Our Construction Materials Export Markets and Developments in 2014

Turkey's construction materials sector continues to be the country's highest exporting sector, with exports exceeding USD 22 billion. Construction materials industry exports comprise numerous subsectors and diverse products. Consequently, export markets also show considerable variety.

Developments in construction markets naturally prove decisive in construction materials exports. Throughout 2014, several important export markets are experiencing significant developments, and these developments are affecting our exports either positively or negatively. Iraq alone constitutes the largest market with a 15% share. Developments in Iraq are resulting in losses in construction work and exports. Exports fell 16.0% during the January-July period. Deterioration in political relations with Libya and Algeria is also negatively affecting exports. Russian-Ukrainian tensions are limiting exports to an already weakening Russian market. Exports to Russia declined 11.1%. France, Azerbaijan and Saudi Arabia, each located in different geographies, are the three other markets where our exports have contracted. The European Union is one of the most important markets for Turkey's construction materials industry. The United Kingdom and Germany are major markets. Accelerating economic growth in both countries and renewed expansion in their construction sectors are significantly increasing our exports to these two nations. Our exports to the distant market of the United States are also rising. Recovery in the U.S. construction and residential sectors is supporting our exports. Romania, Bulgaria and Georgia are neighboring countries where we have increased our exports. Our exports are also growing to Iran, Israel and Egypt, three countries where our political relations have experienced fluctuations.

Construction Materials Industry Production Experienced Significant Declines in July

During the first three months of 2014, construction materials production performed well above the previous year's levels. In contrast, during April and May, production in several major subsectors fell below the same months of the previous year, while in June, production in several major construction materials subsectors also declined compared to the same month of the previous year. In July, industrial production contracted across nearly all sectors, with many sectors experiencing double-digit percentage declines. Of the 26 monitored subsectors in July, production declined year-over-year in 22 of them. In July compared to the same month of the previous year, cement production, which holds a significant share within construction materials, declined 16.9%, ready-mix concrete production fell 20.8%, stone and marble production fell 22.4%, and plastic construction materials production declined 10.4%. One reason for these production declines in July is the reduction in working days due to the holiday. However, alongside these declines experienced over the past four months including July, the overall performance of construction materials industry production is also deteriorating. Following relatively weak growth in construction materials industry production during the second quarter of the year, the third quarter has begun with weak performance. During the January-July period, average construction materials industry growth, together with the weakness over the past four months, has declined to 5.0% levels compared to the same period of the previous year. In five subsectors, production growth exceeds 10%. In six subsectors, production has fallen behind the previous year's levels. During the January-July period, the highest production growth of 23.4% was in wallpaper. This is followed by metal doors and windows sector with 21.4% growth, parquet and floor coverings sector with 20.1% growth, and paints and varnish sector with 16.0% growth. İKMİB Istanbul Exporting Association for Chemicals and Chemical Products