The plastics industry is one of the youngest and most rapidly developing manufacturing industries in Turkey. On average, the industry has grown by 15% every year from 2002 – 2007, although the growth rate decreased by 4% in 2008 due to the global economic crisis. The Turkish plastics industry holds a 1.6% market share in the international plastics industry. Turkey is 2nd in synthetic fiber production and 3rd in PVC (Polyvinyl chloride) profiles and 5th in total plastics processing capacity in Europe. Many industry experts predict that the Turkish plastics industry will soon rank 3rd among EU countries.
The plastics industry started feeling the effects of the global economic crisis in the latter half of 2008. Optimistic scenarios predict 5% shrinkage in 2009 while pessimist scenarios estimate that the shrinkage will be up to15-20%. Firms will be forced to find new foreign markets to substitute for the shrinkage in both the domestic and foreign markets. However, the diverse Turkish plastics market including raw materials, machinery and processed products, will continue to be one of the major plastic centers in the region.
Opportunities remain in the plastic raw materials market for products such as: PP, HDPE, PVC, PS, LLDPE, and ABS.
The major types of machinery used in the plastic processing industry are cutting, splitting, and shaping machines, injection machines, and extruders. They are the best prospects in Turkey’s plastics production machinery market.
Finally, in the processed plastic products market, the following products can be marketed effectively: plastic sheets, foils, strips, and films, packaging materials, self-adhesive sheets, foils, strips, and films and other flat sheets of plastic, tubes, hoses, pipes, and fittings, kitchenware and other households of plastics.
The industry currently employs more than 200,000 people and creates employment opportunities for 20,000 new employees each year. Nearly 7000 companies work in the plastics industry, of which 98% are SMEs. One hundred and thirteen of these firms have foreign capital shares, and almost half (46%) are of EU origin. German companies lead with 21 % of the total, followed by the Netherlands (11 %) and USA, France and Italy with 7 %.
The Turkish plastics industry is made up of different types of manufacturing firms:
1) 70% are plastics production manufacturers
2) 18% are machinery and equipment producers
3) 12% are raw materials and auxiliary material manufacturers
The report will cover each segment of the Turkish plastics industry described above, looking at local production, imports and exports, and market consumption in each category.
1) Plastic Raw Materials Market
Local Production of Plastic Raw Materials:
In Turkey, local production meets 15% of the total demand for plastic raw materials. Turkey has one major petrochemical production facility, Petkim, which supplies plastic materials to the plastic processing industry. It was state-owned, but was privatized recently. Petkim provides 85% of the local production. When Petkim was privatized, it was sold to the TransCentralAsia Petrochemical Holding consortium. Industry experts expect Petkim to make new investments and increase their market share from 15% to 50%. In addition, more investments are expected from countries in the region (i.e. Iran, Saudi Arabia). Other manufacturers include SASA and Baser.
The following plastic raw materials make up the market in Turkey:
PP (polypropene): In Turkey, Petkim is the sole producer of this product. Even after recent investments to increase the production capacity of PP to 144,000 tons, Petkim is only able to cover 15% of the market. The largest import item in thermoplastics is PP with a value $2,025 million in 2008, decreasing to $1,128 million in 2009. This material is mostly used in the production of carpet yarns, big bags, woven sacks, oriented films, sanitary piping and household items.
LDPE (Low-density polyethylene): In Turkey, Petkim is the sole producer of LDPE and is currently capable of meeting 75% of market demand. Its production capacity has reached 310 tons per year. LDPE is primarily used in film production (90%), injection molding (2%), cable production (3%), and blowing molding (5%) industries in Turkey.
LLDPE (Linear Low Density Polyethylene): There is no LLDPE production in Turkey. All LDPE is imported. In 2008, total imports of LLDPE reached 174,000 tons, and nearly 50% is imported from Saudi Arabia. Other suppliers include the Netherlands, Sweden, Germany, and Kuwait.
HDPE (High Density Polyethylene): Petkim is the sole local producer of HDPE in Turkey. Its capacity is 96,000 tons per year. Saudi Arabia, Germany and Belgium are the largest foreign suppliers of HDPE, each with a 7.5% market share.
PVC (Polyvinyl Chloride): Petkim is the sole producer of PVC, covering 20% of market demand. Its production capacity is 150,000 tons per year. PVC is used primarily in electric, automotive, toys, profiles, claddings, pipes, packaging films, and artificial leather and health products.
PS (Polystyrene): PS is produced locally by Baser Kimya with an annual production capacity of 40,000 tons. The remaining demand is met by imports, which reached $684 million in 2008, and decreased to $414 million in 2009. Belgium, Spain, the U.K., S. Korea and France are the major suppliers. Solid and expanded PS is preferred for packaging insulation and appliances.
PET (Polyethylene terephthalate) & ABS (Acrylonitrile-butadiene-styrene): ABS copolymer, one of the major thermoplastic products, is supplied entirely by imports. PET is produced locally by SASA, the largest polyester fiber and filament producer in Europe and the Middle East. SASA established a joint venture with Dupont in 2000. However, Sabanci, a Turkish local partner, bought back all its shares from Dupont in 2004. There is double-digit growth both for PET in bottles and for engineering plastics in electrical and automotive applications.
Exports of Plastic Raw Materials:
Even though there is a significant shortage in the local production of raw materials and the Turkish plastics industry relies heavily on imports, exports of raw plastic materials from Turkey is substantial. In 2008, total exports were $614 million, but is projected to decrease by 25% in 2009 to $459 million. Conversely, in terms of tonnage, Turkish exports increased by 5%. This indicates that unit prices fell tremendously in 2009. Italy, Germany, Russia, Egypt, and Greece are major export markets for Turkish plastic raw materials. Acrylic polymers, PA (3907), PE (3901), amino resins (3909), PP (3902), cellulose and its chemical derivatives (3912), PVC (3904), wastes, parings and scrap, of plastics (3915) are major export items.
2)Plastic Processing Machinery
Local Production of Plastic Production Machinery:
Experts believe that the Turkish plastics production machinery industry is not meeting its full potential. Currently, there are 808 plastic machinery producers, with only 209 of these able to manufacture more than one product; 29% of these are produce molds, 16% produce plastic processing machinery, 12% manufacture auxiliary equipment and 12% produce packaging machinery. Other machinery producers work in plastic pre-operation and recycling, measurement, finishing and welding machinery sectors and produce parts and accessories.
Local Market for Plastic Production Machinery:
The plastics sector gradually invests in machinery and equipment every year mirroring the increase in its operation capacity. The machinery and equipment investment in the sector was 25,000 tons and $288 million in 2003 and increased to 51,000 tons and $630 million in 2008. Of the $630 million invested in machinery equipment in 2008, 30% was used to purchase cutting, chopping and shaping machines, 23% for injection machines and 19% for extrusion machines. The number of injection machines is decreasing and the rate of cutting, chopping and shaping machines is on the rise.
Exports of Plastic Production Machinery:
In 2008, total exports of plastic production machinery were $94.6 million. Russia, Iran, Romania, Bulgaria, Germany, Ukraine, Morocco, and Greece are major export markets of Turkish plastic production machinery. Cutting, splitting and shaping machinery (47%) and injection and extrusion machinery (17%) have the largest share in Turkish plastic production machinery exports.
3)Processed Plastics Materials
Local Production of Processed Plastic Materials:
The annual processing capacity in Turkey is 5.1 million tons per year, with an annual growth rate of 14% from 2003 to 2008. Over 5000 plastic processing firms manufacture hundreds of different products in Turkey. Because firms identify their production capacities in different units, (i.e.tons, meters, square meters, cubic meters, number of pieces, or pairs), specifying the total production capacity of the Turkish plastics industry by using one type of unit is difficult. Our research estimates it at 7 million tons.
The packaging industry leads all other industries in plastic consumption. There is an increasing trend to package goods to comply with EU standards. The increasing consumer awareness to packaging and the improvement in living standards has resulted in strong growth in the plastic packaging market. Plastic materials represent only 15% of the weight of packaging materials, but constitute more than a third of the cost. The technological developments in plastic processing over the last ten years have resulted in an average weight decrease of 28% per unit packaged. The Turkish packaging industry produces oriented films, stretch films, shrink films, pallet covers, sacks bags, big-bags, woven sacks, yarns, thermoformed containers for food and beverages, bottles for carbonated and non-carbonated drinks, industrial containers, bottles for detergents and cosmetics, foamed containers for food and foamed packaging forms among others.
Greenhouse films, mulch films and irrigation pipes are the major plastic applications in the Turkish agricultural industry. The increased investment in construction and building industries is another niche market for plastics.
Plastics are also used in television sets, refrigerators, washing machines, computers as well as fiber optic cables and power distribution cables. The ease of formability, low density, electrical insulation properties and flame retardant modifiability make plastics a core product for the electrical and electronics industries.
The lightweight, corrosion resistance and formability of plastics also make them ideal materials for the automotive and transport industries and enable car manufacturers to reduce exhaust emissions. The rapid growth of this industry in Turkey in recent years has resulted in increased demand for suitable plastics. Turkey is also one of the leading countries for textile products. Both synthetic fibers and cloths are produced and exported on a large scale. Acrylic, polyester, polyamide and polypropylene are the major materials used in these industries. The shoe industry is also a major producer and exporter. PVC, EVA, TPE and PUR are processed into shoe soles.
Turkey would also like to become an energy terminal with existing and planned natural gas and crude oil pipe line products. It acts as a bridge, connecting the newly commissioned super-sized petrochemical plants in the Middle East to large scale markets in the west. These existing and planned pipelines of petroleum and natural gas are also opportunities for plastics product sales.
Exports of the Processed Plastic Materials:
Turkish plastics industry exports are increasing thanks to its geographical location on the crossroads between Europe and Asia. The direct exports of finished and semi-finished plastics goods from Turkey are valued at $2.9 billion, which is the largest share in chemical exports. However, exports are estimated to decrease in 2009 by approximately 22% and decrease to $2.3 billion. The main plastic products exported are packaging, pipes and tubes, plastic furniture, textiles, footwear, table and kitchenware and OEM parts. The appliance and automotive sectors are experiencing a double-digit growth in their exports. When indirect exports in the form of OEM components and packaging for other goods are taken into account the exports total almost $3 billion.
Turkish plastics products are exported to 172 countries all over the world. Russia, Romania, Germany, Ukraine and Iraq were the top 5 countries with the greatest share in Turkey’s plastic product exports in 2008. Turkish exporters are losing certain markets because of the global economic crisis, and have targeted new markets in 2009. As a result, the top five export markets are now, in ranked order, Libya, Iraq, Germany, Romania, and Russia. In 2008, the first 15 countries accounted for 66% of total plastics product exports. In 2009, 18% of total production will be exported, while 8% of domestic consumption will be met by imported goods. Due to the global economic crisis the entire plastics industry will face decreases in tonnage volume.
By Berrin Erturk