Will Turkish cement exports come under pressure?
As the second-largest cement exporter after Vietnam, Turkey's cement industry has for many years exported its surplus around the world. However, analysts anticipate Turkish trade to contract due to COVID-19 as the pandemic affects trans-Atlantic exports to the US, as well as other countries where anti-dumping measures increase in response to local surpluses - most recently Georgia. However, this week's news indicates that Turkish cement exporters have found ways to boost their sales, at least to France.
The rise in cement exports from Turkey to France registered an 8.9 per cent increase to US$61.6m in the 1H20, according to the Turkish Ministry of Trade. This is perhaps surprising considering that France a cement consumption of around 19Mt and an installed capacity of 29.5Mt. French capacity is also increasing with new grinding plants such as Rhône Ciments' Portes-lés-Valance plant coming on-stream in May. However, like many countries, France has major infrastructure projects that it wants to get up and running again quickly to help its economy begin to recover. This could well be attracting demand for higher imports of cement and clinker.
Will Turkish cement exports continue to pick-up?
Total cement exports from Turkey in June reached US$343.1m, up 37.4 per cent on June 2019 – not restricted by COVID-19 as initially feared.
This is supported by data from the Turkish cement Manufacturers Association (TCMB) announced in June, which showed that cement and clinker exports from Turkey had surged by 37 per cent to 9.8Mt in the 5M20. Cement exports reached 4.8Mt and clinker exports 5Mt in 5M20.
Earlier in February 2020, Dr Tamer Saka, chairman of the TCMB, stated that "Our forecast is that the Turkish cement sector will grow approximately two per cent in domestic sales and 15 per cent in exports this year."
Strong export sales in May and June followed a robust start to 2020, compared to the 1H19. "While the total cement and clinker exports of the sector increased by 54 per cent in the first quarter of the year, export revenue increased by 37 per cent to US$276m. In the same period, cement exports increased by 57.1 per cent and reached 3.8Mt, while clinker exports increased by 51 per cent to 4.2Mt," added Dr Saka.
USA imports not contracting yet
Figures from the US Geological Survey (USGS) reported that imports of clinker and cement to the USA were up seven per cent to 1.4Mt in March 2020 and 3.5Mt for the 1Q20 period. Turkey was the largest source of imports, which amounted to 1Mt over the first quarter, ahead of Canada (0.8Mt) and Greece (0.5Mt).
Speaking during the recent Cemtech Live Webinar on Global Trade in May 2020, Ad Ligthart of Cement Distribution Consultants suggested cement trade from Turkey was likely to fall in the 2H20 as the impact of the pandemic was felt on demand. As a result, he argued, terminals in the USA could be mothballed along with coastal grinding plants.
COVID-19 is certainly at its most potent in Texas and Florida, both key destinations for Turkish exports, which will be hit if the state cannot contain the virus better than it has to date.
Outlook
It is a little early to make long-term assumptions on Turkish cement and clinker trade with the pandemic still raging in many parts of the world. However, as countries are looking to kickstart their economies, the construction sector is paramount in many governments' thinking, which will drive cement sales. There are opportunities to take up the slack in some markets and the ready availability of excess Turkish cement on Europe's borders is not being overlooked by some countries. The Turkish export scene may turn out to be more resilient than anticipated at the start of the year when the first reports of the spread of COVID-19 emerged.
