Taken in its broadest sense to include sub-sectors such as petrochemicals, fertilisers, soaps and detergents, pharmaceuticals, paints and colouring agents, as well as raw chemical production, Turkey’s chemical business ranks second among domestic export industries, after automotives. Indeed, the sector has been steadily climbing its way to a higher position, recently overtaking textile and steel exports.
Now, the chemical industry faces the challenges of continuing to expand and of meeting its 2023 targets, during a period of stagnation in its traditional market – Europe. One response has been for industry to test new horizons, with the chemical industry one of the main players in the current national drive to offer African countries a bigger slice of the trade pie. At the same time, the industry is also sustained by large imports of intermediate chemicals, producing a trade deficit in the sector. Producing more of these vital ingredients at home is thus a current major goal.
Facts & Figures
According to data from the official Turkish statistics department, TurkStat, in out of an exports total of $152.54bn in 2012, chemicals and related products accounted for $8.92bn, which was up from $8.05bn in 2011. The largest sub-sector, plastics in non-primary forms, accounted for $2.4bn of this in 2012, which was up from $2.14bn in 2011.
Other major component sub-sectors that should be added to the chemicals and chemical products sector total include essential oils, resinoids, perfume, toiletries and polishing materials, which accounted for $1.45bn in exports in 2012 – up from $1.3bn in 2011 – and inorganic chemicals, which accounted for $1.27bn, up from $1.22bn the year before.
The industry as a whole includes products that occur in a variety of manufacturing activities other than these, with a better idea of the size of the sector provided by the fact that in 2011, according to the Chemical Industry Sector Assembly of Turkey, (CISAT), 13,118 firms were registered this business, 95% of them small and medium sized enterprises that employed 765,000 people. Production capacity was around 180m metric tonnes (MT) per year, with the sector responsible for 6% of the country’s GDP.
Meanwhile, the sector is also a major player in terms of imports. In 2012, the total import bill was $236.54bn for the country, with chemicals and related products taking up $29.68bn of this, down from $31.19bn in 2011. The largest sub-sectors were plastics in primary forms, at $9.93bn, roughly unchanged from 2011, organic chemicals, at $4.9bn, down from $5.28bn in 2011, and medicinal and pharmaceutical products, at $4.34bn, down from $5.83bn the year before.
The main geographical locations for the petrochemical, thermoplastic, fertiliser, organic and inorganic chemical, pharmaceutical, synthetic fibre, soap and detergent, and paint sub-sectors is the area of Istanbul-Kocaeli-Sakarya, with further clusters around Izmir, Ankara and Adana-Gaziantep.
In petrochemicals, the largest outfit is Petkim Petrokimya Holding, with one of two petrochemical complexes in the country under its subsidiary, Petkim Aliağa. The other, near Kocaeli, is the Turkish Petroleum Refineries Corporation facility. Total production, according to the Turkish Chemical Manufacturers Association (TCMA), is around 2.9m MT per year, and this takes care of around 25% of all domestic demand.
The sector has succeeded in attracting foreign investment, with the State Oil Company of Azerbaijan Republic investing $5bn in a new refinery at Petkim’s Izmir complex. Yet, from 2005 to 2009, chemicals accounted for only 3.6% of all foreign direct investment in Turkey, according to CISAT.
“The new foreign investment incentive programme is a step in the right direction, but many of the terms under this scheme expire after a short period of time,” Volker Hammes, the CEO of BASF Turkey and head of BASF Business Centre Turkey, Middle East and North Africa, told OBG. “This is a problem for international companies in the chemicals industry, where capital expenditure must be carefully planned over several decades.”
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