Foreign investors' interest in Turkey's chemical sector continues
KPMG Turkey released its 2019 Chemical Sector Overview report. From this report, it is possible to conclude that foreign investors' interest in the chemical sector continues.
The report also shows that the chemical sector closed 2018 in better condition than the general manufacturing industry. As of the end of 2018, out of Turkey's USD 29.7 billion in equity investments by foreign residents, USD 3.4 billion has been directed to the chemical sector.
Outlook positive
Ümit Bilirgen, Energy and Natural Resources Sector Leader at KPMG Turkey, emphasized that the Turkish chemical sector's long-term outlook is quite positive, and alongside a strong domestic market, he also highlighted the government's support in reducing external dependence and noted that this presents significant potential for the sector. Bilirgen stated, "However, the realization of this potential depends on how quickly the sector can reduce its dependence on technology and basic inputs from abroad."GLOBAL SITUATION
- In 2017, the chemical sector, which grew 4.6% compared to the previous year, reached global sales revenue of USD 3 trillion 475 billion.
- In recent years, as in many other sectors, production in the chemical sector has shifted to Asia. China alone accounted for 37.2% of sales. European manufacturers ranked second with a 15.6% share, while the United States ranked third with 13.4%.
- Medium-term momentum loss in the global economy is also evident in the world chemical sector, but moderate growth performance is expected.
Plastic demand
- Plastic demand has increased more than twofold globally since the 2000s. Despite environmental approaches, growth trends in this area are expected to continue rising. The International Energy Agency projects that plastic and other product consumption will feed global oil demand through 2050. Demand for petrochemicals will be particularly determined by China's and India's growth performance.
SITUATION IN TURKEY
- In 2018, Turkey's chemical product manufacturing sector displayed performance different from the general economy. Although slowdown became evident in the general economy from the second quarter onwards, production in the chemical sector maintained its strength until mid-third quarter. Although the chemical sector contracted somewhat in the final quarter, it showed better performance than the general manufacturing industry.
- General manufacturing industry grew an average 1.6% in 2018, while the chemical product manufacturing sector's rate was 5.9%. According to January 2019 data, while general manufacturing contracted 7.5% on an annual basis, the contraction in the chemical sector remained at 4.2% level.
- Capacity utilization rate, which followed a volatile course, remained in line with general manufacturing industry average in 2018. Sector capacity utilization rate was realized at 76.9% in 2018. This figure also rose to 76.2% level in the January-February 2019 period.
Employment increased
- Over the past 4 years, while the number of businesses in the sector increased, employment exceeded 80 thousand. According to SGK December 2018 data, 4,678 companies are engaged in the manufacturing of chemicals and chemical products. These establishments employ a total of 80,857 people.
Revenues rose
- Despite slowdown in economic activity in 2018, domestic revenue in the chemical industry recorded 34% annual increase. With the support of exchange rate increases, the increase in foreign revenue exceeded 50%.
- Although price increases have slowed recently, average domestic producer costs in the sector showed 34.6% annual increase. The increase in foreign producer price index was 36.1%.
- With the support of low TL levels, exports of chemical substances and products increased 7.4% compared to the same period in 2018. Imports, in the same period, showed 17.6% contraction.
Advertisement
Ad Space728 × 90
