2021-2022 Chemical Industry Assessment
2021-2022 Chemical Industry Assessment
Adil Pelister
Chairman of the Board at IKMIB
Our chemical sector, which plays a strategic role in the economy with its 16 sub-sectors and is among the 5 target sectors in the Export Master Plan, broke new records with USD 25.4 billion in exports in 2021, exceeding the pre-pandemic level. During this period, we achieved growth of 38.79 percent. We aim to reach USD 28 billion in exports this year.
Creating the second highest export volume in our country, our sector makes a significant contribution to our economy. While our chemical sector was the export leader in May and June during the year, we renewed our monthly record with USD 2.49 billion in exports in December. While our imports totaled USD 97.32 billion in 2021, our trade volume reached USD 122.7 billion.
Among the product groups in our sector, plastics and plastic products, which we exported the most in 2021, increased by 41.99 percent compared to the previous year and reached USD 8.99 billion. Ranking second, exports of mineral fuels, mineral oils and products increased by 78.97 percent to USD 5.58 billion. Our inorganic chemicals exports, which ranked third, increased by 30.47 percent to USD 2.07 billion. Our rubber and rubber goods exports, which ranked fourth, increased by 25.67 percent to USD 1.48 billion, while our pharmaceutical products exports, ranking fifth, increased by 19.41 percent to USD 1.42 billion.
Our industry exported to 229 countries and regions in 2021. Among the countries we export chemicals to the most, the Netherlands ranked first with USD 1.34 billion in exports, followed by Germany with USD 1.22 billion, Iraq with USD 1.179 billion and the USA with USD 1.141 billion. Our exports to the United States increased by 36.06 percent compared to the previous year. As one of the target sectors announced by our Ministry of Trade, the USA ranks first among the target markets prioritized by our chemical industry. The other countries in the top ten following the USA were Italy, Greece, Belgium, Spain, England and Lebanon.
In 2021, employment in our chemical industry increased by approximately 7 percent. The number of employed persons, which was 375,000 people in 2020, reached approximately 400,000 people in 2021. Our Association realized more than half of the exports of our chemical sector with more than 8,500 active members, and its share has been 58.75 percent of total chemical exports.
As the supply chain, which had been disrupted by the pandemic, was redefined, our Turkish products became more preferred in terms of both quality and price. Therefore, deferred demands were expected to be reflected in sales. On the other hand, increased production and sales at higher unit prices also played a role in boosting our exports. Our unit prices per kilogram increased from USD 0.75 in 2020 to USD 0.94 in 2021.
Since the beginning of this year, we have organized 3 national participation programs for the Arab Health, AEEDC and The Inspired Home exhibitions, and two exhibition visits—one domestic and one abroad—and the Export Stars Award Ceremony. In addition to the pharmaceutical and medical sectors, we organized 3 workshops on plastics recycling and the circular economy. In the coming period, we plan to organize 10 national participation programs, 5 exhibition stand participations, 4 fair visits, 3 sectoral trade delegations, 4 hosted buyer organizations and to hold our R&D Project Market.
On the other hand, we anticipate that the negative effects of logistical problems as well as increasing raw material supply and price issues will continue due to the Russia-Ukraine crisis. Russia and Ukraine are two important trading partners for us. We hope this crisis ends as soon as possible. As a result of the crisis, energy costs and commodity prices worldwide continue to rise. The support our government will provide to our exporters and the improvement of the economic environment are of major importance for investments to be made in our sector and ensuring the sustainability of our export growth.
Another issue that is important for our sector is the European Green Deal. We believe that relations with the European Union should be strengthened and improved. We are monitoring carefully the regulations planned to be implemented within the framework of the Deal and the changes being made in EU chemicals legislation.
The EU market, where we export the most, accounts for 40 percent of our total chemical exports. For this reason, the EU market is an important market for our sector. However, the United States, China, Russia, Mexico and India are among our priority target countries.
In the transition to a low-carbon, green economy, access to financing for our SMEs must be supported with green financing. It is of major importance for sustainable growth and competitiveness that our companies determine their green transformation needs as soon as possible and realize their transformation with government support in this area.
In line with our sustainability vision, we continue work on our Chemistry Technology Center project, which is important for the future of our chemical industry and will primarily serve the plastics, cosmetics, paints and coatings, and rubber sectors, and will be the first in Turkey. We continue our preparations to launch our Chemistry Technology Center, which will include a digital library, reference laboratories providing certification services with international accreditations, an R&D center and an entrepreneurship incubation center, in 2022.
When we look at developed countries, we see that their chemical sectors are also well-developed. In this respect, special emphasis should be placed on the chemical sector. In this regard, we believe that a Turkey Chemical Agency should be established in our country, and we believe it will advance the sector and thus advance other sectors and make a very important contribution to the country's development.
Onur Kipri General Manager at Akkim Kimya Last year was a successful one for Akkim Kimya, marked by strong growth and strategic investments. At the beginning of the year, we acquired USK Kimya, one of the largest carboxymethyl cellulose producers in Turkey and globally, with an investment of USD 63 million. In making this investment, we considered USK Kimya's high export capacity, know-how capabilities and dominant position in the domestic market. With USK joining Akkim, our exports' share of total turnover approached 40 percent. By year-end, we increased our strategic contribution to the Turkish economy by exporting more than USD 100 million in total. We have made significant progress under the motto "Sustainability is Our Chemistry," which is core to Akkim. In the sustainability assessment conducted by EcoVadis, we maintained our ranking in the top 3 percent globally across all categories in both 2020 and 2021. We have completed the third stage audit of the "Zero Discharge of Hazardous Chemicals (ZDHC)" program, which evaluates the sustainability of textile chemicals, achieving the highest score in Turkey. We hold Global Organic Textile Standard (GOTS) certification and are among the "Bluesign®" system partners, one of the standards that helps the textile industry move toward sustainable targets. Additionally, last year, we received a Zero Waste Certificate as recognition of the value we created in the circular economy. Beginning in 2022, when we celebrate our 45th anniversary, we aim to increase our annual turnover to USD 600 million over the next five years, together with our subsidiaries. It is also among our goals to double our annual exports. This year, new investment plans will be on our agenda in line with our organic and inorganic growth strategy. Through our investments, we will strengthen our contribution to our country in areas such as exports, employment, production and innovation. On the path toward our goals, the understanding of sustainable development will always be important. We will continue to create value for our stakeholders within the framework of the shared goal of a more livable world. We recently signed the "United Nations Women's Empowerment Principles (WEPs)" and will implement practices based on a gender equality commitment that we will carry out under the Akkimce brand through 2025. We view areas such as the European Green Deal climate action plan, risk management processes and employee volunteering as important components of our strategy and embrace them as management.
Haluk Erceber TCMA Chairman of the Board In 2021, the Turkish chemical industry achieved its highest production, export and import volumes and thus historic success since 1960. The chemical industry, which comprises sub-sectors with NACE codes 20-21-22, reached a total trade volume of USD 67 billion in 2021. Chemical industry exports increased by 32 percent compared to the previous year and reached USD 24 billion. Similarly, our imports increased by 42 percent compared to 2020 and reached USD 49 billion. Our sector, which comprises more than 20,000 companies and 370,000 employees, has maintained its second-place position in Turkey's export rankings for years. However, a concern is that the sector ranks first in import levels and accounts for approximately 54 percent of Turkey's total foreign trade deficit. The major problem is the sector's inability to scale up and the lack of new high-tech investments despite all the efforts of industry organizations. The most important need and target for the sector's development and attracting new investments is to increase scale by establishing an industrial cluster with ready infrastructure and port access, which enables increased profitability through shipping savings, co-location of customers and manufacturers in the same area, and production without infrastructure operation problems. Export products from our chemical sector companies are generally 60-70 percent medium-technology and 30 percent high-technology products. Although the unit sales price of export products is around USD 1.2, the unit price for imports is close to USD 2. Our sector companies, which successfully managed the 2020-21 pandemic period in a sound operational environment, realized 44 percent of total exports to EU countries during this period. The most exported-to countries are Germany, Italy, United Kingdom, Spain, Netherlands, Belgium, Iraq, USA and Egypt. As of the end of 2020, the breakdown of the supply chain and the need for high freight payments reduced the profitability of the chemical industry, which depends on imported raw materials, by 70-75 percent and increased Turkey's imports. Our industry, which operated at an average capacity utilization rate of 80 percent throughout the year, successfully leveraged its proximity to the EU and has consistently demonstrated that it is an important supplier among EU chemical industrialists and gained recognition. As TCMA, we are pleased that the European Chemical Industry Council (Cefic), of which we are a member, has demonstrated closeness to and increased confidence in Turkish chemical industrialists during this difficult period. We expect the launch of strategic partnership initiatives for the EU's most reliable supporters and investment collaborations within the scope of the Carbon Border Adjustment Mechanism (CBAM), the EU's Chemicals Strategy for Sustainability (Essential Uses Concept-REACH 2.0), Sustainability and Green Twin Transformation, which will be renewed in 2022. For these investments, the presence of a chemical cluster with port access and support from strong government incentives are essential. However, in the current situation, in order to increase exports and reduce such high imports, new investments in accordance with the European Green Deal, which employs many large-scale and high-tech technologies, should be launched. When incentive application data for 2021 (excluding December) are analyzed, it is seen that 10,622 incentive applications were made across all sectors with a total investment amount of TRY 216.2 billion. When 2021 incentive application data for the chemical manufacturing sub-sector are examined, it is seen that there were 159 incentive applications with a total investment amount of TRY 8.3 billion. The share of the chemical sub-sector within all sectors in terms of investment amount is 4 percent, and the share of the chemical sector by number of applications is 1 percent among all sectors. It was also observed that there were no investment incentives in the "large-scale" support class in 2021, both across all sectors and in the chemical sub-sector. In 2021, 14 incentive applications were made across all sectors within the strategic investments support class with an investment amount of TRY 1.97 billion. When we examine the chemical sub-sector for 2021, it is seen that 1 incentive application was made with an investment amount of TRY 290 million. The share of the chemistry sub-sector within the strategic investments support class across all sectors is 15 percent in terms of investment amount and 7 percent in terms of number of applications. Unfortunately, there are no large-scale incentive applications for climate change and energy transformation in the chemical sector within the scope of the EU's European Green Deal. The envisaged support mechanisms are mostly insurance premiums, tax deductions and similar measures. As TCMA, our most significant goal for the chemical industry in 2022 will be to ensure the realization of new production facility projects using high technology in compliance with new EU legislation. Only in this way can we reduce our foreign trade deficit and contribute more to our economy and employment.
Onur Kipri General Manager at Akkim Kimya Last year was a successful one for Akkim Kimya, marked by strong growth and strategic investments. At the beginning of the year, we acquired USK Kimya, one of the largest carboxymethyl cellulose producers in Turkey and globally, with an investment of USD 63 million. In making this investment, we considered USK Kimya's high export capacity, know-how capabilities and dominant position in the domestic market. With USK joining Akkim, our exports' share of total turnover approached 40 percent. By year-end, we increased our strategic contribution to the Turkish economy by exporting more than USD 100 million in total. We have made significant progress under the motto "Sustainability is Our Chemistry," which is core to Akkim. In the sustainability assessment conducted by EcoVadis, we maintained our ranking in the top 3 percent globally across all categories in both 2020 and 2021. We have completed the third stage audit of the "Zero Discharge of Hazardous Chemicals (ZDHC)" program, which evaluates the sustainability of textile chemicals, achieving the highest score in Turkey. We hold Global Organic Textile Standard (GOTS) certification and are among the "Bluesign®" system partners, one of the standards that helps the textile industry move toward sustainable targets. Additionally, last year, we received a Zero Waste Certificate as recognition of the value we created in the circular economy. Beginning in 2022, when we celebrate our 45th anniversary, we aim to increase our annual turnover to USD 600 million over the next five years, together with our subsidiaries. It is also among our goals to double our annual exports. This year, new investment plans will be on our agenda in line with our organic and inorganic growth strategy. Through our investments, we will strengthen our contribution to our country in areas such as exports, employment, production and innovation. On the path toward our goals, the understanding of sustainable development will always be important. We will continue to create value for our stakeholders within the framework of the shared goal of a more livable world. We recently signed the "United Nations Women's Empowerment Principles (WEPs)" and will implement practices based on a gender equality commitment that we will carry out under the Akkimce brand through 2025. We view areas such as the European Green Deal climate action plan, risk management processes and employee volunteering as important components of our strategy and embrace them as management.
Haluk Erceber TCMA Chairman of the Board In 2021, the Turkish chemical industry achieved its highest production, export and import volumes and thus historic success since 1960. The chemical industry, which comprises sub-sectors with NACE codes 20-21-22, reached a total trade volume of USD 67 billion in 2021. Chemical industry exports increased by 32 percent compared to the previous year and reached USD 24 billion. Similarly, our imports increased by 42 percent compared to 2020 and reached USD 49 billion. Our sector, which comprises more than 20,000 companies and 370,000 employees, has maintained its second-place position in Turkey's export rankings for years. However, a concern is that the sector ranks first in import levels and accounts for approximately 54 percent of Turkey's total foreign trade deficit. The major problem is the sector's inability to scale up and the lack of new high-tech investments despite all the efforts of industry organizations. The most important need and target for the sector's development and attracting new investments is to increase scale by establishing an industrial cluster with ready infrastructure and port access, which enables increased profitability through shipping savings, co-location of customers and manufacturers in the same area, and production without infrastructure operation problems. Export products from our chemical sector companies are generally 60-70 percent medium-technology and 30 percent high-technology products. Although the unit sales price of export products is around USD 1.2, the unit price for imports is close to USD 2. Our sector companies, which successfully managed the 2020-21 pandemic period in a sound operational environment, realized 44 percent of total exports to EU countries during this period. The most exported-to countries are Germany, Italy, United Kingdom, Spain, Netherlands, Belgium, Iraq, USA and Egypt. As of the end of 2020, the breakdown of the supply chain and the need for high freight payments reduced the profitability of the chemical industry, which depends on imported raw materials, by 70-75 percent and increased Turkey's imports. Our industry, which operated at an average capacity utilization rate of 80 percent throughout the year, successfully leveraged its proximity to the EU and has consistently demonstrated that it is an important supplier among EU chemical industrialists and gained recognition. As TCMA, we are pleased that the European Chemical Industry Council (Cefic), of which we are a member, has demonstrated closeness to and increased confidence in Turkish chemical industrialists during this difficult period. We expect the launch of strategic partnership initiatives for the EU's most reliable supporters and investment collaborations within the scope of the Carbon Border Adjustment Mechanism (CBAM), the EU's Chemicals Strategy for Sustainability (Essential Uses Concept-REACH 2.0), Sustainability and Green Twin Transformation, which will be renewed in 2022. For these investments, the presence of a chemical cluster with port access and support from strong government incentives are essential. However, in the current situation, in order to increase exports and reduce such high imports, new investments in accordance with the European Green Deal, which employs many large-scale and high-tech technologies, should be launched. When incentive application data for 2021 (excluding December) are analyzed, it is seen that 10,622 incentive applications were made across all sectors with a total investment amount of TRY 216.2 billion. When 2021 incentive application data for the chemical manufacturing sub-sector are examined, it is seen that there were 159 incentive applications with a total investment amount of TRY 8.3 billion. The share of the chemical sub-sector within all sectors in terms of investment amount is 4 percent, and the share of the chemical sector by number of applications is 1 percent among all sectors. It was also observed that there were no investment incentives in the "large-scale" support class in 2021, both across all sectors and in the chemical sub-sector. In 2021, 14 incentive applications were made across all sectors within the strategic investments support class with an investment amount of TRY 1.97 billion. When we examine the chemical sub-sector for 2021, it is seen that 1 incentive application was made with an investment amount of TRY 290 million. The share of the chemistry sub-sector within the strategic investments support class across all sectors is 15 percent in terms of investment amount and 7 percent in terms of number of applications. Unfortunately, there are no large-scale incentive applications for climate change and energy transformation in the chemical sector within the scope of the EU's European Green Deal. The envisaged support mechanisms are mostly insurance premiums, tax deductions and similar measures. As TCMA, our most significant goal for the chemical industry in 2022 will be to ensure the realization of new production facility projects using high technology in compliance with new EU legislation. Only in this way can we reduce our foreign trade deficit and contribute more to our economy and employment.
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