightly as prices increase, but costs will increase by a larger amount. Import coal and petrocoke prices have risen 100 per cent since the start of the year," he added.
Energy costs amount for more than 50 per cent of costs.
 
"Profits are seen below 2009 figures as a result," he said.
 
According to TCMA, cement production increased by 13.2 per cent in the first four months of 2010, to 18Mt, and domestic sales rose 14.2 per cent to 12.7Mt.
 
Turkey’s buoyant domestic market had nothing to do with forthcoming elections in 2011, which in the past have triggered a building boom, he said.
 
Ignebekcili said Turkey’s cement sector has become Europe’s largest and the world’s fifth-largest cement producer with 58Mt of output.
 
"We expect 8-10 per cent growth in total production. In that case we will outperform Japan to become the world’s fourth largest producer."
 
Ignebekcili said Turkey, the world’s largest cement exporter last year, would likely see total exports this year of at least 18-19Mt. A slight increase in cement exports had been offset by a 30 per cent contraction in clinker exports, however.
 
Foreign investors could try to enter the attractive Turkish cement sector if strong sales and exports continued.
 
Source: Reuters