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ANALYSIS: Turkey
Turkish delight at improving markets
Yogender Malik looks at how Asia’s bridge to Europe and the wider Mahgreb region, Turkey, is positioning itself for changing economic conditions moving forward and looking to capitalise on an improving domestic scene…
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uge investments and steady expansions by existing producers, two new entrants ( one each in float and container glass segments) has made Turkey one of the most dominant glass producers in both- flat and container glass segments in the European and Asian region. All of the glass producers in the three major sub-segments enjoys significant scale of operations, which enable these producers to achieve economies of scale and lower production costs. Most of the producers are also highly backwardly integrated, which further help them in optimising the total cost of production. Economic slowdown has had an adverse impact on glass consumption in Turkey in last one and a half years. After extending the high economic growth of 2017 into the first quarter of 2018, Turkey was confronted with problems such as rising inflation and shrinking domestic demand. This situation was caused by volatility in foreign exchange rates and geopolitical tensions, especially starting from the second half of the year 2018. To address these challenges, the government announced the New Economy Program (NEP). The NEP was designed to promote savings and export-driven growth in order to stimulate the economy. Subsequently, the Turkish Central Bank (CBRT) implemented contractionary monetary measures to support the NEP targets. Economic slowdown in the country has adversely impacted the construction, automotive and consumer demand to a large extent in last two years, which has an adverse impact on flat and container glass demand in the domestic market. But, Turkey’s strategic location provides the country’s glass producer to reach to a number of export markets without incurring too much on the transportation. Sisecam, the glass giant from the country dominates the glass production in all the three major segments of the industry. Sisecam’s domination in Turkish and regional glass market can be understood from the sales and production figures. In 2018, the company registered sales revenues of USD 3.2 billion. The company produced 4.9 million tons of glass, 2.4 million tons of soda ash and 4.1 million tons of industrial raw materials. The company invested a total of USD 650 million in new plants and capacity up gradation of existing plants.
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asianglass AG 20-1
Glass trade
According to the information from Turkey Statistical Institute (TSI), Turkey exported nearly USD 535 million worth of glass products in the first six months of the year 2019. Exports during the first six months increased by USD 40 million as compared to the export figures for the first six months of 2018. Turkish glass producers exported float glass, container glass and tableware glass to 164 countries across the globe. Italy was the top destination for glass exports from the country. With total exports of USD 45.492 million, Italy accounted for 8 percent of total glass exports from Turkey. Germany with exports worth of USD 43.649 million was second largest export destination. Israel with USD 26.827 million, Spain with USD 26.196 million and USA with USD 25.363 million were the tird, fourth and fifth largest destination of glass exports from the country. During the same period, Turkey’s imported a total of USD 328.407 million worth of glass products. Imports of glass products, which was USD 453. 873 thousand during the first six months of 2018 , decreased by USD 125.465 thousand dollars. China was the largest source of imports of glass products with imports worth USD 65 million. Germany with USD 38 million, Italy and France with USD 25 million and Bulgaria with USD 20 million were the second, third, fourth and fifth largest import destination for glass imports in the country. Another interesting development that is taking place in the wider Central Asian region as investments continue to pour into companies in those countries. As these factories become more and more sophisticated, there is a danger that what were previously extremely lucrative export markets may become less accessible. Take, for example, Azerbaijan where Azerbaijani Ask Glass (a subsidiary of the Azerbaijan Industrial Corporation) has begun exporting glass containers to Georgia, and in 2020 will significantly increase deliveries. Ask Steklo signed a contract with Coca-Cola Bottlers Georgia to supply 2.6 million glass containers to Georgia to dispense Coca-Cola and Fanta drinks in them by the end of 2019. In 2020 export volumes will increase the initial forecast provides for the supply of 10-20 million units of glass containers, according to the Azerbaijan Industrial Corporation.
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