The Fifth of the TÜRKÇİMENTO Anatolian Meetings Held in Gaziantep

"We Continue The Endeavors That Will Create Value For Our Country Despite The High Costs"     

Giving a speech at the Anatolian Meetings organized by TÜRKÇİMENTO in Gaziantep, Fatih Yücelik, Chairman of the Board of Directors, said, "As the cement sector, we kept undersigning endeavors that will create added value for our country even in the times when we were subject to price pressure resulting from the high-level cost increases. Let the construction sector produce projects, we will be enough for Turkey. We have cement plants everywhere.”

The Anatolian Meetings of TÜRKÇİMENTO representing 94% of the cement sector, which have become traditional, were held this time in Gaziantep. The meeting in Gaziantep took place with the attendance of Fatih Yücelik, Chairman of the Board of Directors of TÜRKÇİMENTO; Adil Sani Konukoğlu, Deputy Chairman; and Nihat Özdemir, Vice Chairman. The representatives of the cement sector also mentioned the cost-price argument experienced in recent days and invited attention to the fact that the cheapest cement in the world is sold in Turkey. The speakers warned that the export restriction planned to be imposed on cement exports may increase costs by further reducing the already low capacity use in Turkey. 

In his assessment about the issue of stopping cement exports, Fatih Yücelik reminded that the sector aims to grow in exports and said, “The sector has excess tonnage. The consumption in the domestic market is clear. In the event of imposing a restriction on exports, plants become obliged to reduce their tonnage. When assessed mathematically, this means an increase in costs. We are trying to decrease the domestic cost by producing at full capacity. If we cannot provide goods for export, it is possible that the costs that will take place will be reflected in the domestic market prices. The capacity utilization rate of the sector is between 60 and 70 percent… The unused capacity is about 30-40%. Let projects be produced, we are enough for Turkey. We have plants ready for production everywhere.” Adil Sani Konukoğlu said, “If you stop exports, you will work at an insufficient capacity, thereby reducing production. The cost per unit further increases. They say builders will build plants; let them come and let us sell the plants. We are ready to transfer it as it is; it is enough if you give us the money we have invested." Nihat Özdemir invited attention to the fact that a restriction on exports would make the foreign capital upset and said that it would also inflict setbacks for the Turkish economy. 

"WE STRIVED FOR THE CONTINUITY OF THE CONSTRUCTION SECTOR DESPITE THE PANDEMIC"

In his speech he made at the Anatolian Meetings, Fatih Yücelik, Chairman of the Board of Directors of TÜRKÇİMENTO, reminded that Turkey is Europe's largest and worlds the fifth largest producer and the second largest exporter of the world with its approximately 115 million-ton total capacity and said:  
“In the last 10 years, our sector has doubled its production capacity by making new plant investment of nearly two billion dollars During that period, the cement needed by the construction sector was met entirely from local production. The cement sector provides employment to 17,200 people with 76 facilities, 55 of which are integrated, as of the end of 2020. The domestic market turnover of our sector is approximately US$1,7 billion and its export income is US$1,1 billion.”  

Underlining that they efforted substantially to contribute to the continuity of the construction sector, as always, in the period when the COVID-19 pandemic, which affected the world, posed a great impact on production and the economy, Fatih Yücelik said, “Unfortunately, our sector entered the pandemic period by incurring a great injury with the drop of the domestic market cement consumption, which was 72 million tons in 2017, to 45 million tons in 2019. As the cement sector, we kept undersigning endeavors that will create added value for our country even in the times when we were subject to price pressure arising from the high-level cost increases, with years of perseverance and self-sacrifices.” 

Yücelik, Chairman of the Board of Directors of TÜRKÇİMENTO, who drew attention to the fact that approximately 80% of the total cost items of the cement sector consist of imported inputs and electricity cost and provided the following information in terms of costs: 

“The level of our sector's dependence on importation in fuel supply is also quite high. Over 90% of the cement sector's primary fuel needs are met by petroleum coke and imported coal. Almost all (92%) of the fossil fuels used in production extensively are imported, which means they are indexed to foreign currency. In August of 2021, the petcoke prices increased by 270% and electricity and imported coal prices increased by 62% and 197%, respectively, compared to August of the previous year. In July 2021, Domestic Lignite increased by 43%. The dollar rate, which was 7,27 TL in August 2020, increased to 8,49 TL. Despite all those developments, the sector demonstrated its self-sacrifice to keep cement prices at a point far below the cost rise. In this period, the rise in cement prices remained much below the cost increases. While these developments are being experienced, however, our sector is unfortunately shown as the responsible party for the price increases in the construction sector.”

“80% OF THE SECTOR’S PRODUCTION IS GOING TO THE DOMESTIC MARKET”    

Expressing that nearly 40 million tons of excess capacity of the TÜRKÇİMENTO members emerged at the end 2020, Fatih Yücelik also provided the following information on the six-month period of 2021: “In the first half of the year, while the cement production of the sector increased to 37 million tons with an increase of 26%, domestic sales reached 28,3 million tons with an increase of 29% year-on-year. 21,8% of the cement produced in the first six months of the year was exported. Almost 80% of the production went to the domestic market. According to the temporary data of the Exporters' Associations, the total exportation of the cement sector increased by 12,3% on a value basis and increased to 836 million dollars in the January-August 2021 period. Nevertheless, the total export amount decreased by 2,9% year-on-year and dropped to 20,8 million tons.”    

By mentioning the fact that the cement sector, which has been operating for over 100 years, will continue to undertake the responsibility of being one of the leading actors of our common future, against all odds, Yücelik said, “My opinion is that at a time when the issues of sustainability have become this important in the entire world, it is much more important that we steer our concentration to this field, both as a sector and as a country.”   

ADİL SANİ KONUKOĞLU: SHARE OF CEMENT IN AN 150 SQUARE-METER APARTMENT FLAT IS SEVEN-NINE THOUSAND LIRAS    

Adil Sani Konukoğlu, Deputy Chairman of the TÜRKÇİMENTO Board of Directors   Adil Sani Konukoğlu, Deputy Chairman of the TÜRKÇİMENTO Board of Directors, reminded that Gaziantep has always been a city that contributes to the Turkish economy and said: Our city exporting to 180 countries is still Turkey's fifth largest exporter city with an export volume of 9,5 billion dollars. Our target is to reach 10 billion dollars by the end of this year. In anything you use, there is a Gaziantep signature. While a shortage of mask fabric was being experienced in the world, the industrialists in Gaziantep ensured that Turkey breathed comfortably by producing mask fabrics. Our target is to capture 10 billion dollars this year."    

In his assessment regarding the latest developments in the cement sector, Adil Sani Konukoğlu said, “Cement in China is 70 US dollars and ex-works price in Turkey is 340 liras. For the time being, 70 cubic-meter concrete is spent in a 150 square-meter apartment flat, including its foundation and garden. When it comes to the average cubic-meter price of concrete, it is 300 TL. That is to say, it makes a total of 21 thousand liras. Here, the share of cement is 33-35% maximum. The cost of cement in an apartment flat sold by contractors for one million TL is seven-nine thousand liras. Hence, the cost of cement in housing prices is quite limited."   

NİHAT ÖZDEMİR: THE WORLD'S CHEAPEST CEMENT IS IN TURKEY    

Nihat Özdemir, Vice Chairman of the TÜRKÇİMENTO Board of Directors, invited attention to the fact that the cement and construction sectors cannot be separately considered from each other and made the following assessment:   “If the economy is growing, the growth starts from the construction sector. The construction sector acts jointly with 200 sectors. If the economy ceases, it will be the construction sector that first feels it. We are one of the subsectors of construction. We are making a product that is heavy in load but light in price. About two years ago, we caused six-month research to be conducted by METU. It appeared as a result of that research that the value of cement in the cost of housing construction was 3,5 percent. When a house is a luxurious one, the figure drops to 3%. Our company has built Yusufeli, which is the third-highest dam in the world and the highest one in Turkey. Its height is 275 meters. We poured 4,3 million cubic-meter concrete into that dam. We bought all of its cement from Aşkale Cement of Erzurum as it was cheaper because of transportation. The cement we used in that dam is 7,7 percent of the total cost of the dam. There are 55 plants in Turkey and none of them has sales of 500 liras as alleged. The ex-works selling price of all cement plants in Turkey is 330-340 TL. If it is carried 200 km with shipment fees, it will be completely more than the price along with the transportation costs. It does not bind the cement producers. As Limak, we have cement plants abroad as well. We are both cement producers and consumers. It is 1000 TL in Ivory Coast and US$105 in Mozambique. Our selling price in Turkey is US$35. The cheapest cement in the world is in Turkey.”    

Asserting that in the discussions in recent days, false statements were made and public opinion was misled on this issue, Nihat Özdemir said, “We are ready to debate the mathematics of the costs on any platform. What we want from the media at this point is not to accept what they are told in advance and pore over it.”   

Abdurrahman Yıldırım, economy finance writer, said in his speech he gave at the meeting, “The main reason in the argument regarding cement prices is foreign currency. It is the dollar currency. TL has lost the value of 77% in the last eight years. In view of the average dollar currency between 2013 and the OVP currency for 2021 as US$8,30, it lost value at 10% every year. This increases inflation rapidly. We, as a country, lost our investment rating due to the rise in foreign currency rate along with the increase in inflation and other factors. We dropped four tiers back at the investment-grade level. Who could invest and how do they do it in a country that has lost 77% value? Unfortunately, Turkey cannot produce without importing. When raw materials are imported and used in production, the currency increase spreads throughout the entire production. If the problems can be addressed with a holistic approach and domestic production is given weight, it can be solved.” 

Journalist Vahap Munyar also said that he thinks the government must take steps to pave the way for dynamism in the economy, particularly in the cement sector. Munyar said, “We also import inflation together with the imports of raw materials and intermediate goods. This comes to a point that pushes us as well.”