Chemical Industry Review 2021-2022
Turkchem Dergisi'nde Sector Professionals Assessed the Chemical Industry
With 16 sub-sectors, the chemical sector fulfils a strategic role in the economy and is among the 5 target sectors in the Export Master Plan. In 2021, the sector surpassed pre-pandemic levels with exports of USD 25.4 billion, setting a new record. Growth in this period reached 38.79%. This year we are targeting exports of USD 28 billion.
As the country's second-largest exporting sector, we contribute significantly to the economy. During the year, the chemical sector led exports in May and June, and we renewed our monthly record with USD 2.49 billion in exports in December. Imports in 2021 totalled USD 97.32 billion, and trade volume reached USD 122.7 billion.
In 2021, plastics and plastic products, the most exported product groups in our sector, increased 41.99% compared to the previous year and reached USD 8.99 billion. Mineral fuels, mineral oils and products in second place grew 78.97% to reach USD 5.58 billion. Inorganic chemicals in third place increased 30.47% to reach USD 2.07 billion. Rubber and rubber goods in fourth place rose 25.67% to USD 1.48 billion, while pharmaceutical products in fifth place increased 19.41% to USD 1.42 billion.
In 2021, our sector exported to 229 countries and regions. The Netherlands ranked first among our top chemical export destinations with USD 1.34 billion, followed by Germany with USD 1.22 billion, Iraq with USD 1.179 billion, and the USA with USD 1.141 billion. Exports to the USA increased 36.06% compared to the previous year. The USA, listed among target sectors by our Ministry of Commerce, is a priority destination market for our chemical sector. Other countries in the top ten alongside the USA include Italy, Greece, Belgium, Spain, the United Kingdom, and Lebanon.
Employment in the chemical sector in 2021 increased approximately 7%. Employment numbers, which stood at 375,000 in 2020, reached approximately 400,000 in 2021. Our Association, with over 8,500 active members, accomplished more than half of chemical sector exports and captured 58.75% of total chemical exports.
With the reconfiguration of supply chains disrupted by the pandemic, Turkish products became more preferred in both quality and price. Consequently, pent-up demand was expected to translate into sales. Additionally, increased production and higher unit prices also contributed to export growth. Our unit prices per kilogram rose from USD 0.75 in 2020 to USD 0.94 in 2021.
Since the beginning of this year, we have conducted 3 national pavilion organizations at Arab Health, AEEDC, and The Inspired Home trade fairs, visited 2 fairs (one abroad and one domestic), and held our Exports Stars Awards Ceremony. We organized a total of 3 workshops on pharmaceutical and medical sectors as well as plastic recycling and circular economy. In the coming period, we plan to organize 10 national pavilion exhibitions, 5 info stand participations, 4 trade fair visits, 3 sectoral trade missions, and 4 buying missions along with an R&D Project Bazaar.
On the other hand, we anticipate that the adverse effects of rising raw material supply and price issues along with logistics challenges will continue due to the Russia-Ukraine crisis. Russia and Ukraine are two important trading partners. We hope this crisis ends as soon as possible. The crisis is driving global energy costs and commodity prices higher. In response, government support for our exporters and improved economic conditions, coupled with sector investments and sustained export growth, are of utmost importance.
Another important issue for our sector is the European Green Deal. We believe relations with the European Union must be strengthened and developed. We are carefully monitoring regulations planned for implementation under the Deal and changes being made to EU Chemical Legislation.
The EU market, where we achieve the most exports, comprises 40% of our total chemical exports. Therefore, the EU market is an important market for our sector. However, the USA, China, Russia, Mexico, and India are among our priority target countries.
During the transition to a low-carbon, green economy, particularly small and medium-sized enterprises must receive green financing support to access finance. It is crucial that our companies determine their green transformation needs as soon as possible and implement their transformation with government support for sustainable growth and competitiveness.
In line with our sustainability vision, we continue working on our Chemical Technology Centre project, which will serve our plastic, cosmetics, paints and coatings, and rubber sectors and will be a first for Turkey, given its importance for the future of our chemical sector. We are continuing preparations at full speed to bring our Chemical Technology Centre online in 2022, which will house a digital library, reference laboratories providing certification services with international accreditations, an R&D centre, and an entrepreneurship incubation centre.
Looking at developed countries, we see that the chemical sector is also developed. From this perspective, special importance must be given to the chemical sector. In this respect, we believe a Turkish Chemical Agency must be established in our country, and we think it will advance the sector, thereby advance other sectors, and make a very important contribution to the country's development.
Adil Pelister
İKMİB Board of Directors Chairman
Last year was a successful year full of strong growth and investment steps for Akkim Kimya. At the beginning of the year, we incorporated USK Kimya, one of Turkey's and the world's largest carboxymethyl cellulose producers, into our company with a USD 63 million investment. When making this investment, we considered USK Kimya's strong export power, know-how capability, and clear market dominance domestically. With USK joining Akkim, our export share in total turnover approached 40%. By year-end, we exceeded USD 100 million in total exports, increasing our strategic support to Turkey's economy. We made important progress with the motto "Sustainability is in Our Chemistry" which is valuable to Akkim. In the sustainability assessment conducted by EcoVadis, we maintained our top 3% global ranking in all categories in 2021 as we had in 2020. We completed the third-level audit of the "Zero Discharge of Hazardous Chemicals (ZDHC)" program, which evaluates the sustainability of textile chemicals, achieving Turkey's highest score. While holding Global Organic Textile Standard (GOTS) certification, we are among the "Bluesign®" system partners, one of the standards helping the textile industry move toward sustainable goals. Additionally, last year we earned the Zero Waste Certificate as a measure of the value we created in the circular economy. Starting from 2022, as we celebrate our 45th anniversary, we aim to grow our turnover to USD 600 million annually within the next 5 years together with our associates. Among our targets is doubling our annual exports. This year will also see new investment plans on our table in line with our organic and inorganic growth strategy. Through our investments, we will strengthen the contributions we provide to our country in areas such as exports, employment, production, and innovation. Sustainable development understanding will always be important on the path to our goals. We will continue creating value for our stakeholders within the common objective of a more liveable world. We will soon sign the "United Nations Women's Empowerment Principles (WEPs)" and have identified our implementations with gender equality understanding, which we will implement under the Akkimce brand by 2025. We view the European Green Deal climate action plan, risk management processes, and employee engagement as important parts of our strategy and own them as management. Onur Kipri Akkim Kimya General Manager
The Turkish Chemical Sector achieved the highest production, export, and import volumes and historic success in 2021 since 1960. The Chemical sector, composed of sub-sectors with NACE codes 20-21-22, reached a total trade volume of USD 67 billion in 2021. Chemical sector exports in 2021 increased 32% compared to the previous year, rising to USD 24 billion. Similarly, our imports increased 42% compared to 2020, rising to USD 49 billion. Our sector, with over 20,000 companies and 370,000 employees, has maintained Turkey's export second position for years. However, the unfortunate high import amount and the approximately 54% share our country takes from Turkey's total foreign trade deficit ranks first. The sector's failure to achieve scale despite all industrial efforts and lack of new high-technology investments stand out as the biggest problem. Grouping within industrial clusters with ports and ready infrastructure enabling scale growth through reduced transportation costs, co-location of customers and manufacturers, and focusing on production without infrastructure operational issues—is the most important need and target for sector development and new investments. Export products of our chemical sector companies generally consist of 60-70% medium technology and about 30% high technology products. While the unit sales price of exported products is around USD 1.2, this unit price in imports approaches USD 2. Our sector companies, which successfully managed the 2020-2021 pandemic period in excellent and healthy working conditions, accomplished 44% of total exports to EU countries during this period. Germany, Italy, the United Kingdom, Spain, the Netherlands, Belgium, Iraq, the USA, and Egypt are among the top export destinations. Since the end of 2020, supply chain disruptions and mandatory high freight payments reduced profitability for the chemical sector, which depends 70-75% on imported raw materials, and increased Turkey's imports. Our sector, which completed the entire year operating at 80% average capacity utilization, successfully leveraged its proximity to the EU and demonstrated that it has always been an important supplier within EU chemical industry, earning recognition. As TKSD, we are pleased by the proximity shown to us by the management of the European Chemical Industry Council Cefic, of which we are members, and by seeing increased confidence in Turkish Chemical Manufacturers during this challenging period. During 2022, we expect the renewal of the Carbon Border Adjustment Mechanism (CBAM), EU Chemicals Strategy for Sustainability (Essential Uses Concept, REACH 2.0), and the beginning of strategic partnership work for the most reliable supporter and investment cooperation for the EU within the scope of Sustainability and Green Twin Transformation. For these investments, the presence of a chemical cluster with a port and strong government incentives are essential. However, in the current situation, many large-scale and high-technology new investments compliant with the European Green Deal must be launched to increase exports and reduce these high imports. When examining 2021 incentive certificate data (excluding December), it is seen that a total investment amount of TRY 216.2 billion for all sectors, with 10,622 incentive certificate applications made. When examining 2021 incentive application data for the manufacturing sub-sector for chemistry, 159 incentive certificate applications were made with a total investment amount of TRY 8.3 billion. The chemical sub-sector's investment amount share within all sectors is 4%, and the chemical sector's share on a document basis within all sectors is 1%. In 2021, neither for all sectors nor for the chemical sub-sector was there investment incentive falling in the support class "large-scale" group. In 2021, across all sectors in the support class; 14 incentive applications were made within strategic investments with an investment amount of TRY 1.97 billion. When examining the chemical sub-sector for 2021, 1 incentive application was made with an investment amount of TRY 290 million. The chemical sub-sector's share within all sectors in the support class; within strategic investments; is 15% in TRY and 7% in document count. Unfortunately, there are no large-scale incentive applications in the chemical sector from the EU regarding climate change and energy transition within the scope of the European Green Deal. The envisioned support elements have been more in the scope of insurance premiums, tax reductions, etc. As TKSD, in 2022 our most important goal for the Chemical Sector will be to ensure the realization of new production facility projects utilizing high technology in compliance with new EU regulations. Only this way can we reduce our foreign trade deficit, contribute more to our economy and employment. Haluk Erceber TKSD Board of Directors Chairman
Last year was a successful year full of strong growth and investment steps for Akkim Kimya. At the beginning of the year, we incorporated USK Kimya, one of Turkey's and the world's largest carboxymethyl cellulose producers, into our company with a USD 63 million investment. When making this investment, we considered USK Kimya's strong export power, know-how capability, and clear market dominance domestically. With USK joining Akkim, our export share in total turnover approached 40%. By year-end, we exceeded USD 100 million in total exports, increasing our strategic support to Turkey's economy. We made important progress with the motto "Sustainability is in Our Chemistry" which is valuable to Akkim. In the sustainability assessment conducted by EcoVadis, we maintained our top 3% global ranking in all categories in 2021 as we had in 2020. We completed the third-level audit of the "Zero Discharge of Hazardous Chemicals (ZDHC)" program, which evaluates the sustainability of textile chemicals, achieving Turkey's highest score. While holding Global Organic Textile Standard (GOTS) certification, we are among the "Bluesign®" system partners, one of the standards helping the textile industry move toward sustainable goals. Additionally, last year we earned the Zero Waste Certificate as a measure of the value we created in the circular economy. Starting from 2022, as we celebrate our 45th anniversary, we aim to grow our turnover to USD 600 million annually within the next 5 years together with our associates. Among our targets is doubling our annual exports. This year will also see new investment plans on our table in line with our organic and inorganic growth strategy. Through our investments, we will strengthen the contributions we provide to our country in areas such as exports, employment, production, and innovation. Sustainable development understanding will always be important on the path to our goals. We will continue creating value for our stakeholders within the common objective of a more liveable world. We will soon sign the "United Nations Women's Empowerment Principles (WEPs)" and have identified our implementations with gender equality understanding, which we will implement under the Akkimce brand by 2025. We view the European Green Deal climate action plan, risk management processes, and employee engagement as important parts of our strategy and own them as management. Onur Kipri Akkim Kimya General Manager
The Turkish Chemical Sector achieved the highest production, export, and import volumes and historic success in 2021 since 1960. The Chemical sector, composed of sub-sectors with NACE codes 20-21-22, reached a total trade volume of USD 67 billion in 2021. Chemical sector exports in 2021 increased 32% compared to the previous year, rising to USD 24 billion. Similarly, our imports increased 42% compared to 2020, rising to USD 49 billion. Our sector, with over 20,000 companies and 370,000 employees, has maintained Turkey's export second position for years. However, the unfortunate high import amount and the approximately 54% share our country takes from Turkey's total foreign trade deficit ranks first. The sector's failure to achieve scale despite all industrial efforts and lack of new high-technology investments stand out as the biggest problem. Grouping within industrial clusters with ports and ready infrastructure enabling scale growth through reduced transportation costs, co-location of customers and manufacturers, and focusing on production without infrastructure operational issues—is the most important need and target for sector development and new investments. Export products of our chemical sector companies generally consist of 60-70% medium technology and about 30% high technology products. While the unit sales price of exported products is around USD 1.2, this unit price in imports approaches USD 2. Our sector companies, which successfully managed the 2020-2021 pandemic period in excellent and healthy working conditions, accomplished 44% of total exports to EU countries during this period. Germany, Italy, the United Kingdom, Spain, the Netherlands, Belgium, Iraq, the USA, and Egypt are among the top export destinations. Since the end of 2020, supply chain disruptions and mandatory high freight payments reduced profitability for the chemical sector, which depends 70-75% on imported raw materials, and increased Turkey's imports. Our sector, which completed the entire year operating at 80% average capacity utilization, successfully leveraged its proximity to the EU and demonstrated that it has always been an important supplier within EU chemical industry, earning recognition. As TKSD, we are pleased by the proximity shown to us by the management of the European Chemical Industry Council Cefic, of which we are members, and by seeing increased confidence in Turkish Chemical Manufacturers during this challenging period. During 2022, we expect the renewal of the Carbon Border Adjustment Mechanism (CBAM), EU Chemicals Strategy for Sustainability (Essential Uses Concept, REACH 2.0), and the beginning of strategic partnership work for the most reliable supporter and investment cooperation for the EU within the scope of Sustainability and Green Twin Transformation. For these investments, the presence of a chemical cluster with a port and strong government incentives are essential. However, in the current situation, many large-scale and high-technology new investments compliant with the European Green Deal must be launched to increase exports and reduce these high imports. When examining 2021 incentive certificate data (excluding December), it is seen that a total investment amount of TRY 216.2 billion for all sectors, with 10,622 incentive certificate applications made. When examining 2021 incentive application data for the manufacturing sub-sector for chemistry, 159 incentive certificate applications were made with a total investment amount of TRY 8.3 billion. The chemical sub-sector's investment amount share within all sectors is 4%, and the chemical sector's share on a document basis within all sectors is 1%. In 2021, neither for all sectors nor for the chemical sub-sector was there investment incentive falling in the support class "large-scale" group. In 2021, across all sectors in the support class; 14 incentive applications were made within strategic investments with an investment amount of TRY 1.97 billion. When examining the chemical sub-sector for 2021, 1 incentive application was made with an investment amount of TRY 290 million. The chemical sub-sector's share within all sectors in the support class; within strategic investments; is 15% in TRY and 7% in document count. Unfortunately, there are no large-scale incentive applications in the chemical sector from the EU regarding climate change and energy transition within the scope of the European Green Deal. The envisioned support elements have been more in the scope of insurance premiums, tax reductions, etc. As TKSD, in 2022 our most important goal for the Chemical Sector will be to ensure the realization of new production facility projects utilizing high technology in compliance with new EU regulations. Only this way can we reduce our foreign trade deficit, contribute more to our economy and employment. Haluk Erceber TKSD Board of Directors Chairman
Advertisement
Ad Space728 × 90
