CHEMICAL INDUSTRY SNAPSHOT
Contributing to economic growth
The chemical industry in Turkey greatly beneﬁtted from the export-oriented economic policy changes in 1980, and has shown an impressive increase both in production and exports over the last ﬁve years, contributing signiﬁcantly to the growth of the national economy. Currently, the Turkish chemical sector – with its modern technology and diversiﬁed products – is the key component of the manufacturing industry and integrated into the supply chain of national industries, especially the textiles and automotive sectors.
The Turkish chemical sector covers a wide range of products in 14 distinct product chapters in foreign trade statistics. The production of the sector is generally aimed at products required by the manufacturing industry and the directly consumable products; namely, petrochemicals, thermoplastics, fertilizers, organic and inorganic chemicals, pharmaceuticals, synthetic ﬁbres and yarns, soap and detergents, paints, etc
Gross production value in the chemical sector was around € 47 billion level in 2019 which comprised of chemicals/products (50%) and pharmaceutics 18%) and plastics & rubber (32%)
Most of the companies in the chemical industry, especially private sector companies, are located in Istanbul, Izmir, Kocaeli, Sakarya, Adana, Gaziantep and Ankara. The Turkish chemical industry has developed signiﬁcantly in terms of quality, productivity and protection of the environment, and has been successful in adopting the EU’s technical standards. In addition, Responsible Care, the chemical industry’s trademarked voluntary initiative on environmental, health and safety issues, has been successfully implemented since 1992.
The Turkish CLP (Classiﬁcation, Labelling and Packaging) by-Law was issued in December 2013 and has been implemented since 2015.
The Turkish REACH by-Law was issued in June 2017 and entered in force in December 2017. Pre-notiﬁcation will be made (like SIEF) till December 2020 and registration period started in 2021 will continue until December 2023.
The Turkish petrochemicals industry has shown considerable growth since 1970. The dominant organisation in the Turkish petrochemical sector is SOCAR – Petkim PetroKimya Holding A.Ş. There are two petrochemical complexes – one being the Petkim Aliaga complex in İzmir and the other Tupras (Turkish Petroleum Reﬁneries Corporation) Korfez Petrochemical and Reﬁnery in Kocaeli. These two complexes produce a wide range of petrochemicals including all common plastics (HDPE, LDPE, PS, PVC, and PP), aromatics, ethylene glycol, phthalic anhydride, terephthalic acid, carbon black, synthetic rubber, acrylonitrile and caustic soda. The total production of these petrochemicals reaches about 2,9 million tonnes/year, and meets about 25% of domestic demand.
SOCAR’s new $6,3 billion-worth investment in the same location, foundation of which was laid in 2011 was put into operation in 2018 and has been running nonstop since 2019. The facility has ten million crude oil processing capacity resulting various products such as diesel, jet fuel, LPG, reformate. SOCAR has also completed the feasibility studies on building p-xylene production facility with 700K tonnes/y and PTA (pure terephthalic acid) production facility with 1M tonnes/y processing capacity.
There are two domestic investments on petrochemicals, which are localized in Eastern Mediterranean Region. First one is the investment by SASA Polyester San. A.Ş. which increased its capacity from 350K tons/year to 750 tons by commissioning the fiber plant with a new investment of 1 billion dollars. It increased polyester capacity to 1.4 million tons/year by commissioning the newly established polyester facility in 2020. It started the PTA (pure terephthalic acid) production facility project, which is the raw material of fiber and polyester facilities. A $935 million license and technical service agreement was signed with American Invista (Koch Industries). Secondly The Ministry of Industry and Technology aims to establish a chemical cluster with petrochemical investments in 1300 hectar area facing the sea in Ceyhan, Adana. Although initial goal was to produce polypropylene from propane with a 450,000 tons of PdH plant, it is possible to increase the number of raw materials produced. This is an attractive and well-equipped location for foreign petrochemical investors.
Since the textile sector is well developed in Turkey, polymer production related to textiles and the production of textile chemicals have also developed simultaneously. Large plants for the production of polyamide, polyester and acrylic ﬁbres have been built, and production has been directed to both foreign markets as well as the domestic. Almost all synthetic ﬁbres are produced by the private sector, and synthetic ﬁbre production is around 850,000 tonnes/year.
The fertilizer industry is also one of the key industries for Turkey, which has been supporting vast agricultural potential of the country. Currently, there are seven private sector companies producing fertilizers with total production capacity of 6,8 million tonnes/year. Turkey’s fertilizer production meets domestic demand and the surplus is exported.
Pharmaceuticals, soap and detergents, soda, chromium chemicals, boron chemicals, paints, sodium sulphate, fatty acids and rose oil are the other main areas of production of the chemical industry. The pharmaceuticals industry has become one of the leading sectors of the chemical industry, accounting for approximately 18% of the chemical industry’s production. Production trends of pharmaceuticals are closely related to domestic demand. A significant number of Turkish pharmaceutical companies are continuation of EU or USA initial investments and has been manufacturing a wide range of pharmaceutical products, mostly generic formulas since 1960. The number of pharmaceuticals on the market is 3,100 and this number reaches 7,200 when alternative posologies are included. It is worth mentioning that the Afyon Alkaloids Factory produces 20% of the morphine consumed by pharmaceuticals industries all over the world.
The Turkish soap and detergent industry has shown very good performance in terms of quality, capacity and exports in 2020. There are many companies in the soap and detergent industry, about 15 of them being the major ones; among these there are multinational groups which have worldwide reputations. Since 1990, domestic and foreign investments in the Turkish cleaning products industry have increased considerably. As a consequence, detergent production capacity has reached 1.3 million tonnes and soap production capacity has reached 550,000 tonnes; both have great export potential. Although the consumption and production of cosmetics and personal care products are growing rapidly, the number of cosmetics and personal care products has decreased due to pandemic in 2020. Hair care has the largest share of the cosmetics and personal care products market in Turkey. Natural cosmetic production is on the rise, due to growing demand for these products. During the 2020 pandemic process, the existing disinfectant and cologne manufacturers rapidly increased their production capacity by supplying raw materials and also exported to the EU.
Parallel to the developments in Turkey’s construction, automotive and marine industries, the paints and coatings industry has also developed to become one of the most dynamic sectors of the Turkish chemical industry. Today the industry produces about 600,000 tons in 2020 of paints and coatings and comprises of about 600 manufacturers, 20 of them being large-scale companies. In addition to meeting domestic demand, the Turkish paint sector has recently tended to export more.
Turkey has the largest soda factory in the Middle East, with a total capacity of 750,000 tonnes per year. In addition to light and dense soda ash, reﬁned sodium bicarbonate and sodium silicate are produced at the Mersin plant. An extremely rich trona (natural soda ash) deposit was found near Ankara, at Beypazari and at present Turkey has substantial export potential for soda ash. Eti Soda A.Ş.. started operation in 2009, with 1 million tonnes/year soda ash continued to be produced.
As one of the top ﬁve countries supplying chrome ore to world markets, Turkey produces and exports some of the most important chrome chemicals and derivatives such as sodium bichromate, basic chrome sulphate, chromic acid and chrome oxide.
Turkey also enjoys a comparative advantage in boron chemicals – borax decahydrate, borax pentahydrate, boric acid and sodium perborate – due to the size of its reserves, the quality of minerals and proximity to consumer markets. Eti Maden Isletmeleri Genel Müdürlüğü is the dominant producer of boron minerals and boron chemicals and the sole exclusive exporter of boron chemicals.
Turkey has developed a substantial capacity and production of sodium sulphate. In sodium sulphate production, Turkey is second largest in Europe and sixth in the world.
Given Turkey’s climatic and ecological conditions, many medicinal and aromatic plants are cultivated or gathered from nature. Turkey is one of the most important rose oil exporters in the world market. The majority of these exports originate from the Isparta region. Laurel oil, thymus oil, lavender oil and origanium oil are also produced in Turkey.
In conjunction with recent industrial growth in Turkey, the consumption and production of many other chemicals are growing rapidly, and the number of specialty chemicals produced is also increasing every year. The recent developments in textile and leather chemicals are also worth mentioning, and many small- and medium- sized companies have recently started to operate in these two sectors. In the Turkish chemical industry, there are about 332 companies with foreign investment. The Turkish chemical industry has a 13% share of total foreign capital in Turkey.
OYAK has adopted another sector and began building a facility to produce carbon-black, a material with a domestic market volume of 260 milion USD. Partnered with the world’s sixth largest carbon black producer Taiwanese International CSRC Investment Holding Co. Ltd. OYAK will meet the annual domestic need of 220 thousand tons of for carbon black which is primarily used in tire industry as well as numerous other fields including manufacturing rubber, paint and speciality electronic devices. The production facility will be located in Iskenderun. With the new incentive package released in 2020, special financial support and investment area are provided for new investments.
HOW ARE WE DOING?
- Unique geographical location for the world markets and oil & gas pipeline routes
- Presence of high younger population ratio as near-future employment potential
- Good adoption of international industry standards and EU harmonisations with EU market rules
- Strong dynamic domestic market with 84 million population.
- Presence of entrepreneurial capacity/potential of SMEs, Free Zones and Organized Industry Zones
- Presence of well-developed industry sectoral diversity and infrastructure
- Uninterrupted production and responsible employees during the challenging and risky conditions such as pandemic
- Relatively low allocations for R&D spending in chemical industry sectors
- Dependency on high-cost imported energy and raw materials supplies (70%)
- Limited production capabilities in high added-value chemical products
- Lack of chemical clusters with ports for chemical manufacturers, synergy and thus, large volume production
OUR CONTRIBUTION TO A COMPETITIVE EUROPE
A new incentives package has recently been declared for new chemical industry investments from scratch with the goal of reaching a $30 billion in chemicals exports by 2023.
Incentives in the form of land allocation and investment credit support for one establishment of integrated chemical industry clusters were also developed, both at national and at regional level, to encourage and sustain innovation, along with new domestic and international production facility investments.