Turkish Chemical Industry

The Turkish chemical industry comprises facilities where various chemical raw materials and consumer products are produced, primarily petrochemicals, soap, detergents, fertilizers, pharmaceuticals, paints and coatings, synthetic fibers, and soda. In the sector, companies with different scales and capital sources operate. While a significant portion of these companies consists of small and medium-sized enterprises, large-scale firms and multinational corporations are also present. The chemical sector meets a significant portion of the raw materials it uses for production through imports. Approximately 70% of the raw materials used are imported, while 30% is met by domestic production. The chemical industry, with a capacity utilization rate of 75.3%, is a capital and technology-intensive sector. Its share in manufacturing employment has averaged 8% over the past five years, and its share in total value added created in manufacturing stands at 13.77%. [the_ad id="105219"] The chemical industry, from a logistics perspective, is predominantly located in the coastal regions of the country. Most chemical companies producing oil and oil products, detergents, soap, pharmaceutical chemicals, and paints are concentrated in Istanbul, Kocaeli and Sakarya, the three major industrial cities in the Marmara Region, and in Izmir in the Aegean Region, while most fertilizer and oil product companies are clustered in the Mediterranean Region. Additionally, important production centers for key raw materials such as soda and bichromate are located in the Mediterranean region. The chemical industry, one of Turkey's locomotive sectors, as an industrial branch that supplies intermediate goods and raw materials to many sectors, provides considerable benefit to the national economy both in production and in foreign trade. The chemical sector, which accounts for 10% of total country exports and provides employment to approximately 300,000 people, is among the sectors that will contribute most to Turkey's achievement of its goals.

Chemical Sector Exports Continue to Grow

As İKMİB, we continue our intensive efforts to strengthen the position of the chemical sector, which carries Turkey's exports, in foreign markets and increase its exports. From plastics to cosmetics, from pharmaceuticals to paints, through the organizations we arrange and promotional efforts we conduct in virtually every country in the world across all subsectors of the chemical industry, we serve Turkey and the Turkish Chemical Sector with all our capacity. The chemical industry, which ranks third among Turkey's most exporting sectors, has continued to increase the rise it achieved in exports since the beginning of the year. Chemical sector exports reached USD 16.115 billion in 2017. Compared to 2016, sector exports showed a 15.2% increase in value terms. In the future projection of chemical sector exports, utilizing Turkey's position on an energy corridor, the target is to transition to a high value-added production structure and reduce intermediate input imports, thereby increasing the export-to-import coverage ratio to 70% by 2023. Our sector, which exports with a wide distribution from Europe to Africa, South America and the Far East, is increasing its competitiveness day by day. European Union countries hold an important position in chemical industry exports.

We realize approximately 36% of our total chemical sector exports to the European Union, which is the country group from which we export the most.

The European Union is followed by Near and Middle Eastern Asian countries in second place with a 23% share, other European countries in third place with a 12% share, North African countries in fourth place with an 8% share, and other Asian countries in fifth place with an 8% share. From this perspective, we can say that chemical sector exports are distributed in a balanced manner in terms of market diversification across different continents. We are also working to increase our chemical sector exports to North America, one of the world's largest markets. We support our exporters through Turkish Trade Centers, international trade fairs and trade delegation organizations for this market. When we examine the distribution of Chemicals and Chemical Products sector exports by country, we see that the United Arab Emirates ranks first with USD 920 million in exports, Germany in second place with USD 874 million in exports, and Iraq in third place with USD 841 million in exports. Iraq is followed by exports to the United States, Egypt, Italy, Iran, Spain, United Kingdom and Greece. Within total Chemicals and Chemical Products exports, the plastics and plastic products group ranks first with a 9.7% increase and USD 5.3 billion in exports. It holds a 33% share in total sector exports. This product group is followed in second place by the mineral fuels product group with a 31.8% increase, USD 3.5 billion in exports and a 22% share, and in third place by the inorganic chemicals product group with a 22.2% increase, USD 1.3 billion in value and an 8% share. Other most-exported product groups are rubber and rubber products, pharmaceutical products, soap and washing preparations, and essential oils and cosmetics product groups, respectively.

Export Growth Will Continue in 2018

The Turkish economy recorded growth exceeding expectations in 2017. I expect the factors supporting growth in 2017 to continue their effect in 2018. Growth in the global economy and particularly improvement in the economic performance of European Union countries will have positive effects on the chemical sector. Developments in neighboring countries such as Iran, Iraq and Syria need to be closely monitored for their impacts on our sector and thus our exports. In the current environment where volatility runs high and geopolitical and political risks affect countries' economic policies, increasing market diversification in exports and emphasizing production policies that create value added are important for the sector's competitiveness. Global chemical sector trade volume stands at approximately USD 4 trillion. The countries with the largest shares in chemical sector trade are the U.S., Germany, China, Saudi Arabia, Belgium, Russia and the Netherlands. Considering the potential Turkey possesses, we can see that it could significantly increase its share within the global chemical industry. I foresee that the increase in both the chemical sector and our total country exports will continue in 2018. As is known, many international organizations have significantly increased their growth rate forecasts for our country in the coming period. Our exports, which provide significant contribution to our country's growth, will again be the driving force in this increase. If the current export growth rate continues, chemical sector exports could reach USD 18 billion in 2018. Murat Akyüz / Chairman of the Board of Directors of İKMİB - Istanbul Chemicals and Chemical Products Exporters Association (İKMİB) Turkey's Chemical Sector Exports Growing