Turkish Daily News reported that the recession experienced by the constructions industry is beginning to affect its sub sectors. Ready mixed concrete sales deteriorate 30% to 35% while iron and steel production declines 12% and the export sector is unable to provide the solution.
The trend of growth in the construction industry seems to be coming to an end. Affected by recession all its related sectors including iron, steel, ready mix concrete and ceramics, began to show signs of the slowdown. Many sub industries of the construction sector have started downsizing due to the contraction in the domestic market as well as fluctuations in global markets.
Cement one of the affected sectors downsized by 1% during the H1 of the year due to the contraction of the domestic market. During the period, the sector has reached out for exports as a way out of the contraction in the local market. However, the deepening global crisis has become a major threat for sector players who have been considering exports as the only way to overcome the obstacles in the domestic market.
Mr Adnan Ignebekcili president of the Turkey's Cement Producers Association said that cement exports increased 80% to reach 7 million tonnes during the H1 of the year. He said that “However the dynamism of the exports has been threatened by the distress in the Russian market. Meanwhile the global financial crisis has been deepening and it looks like it will eventually affect all developed and emerging markets. A serious decline in demand is being seen in the export market.”
Mr Ferruh Karakule secretary general of the Turkey's Ready Mix Concrete Association or THBB said that “The ready mix concrete sector saw sales of 74.5 million cubic meters in 2007. However sales in the sector have declined 30% to 35% during the H1 of the year. Many companies operating in the ready mix concrete sector were bearing losses due to the recession in the construction industry. Trying to survive and be able to make their payments in this not so rosy period, many firms are selling their products at a production cost or even at a loss. Some 400 companies operate in the sector and 35 to 40 of them changed hands, while five had to close down.””
The iron and steel sector also suffers form the contraction in the domestic market. Production in the sector declined 12% during the first 6 months of the year before the sector turned to exports in hope of making ends meet. Iron and steel exports increased 150% in August. The sector will end September with an export increase of 240%.
Mr Veysel Yayan secretary general of the Turkish Iron and Steel Producers Association or DÇÜD said that “The global crisis may cause distress to exports. The high priced contracts, signed during the first half of the year are about to expire. After that happens, we expect a value and quantity decline in our exports.”
The reported added that the construction sector in the country managed to grow only 0.9% during the H1 of the year. The number of construction permits received from municipalities declined 10.2%. Apartment complex constructions also dropped 11.4% during the same period.
According to Turkish Statistical Institute or TÜİK, applications for the construction permits have also dropped. Only 50,565 building construction permits have been attained. Last year that figure stood at 56,389.
