REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey
TURKISH METAL INDUSTRY REPORT
JULY 20102009 DECEMBER
CONTENTS 1.
Executive Summary
3
2.
Sector Overview
4
2.1
Global Sector
4
2.2
Domestic Sector
7
2.2.1
Overview
7
2.2.2
Key Players
17
2.3
Positioning Map
18
2.4
Sector Outlook
19
2.5
SWOT Analysis
20
2.6
Investment Opportunities
21
2.7
Sector Establishments and Institutions
22
LIST OF FIGURES
23
ABBREVIATIONS
24
2
1.
Executive Summary
This report covers ferrous and non-ferrous metals, both of which are key economic industries for Turkey and the world. Ferrous metals primarily consist of steel, where the industry globally now has an annual capacity of around 1.9 billion tons. Annual steel sector revenue in 2009, badly hit in almost every country in the early months of the year by the economic crisis, was over USD 600 billion. The main non-ferrous metals are copper, aluminium, nickel and zinc; total value of non-ferrous metals production in 2009 was USD 172.5 billion. The steel industry is now dominated by China, with about 45 percent of global production. Turkey has also th rd 1 shown impressive growth and is now the 10 largest producer in the world, the 3 largest in Europe. Turkey’s crude steel production was 25.1 million tons in 2009. Turkish steel production reached approximately 2.5 1 million tons for the month of May in 2010, increasing by 19 percent from its level of 2 million tons in May 2009. Turkey is predominantly a producer of long steel products which reached a production level of 21 million tons in 2009, constituting 82 percent of Turkish steel production. There has been a strong demand for long steel products in Turkey due to the high level of construction activity, which has left a shortfall in flat production 1 facilities. Western countries generally have an output ratio between long and flat products of 40 percent to 60 2 percent. As of May 2010, 68 percent of steel production was produced in electric arc furnace mills and 32 percent in integrated facilities. Production in integrated facilities have increased by 17 percent in May 2010 when 1 compared to May 2009 and electric arc furnace production has increased by 11 percent. The main raw material in integrated facilities is iron ore whereas the main raw material in electric arc furnaces is scrap, often imported. There are 3 integrated facilities: Erdemir, İsdemir and Kardemir. 21 electric arc furnaces and 2 1 induction furnaces form the total of 26 production facilities. Turkish steel exports have reached 16 million tons in 2009 and imports have reached approximately 10 million 3 tons. Long products formed 74 percent of total exports whereas flat products were 56 percent of total imports 4 in 2009. The top 5 long product export markets were Egypt, UAE, Iraq, Libya and Yemen. Flat products are mainly imported from Russia, Ukraine, Romania, Italy and Belgium. The Turkish copper industry constitutes a significant part of Turkey’s total metal production. Turkey’s copper production reached 6 million tons in 2008. Although the production of copper has been increasing each year 4 since 2004, Turkish copper import levels remained very high, amounting to USD 2 billion. Imports are mainly from Kazakhstan, Russia and Bulgaria. Turkish aluminium consumption increased to 989 thousand tons in 2009 with a CAGR of 5 percent between 4 2005 and 2009. Turkey is dependent on imports due to the lack of domestic aluminium supply. 81 percent of the total imports were primary aluminium whereas the main items exported were aluminium extrusions and flat 5 products, bars, rods and profiles, together comprising 55 percent of the total exports in 2009. Aluminium is mainly imported from Russia, Norway and Germany whereas aluminium products are mainly exported to Germany, Iraq and the UK.
1
Turkish Iron and Steel Association (DCUD)
2
Export Promotion Center, Iron & Steel Report, 2010
3
Erdemir Report, February 2010
4
Aluminium Manufacturers’ Union of Turkey (TALSAD)
5
Trade Map 3
2.
Sector Overview
2.1 Global Sector The metal industry can be divided into two categories, ferrous metals and non-ferrous metals. Ferrous metals primarily consist of iron and varieties of steel. The world’s steel industry has shown strong performance in the recent past in terms of production, capacity utilization and consumption. After the strong boom of the recent years, the global steel sector was affected by the economic crisis in late 2008 and 2009. There was a sharp fall in production at the end of 2008 amounting to 80-90 million tons 6 annually. In addition, steel prices fell sharply. Recovery began as the year progressed and has continued in 2010. Crude steel production in 2009 was 1,220 million tons with a 8 percent decrease compared to the prior 7 year. Non-ferrous metals include mainly copper, aluminium, zinc, nickel, lead and tin, which are used to make alloys, castings, forgings, extrusions, wires, cables, pipes, etc., and used in a number of sectors such as agriculture, infrastructure facilities such as power plants, automobiles, railways, telecommunications, building, construction and in engineering and chemical plants. Major emerging nations such as Turkey that have comparatively low labour rates and a growing domestic demand, have the potential to become key players in the global metal markets. Figure 1 – Global Non-Ferrous Metals Market, 2009 Global Non-Ferrous Metals Market by Region 2009 12.0%
Global Non-Ferrous Metals Market by Category 2009 4.4% 2.2%
Americas
11.5%
Copper Aluminum
15.4%
41.9%
AsiaPacific
Nickel 12.1%
47.2%
Europe
Zinc Lead
Rest of the world
Tin 22.6% Source: Datamonitor
30.7% Source: Datamonitor
Non-ferrous production volumes increased with a CAGR of 1.3 percent between 2005-2009, amounting to 56.8 8 million tons and are expected to reach 67.7 million tons in 2014. Because of the rising prices, global revenues have been rising faster. The global non-ferrous metals market generated revenues that reached USD172.5 8 billion in 2009, representing a CAGR of 5.1 percent for the period 2005-2009. This performance is expected to continue, with an anticipated CAGR of 15.7 percent for the five-year period 2009-2014, which will drive the market to a value of USD 357.5 billion by the end of 2014.
6
Erdemir Annual Report,
7
World Steel Association
8
Datamonitor, Global Base Metals Report, March 2010 4
Figure 2 – Global Non-Ferrous Metals Market Forecast
Global Non-Ferrous Metals Market Forecast 400
0.3
CAGR: 15.7%
27.8%
350
0.25
USD billion
300 0.2
250
14.7%
13.3%
200
13.3%
0.15
10.1%
150
0.1
100 0.05
50 -
0 2009
2010
2011
2012
Total
2013
2014
Growth
Source: Datamonitor
Main players in the global metal sector are indicated below. Figure 3 – Global Metal Sector Key Players, 2009
Global Metal Sector Key Players, 2009 Sales (USD million)
Company
Origin
ArcelorMittal ThyssenKrupp AG Mitsubishi Corporation Nippon Steel Corporation JFE Holdings, Inc.
Luxembourg Germany Japan Japan Japan
65,110 54,836 48,864 37,526 30,604
Assets
# of Employees
127,697 60,466 116,559 53,536 41,934
282,000 172,576 59,198 51,544 54,229
Source: Datamonitor
Steel Thanks in part to the strong growth in China, global steel production in 2010 has been running at levels similar to or exceeding 2008, which was a record year. Figure 4 – World Crude Steel Production
World Crude Steel Production 130,000 120,000
000 ton
110,000 100,000 90,000 80,000 70,000 Jan
Feb
Mar 2007
Apr
May 2008
Jun
Jul 2009
Aug
Sep
Oc
Nov
Dec
2010
Source: World Steel Association
5
According to the World Steel Association, world crude steel capacity is expected to reach 1.9 billion tons in 9 2010. China is now the main player in the global steel industry with its share of approximately 45 percent in 2009. th 10 Turkey ranked 10 with its 2 percent share in global crude steel production in May 2010.
Figure 5 – Top 15 Crude Steel Production by Countries & Top 10 Steel Producers Top 10 Global Steel Producers Production (million metric ton) - 2009
Million ton
Top 15 Crude Steel Production by Country, May 2010 60
90 80 70 60 50 40 30 20 10 -
50 40 30 20 10 -
2010 2009 Source: Turkish Iron & Steel Association
78
31
31
27
26
21
21
20
17
15
Source: World Steel Association
Aluminium Global aluminium production reached 23 million tons in 2009 where North America is observed to be the main producer of primary aluminium worldwide with 20 percent of the total production in 2009. Figure 6 – World Primary Aluminium Production & Producers
Thousands of metric tons
Primary Aluminium Production
Global Aluminum Producers, 2007 Revenue (USD billion)
7,000 5,783
6,000
Alcoa, Inc. 4,618 4,658
5,000 4,759
4,000
2,660
3,000 2,000 1,000
3,923 4,400
1,715
4.8 4.8 4,117 3,722 2,297
2,508
1,681
Rio Tinto Alcan, Inc.
3.4 2.9 30.7
Aluminum Corp. of China
6.7
Mitsubishi Aluminum Co. Ltd. RUSAL United Co.
2,211 2008 2009
9.7
-
Hindalco Industries Viohalco S.A.
10 20.1 Source: International Aluminium Institude * Turkey is shown under Asia.
Norsk Hydro ASA
Aluminum Pechiney
Sumitomo Light Metal 16.5 Industries Source: IBIS World & Datamonitor & Freedonia
The aluminium industry is much more consolidated than the steel industry. In 2007, the top 3 aluminium companies hold 40.5 percent of the world primary output while the top 5 steel companies account for 22 11 percent of the total steel produced.
9
World Steel Association
10
Turkish Iron and Steel Association
11
Deloitte, Process Industries: Metals, Industry Briefing and On-Boarding Report, 2009 6
Copper World copper usage has reached 18,075 thousand tons in 2008 with China and the US being the leaders in 12 copper usage. Copper production was similar, at 18,233 thousand tons in 2008. With regards to copper mining, Chile is the leading country having 5,328 thousand tons of copper mine production followed by the US 12 with 1,335 thousand tons; the global total was 15,344 thousand tons in 2008. Figure 7 – World Refined Copper Production and Usage Refined Copper Production, 2008 (000 ton)
Refined Copper Usage, 2008 (000 ton)
China
China 3,791
Japan
7,612 3,058
88 Source: ICSG
Chile
862 1,282
1,540
2.2
Domestic Sector
2.2.1
Overview
5,198 7,135
Japan
United States Russian Fed. Turkey Other
United States Germany
2,020
360
780
1,184
Korea, South Turkey
1,398
Other
Source: ICSG
The Turkish steel industry’s foundations go back to the year 1937, to the establishment of Kardemir, the country's first fully integrated iron and steel plant. Two further integrated plants were commissioned in 1965 and 1970, Erdemir and Isdemir. These were both initially publicly owned. Erdemir was floated on the Istanbul Stock Exchange (ISE) during the foundation of the exchange in the 1980s, and privatizations later occurred. The capacity of these integrated plants was steadily increased and they have been supplemented by increasing numbers of privately-owned electric arc furnaces. Turkey has become an increasingly important supplier to the EU.
Steel Between 2000 and 2008, Turkey performed impressively with a 87 percent increase in production, reaching th 26.7 million tons in 2008. Turkey has moved up to 10 place in the world’s largest steel producing countries as 13 of May 2010. Turkey’s crude steel production reached approximately 2,526 thousand tons in May 2010, increasing by 19 14 percent from 2,126 thousand tons in May 2009.
12
International Copper Study Group (ICSG)
13
Turkey’s Iron & Steel Producers’ Association (DCUD)
14
World Steel Association 7
Figure 8 – Turkish Crude Steel Production
Turkish Crude Steel Production 2,700 2,500 000 ton
2,300 2,100 1,900 1,700 1,500 Jan
Feb
Mar
Source: World Steel Association
Apr
2007
May 2008
Jun
Jul
Aug
2009
Sep
Oc
Nov
Dec
2010
Turkey is predominantly a producer of long steel products which reached 21 million tons in 2009 constituting 82 percent of total steel production in Turkey. There has been a higher demand for long steel products in Turkey due to the extent of construction activities which has left the flat production facilities lagging behind 15 demand. Turkish steel production and consumption are presented in the charts below. Special steel products are included within long and flat steel products in the figures below. Total steel production reached 25.1 million 15 tons in 2009 whereas consumption was 18.0 million tons. Figure 9 – Domestic Steel Production and Consumption Turkish Steel Consumption (000 ton)
Turkish Steel Production (000 ton) 30,000
26,067
26,684
4,257
4,543
30,000 25,119
23,359
25,000 19,593 20,000
4,122
25,000 20,000
4,406
3,768
15,000
19,237
18,440
18,027
21,810
22,141
20,713
5,000
10,000 5,000
-
2005
2006 2007 2008 2009 Long Flat Total Source: Turkish Iron & Steel Producer's Association
20,000
11,661
15,000
15,825
25,000
21,454
21,222
20,000
15,000 10,000
23,771
25,000
10,686
11,182 8,334
9,363
10,000 5,000
15,000 10,000
9,077
10,536
12,110
10,272
9,693
-
5,000 -
2005
2006 2007 2008 2009 Long Flat Total Source: Turkish Iron & Steel Producer's Association
As of May 2010, 68 percent of steel production was produced in electric arc furnace mills and 32 percent in integrated facilities. Production in integrated facilities increased by 17 percent in May 2010 when compared to May 2009 and electric arc furnace production increased by 11 percent. The main raw material in integrated 15 facilities is iron ore whereas the main raw material used in electric arc furnaces is scrap metal. The table below shows the detail of 2009 production for each of the 3 integrated facilities, 21 electric arc 15 furnaces and 2 induction furnaces making up Turkey’s total capacity.
15
Turkish Iron & Steel Producers’ Association (DCUD) 8
Figure 10– Crude Steel Producers
Crude Steel Producers ton
Crude Steel Producers Production 2009
Capacity 2009
3,715,393 2,749,626 1,097,356
3,500,000 3,500,000 1,500,000
93,075 na
200,000 na
45,117 111,050 93,922 2,143,794 285,419 1,304,530 473,212
485,000 750,000 172,000 3,171,300 850,000 1,500,000 2,000,000
Integrated Facilities 1 Erdemir 2 İsdemir 3 Kardemir Induction Furnaces 1 İlhan Metalurji 2 Bilecik Demir Çelik (*) Electric Arc Furnaces 1 Asil Çelik 2 Çebitaş 3 Çemtaş 4 Çolakoğlu 5 Cer Çelik 6 Diler 7 Ege Çelik
Production Capacity 2009 2009
ton 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Ekinciler Habaş İçdaş İzmir Demir Çelik Kaptan Demir Çelik Kroman Mega Demir (*) MKEK Nursan Çelik Sider Sivas Demir Çelik Tosyalı Demir Çelik (*) Yazıcı Demir Çelik Yeşilyurt
735,288 2,438,070 3,030,100 1,097,661 921,104 1,044,501 na 2,277 1,012,665 700,920 409,857 na 1,011,054 547,417
1,000,000 4,800,000 5,267,600 1,320,000 1,350,000 1,250,000 na 60,000 1,200,000 720,000 450,000 na 1,000,000 720,000
Source: Turkish Iron & Steel Producers' Association (*): Total capacity of these three facilities: 1,700,000 ton & production: 240,000 ton n/a: not available
Exports and imports of the Turkish steel industry in recent years are summarised in the charts below. As can be seen, exports are higher than imports. Turkish steel exports have reached 16 million tons in 2009 and 16 imports have reached approximately 10 million tons . Long products form 74 percent of total exports whereas 17 flat products form 56 percent of total imports in 2009. The top 5 long product export markets were Egypt, UAE, Iraq, Libya and Yemen in 2009. Flat products are mainly imported from Russia, Ukraine, Romania, Italy and Belgium. Figure 11– Domestic Steel Exports by Category and by Country Turkish Steel Export 16,806
18,000 16,000
12,669
14,000
000 ton
12,000
9,493
10,000 8,000
1,244 1,625
1,394 1,630
1,368 2,407
18,000 16,000
1,648 2,213
14,000
20.0%
12,000
8,000
9,645
Long Product Exports by Country, 2009
10,890
12,937
11,806
UAE Iraq
46.0% 14.0%
Libya
6,000 4,000
6,460
2,000
9.0%
2,000
-
-
2005 Long
Egypt
10,000
1,131 1,902
6,000 4,000
13,794
15,885
2006 Billet
2007 2008 Flat
2009 Slab
Source: Erdemir Report, February 2010
16
Erdemir Report, February 2010
17
Export Promotion Center, Iron & Steel Report, 2010
5.0%6.0%
Yemen Other
Total Source: Export Promotion Center, Iron & Steel Report
9
Figure 12– Domestic Steel Imports by Category and by Country Turkish Steel Import 14,000
12,924
907
845
11,744 12,000
000 ton
10,000 8,000
9,344
Flat Product Imports by Country, 2009
13,241
14,000
9,891
1,317
214 975
8,006
8,647
20.0%
10,000 8,000
5,532
7,957
6,000
12,000
Ukraine 41.0% 15.0%
6,653 2,000 -
Romania
6,000
4,000
4,000
818 898 2005 Long
1,527 943 2006 Billet
3,005
2,497
3,377
1,190
1,068
768
2007
2008
2009 Slab
Flat
Italy Belgium
2,000 -
Russia
6.0% 7.0%
11.0%
Other
Total
Source: Erdemir Report, February 2010
Source: Export Promotion Center, Iron & Steel Report
In 2009, together with the global economic crisis, the decreasing demand both globally and domestically has affected exports and imports. Turkish steel exports have declined by 5 percent and imports by 23 percent. However, according to BMI forecasts, steel imports are expected to increase by a CAGR of 14 percent between 2010 and 2014 reaching 17.6 million tons. Steel exports are also expected to increase by a CAGR of 18 16 percent between 2010-2014 reaching 31.8 million tons.
Aluminium The Turkish aluminium sector’s roots go back to 1950s but the industry veritably took off with the establishment of the only primary aluminium producer, Eti Aluminyum A.S., in 1974. It has a production 19 capacity of 65 thousand tons/year. The facility produces aluminium by processing bauxite reserves in the region. The majority of the demand for aluminium products comes from the construction, packaging and transportation sectors. Construction accounts for 54 percent of the demand for extruded products, packaging forms 52 20 percent of demand for flat products and transportation forms 75 percent of demand for castings. Asas Aluminyum and Saray Dokum are the main extruded product producers which are listed in the 2009 top 500 companies list of Istanbul Chamber of Industry. Assan Aluminyum and Teknik Aluminyum are the main flat aluminium producers. Assan Aluminyum’s production capacity is 125 thousand tons for aluminium rolled plates 21 and 50 thousand tons for aluminium foils. Teknik Aluminyum’s production capacity is 125 thousand tons per 22 year. Turkey produced a total of approximately 676 thousand tons of aluminium products in 2009; extrusion, flat 23 products and secondary aluminium constituting the major part.
18
BMI, Turkey Metals Report, December 2009
19
Eti Aluminyum website, http://www.etialuminyum.com/
20
Central Anatolian Exporter Unions, Aluminium Report, May 2008
21
Assan Aluminyum website, http://www.assan.com.tr/
22
Teknik Aluminyum website, http://www.teknikaluminyum.com.tr/
23
Aluminium Manufacturers’ Union of Turkey (TALSAD) 10
Figure 13– Aluminium Production Aluminium Production in Turkey
Aluminium Production by Category
300
699
656 thousand tons
250
676
700
595
562
800
8.1% 5.2%
600
200
7.4%
17.8%
500
150
7.5%
400
200 50
20.0%
Other
100
-
34.0%
Folio
-
2005
2006
2007
2008
Primary Aluminium Production Extrusion Folio Other Source: Aluminium Manufacturers' Union of Turkey
Extrusion Flat products (plate-roll)
300
100
Primary Aluminium Production Secondary Aluminium
2009
Secondary Aluminium Flat products (plate-roll) Conductor Total Production
Conductor
Source: Aluminium Manufacturers' Union of Turkey
Total aluminium consumption increased to 989 thousand tons in 2009 with a CAGR of 5.2 percent between 2005 and 2009, 570 thousand tons being primary aluminium. On the other hand, primary aluminium production 24 decreased to a level as low as 35 thousand tons in 2009. Figure 14- Turkey Aluminium Consumption
Aluminium Consumption in Turkey 700
1,011
thousand tons
600 500
1,200
1,070 989
886
1,000
809
800
400 600 300 400
200
200
100 -
2005 2006 2007 Primary Aluminium Consumption Extrusion Total Consumption
2008 2009 Secondary Aluminium Flat products (plate-roll)
Source: Aluminium Manufacturers' Union of Turkey
Turkey is largely import dependent due to the lack of domestic supply. Both imports and exports have increased until 2009, when the sector was hit by the global economic crisis. 81.4 percent of the total imports 24 were primary aluminium whereas the main items exported included extrusions and flat products.
24
Aluminium Manufacturers’ Union of Turkey (TALSAD) 11
Figure 15– Aluminium Imports of Turkey by Product Type
Aluminium Imports 000 ton
2005
2006
2007
2008
2009
Primary Aluminium Secondary Aluminium Extrusion Flat products (plate-roll) Folio Conductor Other Total
393.5 17.0 4.5 57.6 21.8 8.8 13.1 516.2
459.7 12.1 6.2 68.3 23.8 6.7 13.9 590.7
572.1 21.2 8.3 81.3 27.0 9.3 16.5 735.8
598.4 16.9 8.3 82.4 25.2 17.5 20.2 768.8
567.8 14.2 5.3 60.8 19.3 15.5 14.8 697.7
Source: Aluminium Manufacturers' Union of Turkey
Figure 16– Aluminium Exports of Turkey By Product Type
Aluminium Exports 000 ton
2005
2006
2007
2008
2009
Primary Aluminium Secondary Aluminium Extrusion Flat products (plate-roll) Folio Conductor Other Total
27.2 12.6 88.0 66.1 21.7 11.8 42.0 269.2
28.9 14.3 108.6 71.4 24.3 4.3 48.0 299.8
60.6 12.5 124.7 88.6 25.2 10.2 58.9 380.6
60.9 16.2 129.9 89.2 29.5 9.3 63.4 398.3
33.2 11.7 121.2 90.7 37.2 20.2 70.6 384.8
Source: Aluminium Manufacturers' Union of Turkey
Figure 17– Aluminium Exports & Imports by Country Turkish Aluminium Imports, 2009
Turkish Aluminium Exports, 2009
17.3% 27%
Germany 8.8% 60.9%
4.3% 3.7%
Norway
Iraq UK
5.0%
47%
Germany
Bulgaria
9%
France
7%
Other
Source: Trade Map
Russia
5% 6%
Tajikistan Ukraine Other
Source: Trade Map
The top 5 trading counterparties for aluminium exports and imports in 2009 are presented in the charts above. Aluminium is mainly imported from Russia, Norway and Germany whereas products are mainly exported to Germany, Iraq and the UK.
Copper The Turkish copper industry constitutes a significant part of Turkey’s total metal production. Turkey’s copper production was 6 million tons in 2008. Although the production of copper has been increasing each year since 2004, Turkish copper import levels remained high due to the lack of sufficient reserves. Copper is imported mainly from Kazakhstan, Russia and Bulgaria. This data indicates that Turkey is still dependent on foreign countries in addressing its copper demand. In relation to high imports, Turkey’s copper exports are also low when compared to the country’s exports in the steel industry. 12
Figure 18– Turkish Copper Production
Turkish Copper Production 7,000
6,166
0.8
6,000 83%
000 ton
1
4,806
5,000
4,294
4,000
45%
0.6 0.4
2,953
2,920
0
12%
1,616
2,000
0.2
28%
3,000
-0.2
1,000
-0.4
2003
(45)% 2004
-0.6 2005
2006
Copper production
2007
2008
Growth rate
Source: General Directorate of Mining Affairs
The organizations that have taken a role in the extraction and processing of copper are both government institutes and private sector organizations. These corporations include Eti Bakir A.S, Karadeniz Bakir Isletmeleri A.S. and Cayeli Bakir Isletmeleri A.S.. Copper is largely used in the construction industry, electronics industry, household goods manufacturing industry and also in the biomedical sector, among others. The most common form of products manufactured from the metal are wire rods, cathodes, copper wires, bars and profiles. Karadeniz Bakir İsletmeleri and Eti Bakir are the only producers of blister copper (containing 98.5-99 percent copper) in Turkey, but due to the global economic crisis in late 2008, which caused a serious decline in demand and copper prices, blister production stopped in 2009. Cathode production also declined considerably 25 due to the crisis. Figure 19– Turkish Copper Production
Turkish Copper Production 000 ton
2007 2008 2009
Blister Cathode
36 99
40 88
33
Source: Eti Bakır
Figure 20– Cathode Imports of Turkey
Cathode Imports 000 ton Cathode
2007 2008 2009 268
272
291
Source: Eti Bakır
Kazakhstan is the major copper supplier of Turkey with a 24 percent share in total imports in 2009, followed by Russia, Bulgaria and Uzbekistan. The main destinations for Turkish copper exports are; Italy, Bulgaria, the US, 26 China and Israel.
25
Eti Bakir
26
Trade Map 13
Figure 21– Turkish Copper Industry – Export & Import
Turkish Copper Imports & Exports 3,500 3,000
3,276
3,152
USD m
2,500 2,468 2,000 1,985 1,500 1,458 1,000
1,157 880
814
500
597
510 2005
2006
2007 Import
Source: Trade Map
2008
2009
Export
Figure 22– Copper Exports & Imports by Country Turkish Copper Imports, 2009
Turkish Copper Exports, 2009
16% Italy 9% 52% 8% 8% 7%
Source: Trade Map
24%
27%
Kazakhstan
Bulgaria
Russia
US
Bulgaria
China
8%
17%
Other
Uzbekistan Chile
Israel 12%
Other 12%
Source: Trade Map
Metal Forging & Casting The forging and casting industry is highly correlated with the automotive industry’s demands. Additional demand comes from the construction, petro-chemicals, machinery and white goods industries. The Turkish 27 metal casting industry included 952 facilities and 25,000 employees as of 2009. Forging is a manufacturing process where metal is pressed, pounded or squeezed under great pressure. Forging requires higher technical knowledge and has a bigger added value compared to casting. Some of the main players in the Turkish forging industry are as follows;
27
Turkish Foundrymen’s Association 14
Figure 23– Main Players in Turkish Forging Industry
Main Players in Turkish Forging Industry Capacity (tons/year)
Company Parsan Kanca El Aletleri Çimsataş Omtaş
24,000 20,000 20,000 15,000
Source: Deloitte
The casting industry deals with pouring the metal into casts to give them a definite and permanent shape. The global casting industry reached 100 million tons of production in 2007 but then declined to 93 million tons in 28 2008, due to the economic crisis and the shrinkage in construction and automotive industries. th
th
Turkey ranks 14 in the world and 5 in Europe in regards of casting production, and has 1.4 percent market share in total global production. Turkey reached 1.3 million tons of production in 2007, but then declined to 1 28 million tons in 2009. Figure 24 – Metal Casting Production – Europe Top 5
Casting Production - Europe Top 5 6
5.84
5.78
5.48
million tons
5 4 3
2.65
2.75 2.41
2
2.65
2.47
2.39
1.43 1.32
1.33 1.21
1.40 1.27
1 0 2006 Germany
Source: The European Foundary Association
Italy
2007 France Spain
2008 Turkey
The Turkish casting industry was also hit by the global economic crisis in 2009 and production ceased in nearly 150 casting factories and workshops which left 952 facilities operating in the casting industry at the end of 2009. Total production decreased from 1.2 million tons to 1 million tons. Iron is the main metal produced by 28 metal casting and constituted 79 percent of total production in 2009. Figure 25– Turkish Metal Casting Production
Turkish Casting Industry 000 ton
2006
2007
2008
2009
Iron Steel Casting Non-Iron Total Production # of employees ('000) # of facilities
961 132 117 1,210 34 1,306
1,024 144 149 1,317 35 1,226
970 140 155 1,265 29 1,150
810 98 122 1,030 25 952
Source: Turkish Foundrymen's Associaion
28
Turkish Foundrymen’s Association 15
The most important players in the casting industry are as follows:
Figure 26– Main Players in Turkish Casting Industry
Main Players in Turkish Casting Industry 2009 Production Based Sales (TRY million)
Company CMS Jant Componenta Dokumculuk Ticaret ve Sanayi A.S. Samsun Makine DEMISAS Dokum Emaye Mamulleri San. A.S. Hayes Lemmerz İnci Cevher Dokum San. A.S.
242 229 138 113 112 108
Source: ISO 500 list
Exports in the Turkish metal casting and forging industry reached USD 4.7 billion in 2008, showing an increase of 11 percent compared to 2007. Automotive industry products have the biggest share in exported goods constituting 63 percent of the total exports in 2008, followed by the machinery industry constituting 24 29 percent. The main importer of Turkish metal castings and forgings is Germany, constituting 31 percent of the total, 28 followed by Italy and France. Figure 27– Turkish Metal Casting and Forging Industry – Exports
million USD
Turkish Metal Casting and Forging Industry - Exports 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
Exports by Country, 2008 4,713
Germany
4,238 3,072
31%
Italy
40%
2,962
2,779
France
2,049
UK 1,142
969 620
2006 Automotive
609
490
403
2007 Machinery
Other
9% 3% 3%
6%
7%
Poland Other
2008 Total
Source: Undersecretariat of the Prime Ministry for Foreign Trade Export Promotion Center
Russia
Source: Export Promotion Center
Imports in the industry are close to the exports, amounting to USD 4.6 billion in 2008. Again the automotive industry is the main industry forming 68 percent of total imports in 2008.
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Export Promotion Center 16
Figure 28– Turkish Metal Casting and Forging Industry – Imports
Turkish Metal Casting and Forging Industry - Imports 5,000
million USD
4,500 4,000 3,500 3,000
4,634
4,410 3,680
3,143
3,031
2,623
2,500 2,000 1,500 1,000 500
1,084
1,008
787
407
371
270
2006 Automotive
2.2.2
2007 Machinery
Other
2008 Total
Key Players
Top 20 firms operating in the metal industry which were included in the Istanbul Chamber of Industry (ISO) 500 list in 2009 are presented below. Figure 29– Main Players In Turkish Metal Industry
Main Players In Turkey's Metal Industry ISO 500 Ranking Company 2009 7 10 11 12 20 23 28 29 35 38 41 46 50 59 63 70 75 77 128 133
Ereğli Demir Çelik Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. İçdaş Çelik Enerji Tersane ve Ulaşım San. A.S. İskenderun Demir ve Çelik A.S. Çolakoğlu Metalurji A.S. Kroman Çelik Sanayii A.S. Borçelik Çelik Sanayii Ticaret A.S. Sarkuysan Elektrolitik Bakır San. ve Tic. A.S. Diler Demir Çelik Endüstri ve Tic. A.S. Er-Bakır Elektrolitik Bakır Mamülleri A.S. Kaptan Demir Çelik Endüstrisi ve Ticaret A.S. Kardemir Karabük Demir Çelik Izmir Demir Çelik Yazıcı Demir Çelik Sanayi ve Turizm Ticaret A.S. Assan Aluminyum Sanayi ve Tic. A.S. Nursan Çelik Sanayi ve Haddecilik A.S. Nursan Metalürji Endüstrisi A.S. Ekinciler Demir ve Çelik San. A.S. Ege Çelik Endüstrisi San. Ve Tic. A.S Yeşilyurt Demir Çelik End. Ve Liman İşl.
Subsector Iron&Steel Crude Steel Iron&Steel Iron&Steel Steel Steel Steel Copper Iron&Steel Copper Iron&Steel Steel Iron&Steel Iron&Steel Aluminium Steel Steel Steel Steel Iron&Steel
Production # of Year Based Sales, Employees Established TRY mn (2009) 3,576 2,520 2,450 2,362 1,547 1,352 1,138 1,029 903 870 824 774 721 678 627 611 578 559 377 366
13,033 1,425 3,200 na 985 937 850 na 500 475 750 3,118 1,051 1,500 900 392 635 1,100 843 320
1960 1964 1880 1975 1945 1985 1990 1972 1978 1981 1983 1939 1975 1949 1987 1983 2005 1983 2001 2001
Source: ISO 500 list, Capital IQ, DÇÜD
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2.3
Positioning Map Kroman
Assan Alüminyum
Production Capacity 1,100,000 tons/year
Production Capacity 125 ,000 tons/year (plate) 50,000 tons/year (foil)
Kardemir
Colakoglu
Production Capacity 1,500,000 tons/year
Production Capacity 3,000,000 tons/year
Kaptan Production capacity 1,400 ,000 tons/year
Erdemir Production capacity 7,000,000 ton/year
Yazıcı Production Capacity 859,000 tons/year
Yeşilyurt Production Capacity 1,300,000 tons/year
Icdas Production Capacity 5,267,000 tons/year
Borcelik Production Capacity 1,400,000 tons/year
Diler Production Capacity 1,300,000 tons/year
İzmir Demir Çelik Pr
Production Capacity 1,320,000 tons/year
Habaş Production Capacity 3,000,000 tons/year
Ege Çelik Production Capacity 2,000 ,000 tons/year
Isdemir Production Capacity 2,200,000 tons/year
Erbakir Production Capacity 300,000 tons/year
Sarkuysan
Ekinciler
Production Capacity 200 ,000 tons/year
Production Capacity 1,000,000 tons/year
Nursan Metalürji Copper
Production capacity 500,000 tons/year
Nursan Çelik Production capacity 500,000 tons/year
Iron & Steel Aluminium
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2.4
Sector Outlook
The outlook for the Turkish metals industry is correlated with the country’s economic performance in general, because the metal industry depends on demand from a wide range of key industries. According to the Turkey Forecast Report published by EIU in January 2010, the Turkish economy is expected to grow on average 5 percent per year for the next five years. As the country recovers from the negative effects of the global crisis, it will continue in the upcoming years to rapidly expand its industrialization. An increase in the production of housing, automobiles and other products is expected. Consequently, Turkey’s metal industry should benefit from this expansion significantly and demonstrate an increase in demand as well as production. According to a BMI forecast for the Turkish metal industry, steel consumption is expected to increase with a CAGR of c.7 percent for both crude steel and finished steel between 2010 and 2014. Furthermore, production 30 growth is also expected in line with the consumption forecast, with a CAGR of c. 7.5 percent. Parallel to the upward trend in consumption and production, the steel industry is expected to increase its exports and imports as well. Exports and imports are expected to increase with a CAGR of c.23 percent and 20 percent respectively. Turkey is expected to continue exporting more metals and metal products (especially steel) than it will import. The country’s exports are expected to reach approximately 31 million tons of steel by 31 2014.
Figure 30 – Turkish Steel Industry, 2010-2014f
Turkey's Steel Industry 2010-2014 2010f Consumption Apparent crude steel use (000 tons) Apparent finished steel use (000 tons) Production Production ('000 tons) Production (USDmn) Exports Exports ('000 tons) Exports (USDmn) Imports Imports ('000 tons) Imports (USDmn)
2011f
2012f
2013f
2014f
32,330 25,530
34,581 27,429
36,920 29,402
39,619 31,679
42,620 34,210
29,447 22,575
31,640 24,693
34,116 26,626
36,635 28,591
39,130 30,539
17,624 13,202
21,228 16,998
24,720 20,737
28,256 24,422
31,804 28,296
10,453 8,864
12,837 11,636
14,489 13,759
16,146 15,797
17,666 17,792
Source: BMI
The government announced in February 2009 that it was planning a stimulus package to rescue the shi major consumer of steel in Turkey and represents around 15% of GDP. The shipbuilding industry has w new orders in response to the global economic downturn and financial crisis, and some existing orders postponed. The rescue package could include measures to expedite the process of receiving corporate extension of Eximbank loans for the construction of ships for export. The government may also place o financial guarantor for companies in trouble. Significant steel price increases are expected in Q409, when the recovery begins to really pick up. BMI f August and accelerating from September. However, some steel market segments are moving slower th struggled to sell their rebar and wire rod production to the domestic and export markets due to weak d states had halted orders by Q209 due to the economic slowdown, a collapse in the real estate market a taking time to clear. BMI forecasts a fall in exports of nearly 11% in 2009 to 16.3mn tonnes. However, there are a number o figure. Egyptian imports showed a marked slowdown in Q209 from the surge seen in Q109, with report inventories at Egyptian ports in May. If there is no revival in the UAE market, exports could fall at a high 30 BMI the upside, the Emirates have not scaled back government-funded infrastructural projects, providing st 31 Turkish Iron & Steel Producer’s the near term. A Association major risk factor for the Turkish metals industry is the excessively volatile exchange ra for producers to plan costs. By May 2009, the Turkish lira was trading at an historic low of TRY1.82:US$ 19 costs of imports, particularly imports of aluminium ingots on which Turkey is heavily dependent. By Au recovered to TRY1.51:US$, but is still forecast to fall to TRY1.85:US$ by end-December. While we ackno substantial gains in the currency in the short term, fundamental pressures over the longer run are expe
2.5
SWOT Analysis
S
trengths
Turkey is now an important steel manufacturing rd nation, ranking 3 in production in Europe after Germany and Italy.
Turkey offers high employment opportunities in the sector, currently 114,500 employees, and has a large skilled labour pool.
O
pportunities
Increase in demand for housing, automobiles and other products such as white goods leads to growth in the demand for iron and steel production. With the National Restructuring Plan (UYYP), the industry is expected to benefit from Government incentives for investments in flat products and modernization. Furthermore, investments in flat products in the recent years are expected to compensate the supply deficit of flat products.
W
eaknesses
Imbalance between flat and long products. There is a deficit in flat steel and special steel production capacity in contrast to the excess capacity in long steel production.
Imbalanced structure of the production facilities, where electric-arc furnaces (“minimills”) form 68 percent of the total production capacity, leading to a high requirement for scrap imports.
T
hreats
High energy costs which negatively affect production costs.
Volatile and often increasing raw material costs (scrap steel, iron ore and coal). Growth in China tends to pull raw material prices higher.
Competition arising from lower-quality, lower priced semi finished goods imported from the CIS.
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2.6
Investment Opportunities
Major M&A transactions in Turkey since 2005 are presented in the list below: Figure 31– M&A Transactions in Turkey, 2005-09 # Acquirer
Target
Target subsector
Date
Alfa Çelik Valhalla Resources Limited ArcelorMittal Istanbul Stainless Service Turkey (formerly Uginox) Daiyang Metal Sanayi Demrad Döküm Bensan Aktiflestirilmis Bentonit Sanayi ve Ticaret A.S. Rozak Demir Profil Atakaş Metalurji Ferro Döküm Erdemir
iron & steel mineral oil exploration
1.7.2009 12.19.2008
80.0% 100.0%
na 9
coil processing
7.14.2008
35.0%
na
iron & steel iron & steel
3.31.2008 3.10.2008
30.0% 100.0%
38 24
white bentonite production
6.1.2007
100.0%
12
iron & steel iron & steel iron & steel iron & steel
9.10.2007 8.15.2007 6.11.2007 11.2.2005
51.0% 50.0% 56.7% 49.3%
na 102 82 2,960
1 2
Zeman International Aldridge Minerals Inc
Austria Canada
3
ArcelorMittal
Luxembourg
4 5
SK Networks Ada Metal
Korea Turkey
6
AMCOL Minerals Europe Ltd
UK
7 8 9 10
ArcelorMittal Magnitogorsk Iron and Steel Works (MMK) Metallink Metal Oyak
Luxembourg Russia Turkey Turkey
Stake %
Deal Value (USD m)
Origin
Source: Mergermarket & ISI
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2.7
Sector Establishments and Institutions Figure 32– Metal Sector Establishments and Institutions
Establishment/ Institution
General Secreteriat of Istanbul Mineral and Metals Exporters' Association
Code
Description
Contact details
IMMIB
Organised on the basis of materials subject to export, trying to increase exports as it is accepted priority goal for the development of the country. Has 6 Associations in its body: 1) Istanbul Mineral Exporters' Association 2) Istanbul Ferrous and Non-Ferrous Metals Exporters' Association 3) Istanbul Chemicals and Chemical Products Exporters' Association 4) Istanbul Chemicals and Chemical Products Exporters' Association 5) Istanbul Precıous Minerals and Jewellery Exporters' Association 6) Istanbul Iron and Steel Exporters' Association
Dis Ticaret Kompleksi A Blok Cobancesme Mevkii Sanayi Cad. 34197 Yenibosna Bahcelievler Istanbul Turkiye Tel: (0212) 454 00 00 Fax: (0216) 454 00 01 Website: www.immib.org.tr
Turkish Exporters Association
TIM
The objective of the Association is providing cooperative achievements of the whole exporter firms.
Turkish Aluminium Manufacturers Association
TALSAD
Organization has 80 members. Represents its members in domestic or foreign exhibitions, organizes studies, seminars to support the sector growth.
DCUD
Organization has 20 members. Main goals are promoting Turkish Iron and Steel Industry to the level of the ones in the developed countries; developing a structure which can keep up with the global developments of all aspects; compiling and disseminating the statistical information concerning the Iron and Steel Industry in Turkey and the world; discussing the problems that the members face; proposing solutions and applying all lawful means to solve those problems.
Turkish Iron & Steel Producers Association
Istanbul Copper and Braze Manufacturers Association
Dis Ticaret Kompleksi B Blok Cobancesme Mevkii Sanayi Cad. 34197 Yenibosna Bahcelievler Istanbul Turkiye Tel: (0212) 454 04 71/454 04 90 Fax: (0216) 454 04 13/454 04 83 Website: www.tim.org.tr Assan Alüminyum Tesisleri, E5 yolu üzeri 32. km, 81700 Tuzla Istanbul Turkiye Tel: (0216) 446 79 61 Fax: (0216) 446 79 62 Website: www.talsad.org.tr Cinnah Cad. Alaçam Sok. No:1/24 Cankaya Ankara Turkiye Tel: (0312) 466 37 34 Fax: (0312) 467 22 07 Website: www.dcud.org.tr
Istanbul Bakir ve Pirinc Sanayicileri Dernegi Sitesi Hurriyet Cad. No:2 34900 Beylikduzu Main goals are to protect common interests of copper and braze producers; Buyukcekmece Istanbul Turkiye consolidate loyalty amongst these industrialists, to make development in Tel: (0212) 875 10 05 (3 lines) the sector; meet the requirements of the members. Website: www.bakirpirincdernegi.org.tr
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LIST OF FIGURES Figure 1 – Global Non-Ferrous Metals Market, 2009
4
Figure 2 – Global Non-Ferrous Metals Market Forecast
5
Figure 3 – Global Metal Sector Key Players, 2009
5
Figure 4 – World Crude Steel Production
5
Figure 5 – Top 15 Crude Steel Production by Countries & Top 10 Steel Producers
6
Figure 6 – World Primary Aluminium Production & Producers
6
Figure 7 – World Refined Copper Production and Usage
7
Figure 8 – Turkish Crude Steel Production
8
Figure 9 – Domestic Steel Production and Consumption
8
Figure 10– Crude Steel Producers
9
Figure 11– Domestic Steel Exports by Category and by Country
9
Figure 12– Domestic Steel Imports by Category and by Country
10
Figure 13– Aluminium Production
11
Figure 14- Turkey Aluminium Consumption
11
Figure 15– Aluminium Imports of Turkey by Product Type
12
Figure 16– Aluminium Exports of Turkey By Product Type
12
Figure 17– Aluminium Exports & Imports by Country
12
Figure 18– Turkish Copper Production
13
Figure 19– Turkish Copper Production
13
Figure 20– Cathode Imports of Turkey
13
Figure 21– Turkish Copper Industry – Export & Import
14
Figure 22– Copper Exports & Imports by Country
14
Figure 23– Main Players in Turkish Forging Industry
15
Figure 24 – Metal Casting Production – Europe Top 5
15
Figure 25– Turkish Metal Casting Production
15
Figure 26– Main Players in Turkish Casting Industry
16
Figure 27– Turkish Metal Casting and Forging Industry – Exports
16
Figure 28– Turkish Metal Casting and Forging Industry – Imports
17
Figure 29– Main Players In Turkish Metal Industry
17
Figure 30 – Turkish Steel Industry, 2010-2014f
19
Figure 31– M&A Transactions in Turkey, 2005-09
21
Figure 32– Metal Sector Establishments and Institutions
22
23
ABBREVIATIONS BMI
Business Monitor International
CAGR
Compound Annual Growth Rate
EIU
Economist Intelligence Unit
ISPAT
Republic of Turkey Prime Ministry Investment Support and Promotion Agency
TPA
Ton per annum
DCUD
Turkish Iron & Steel Producers Association
ICSG
International Copper Study Group
UK
United Kingdom
UAE
United Arab Emirates
USGS
United States Geological Survey
GDP
Gross Domestic Product
TRY
Turkish Lira
USD
US Dollar
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Disclaimer This Document is one of a series which has been assembled by the Republic of Turkey Prime Ministry Investment Support and Promotion Agency (“ISPAT”) with the assistance of DRT Kurumsal Finans Danışmanlık Hizmetleri A.Ş. (“Deloitte”) for the sole purpose of giving investors a sector synopsis of key priority growth sectors in Turkey. This Document has been prepared for information purposes relating to this sector. This Document does not purport to be all-inclusive nor to contain all the information that a prospective investor may require in deciding whether or not to invest in this sector. No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of this Document or any other written or oral information made available to any prospective investor or its advisors in connection with any further investigation of the sector and no responsibility or liability is or will be accepted by ISPAT or Deloitte or by any of their recipient or respective officers, employees or agents in relation to it. Each of ISPAT and Deloitte and their respective subsidiaries and associated companies and their respective officers, employees and agents expressly disclaims any and all liability which may be based on this Document or such information, and any errors therein or omissions therefrom. The information contained herein was prepared based on publicly available information sources at the time that this Document was prepared. In particular, no representation or warranty is given as to the achievement or reasonableness of future projections, targets and estimates, if any. ISPAT and Deloitte have not verified any of the information in this Document. Recipients of this Document are not to construe the contents of this Document as legal, business, tax or other advice. Any recipient or prospective investor should not rely upon this Document in making any decision, investment or otherwise and is recommended to perform their own due diligence and seek their own independent advice. This Document does not constitute an offer or invitation for the sale or purchase of securities or any of the businesses or assets described herein or to invest in the respective sector and does not constitute any form of commitment or recommendation on the part of ISPAT or Deloitte or any of their respective subsidiaries or associated companies. Neither ISPAT nor Deloitte accept any liability in relation to the distribution or possession of this Document in and from any jurisdiction and neither ISPAT nor Deloitte shall be liable for any violation by the recipient of any such registration requirements or other legal restrictions. Under no circumstances should this Document itself or any modified version be published or reproduced or sold by any third party in return for a fee or membership. The intellectual property rights of this Document are owned by ISPAT.
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