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Turkish Ready Mixed Concrete Association announced its 2020 Ready Mixed Concrete Industry Report
Turkish Ready Mixed Concrete Association (THBB) has announced the "Ready-Mixed Concrete Industry Report", which scientifically analyzes the ready mixed concrete sector, which makes significant contributions to our country's economy, in 2020. Turkish Statistical Institute (TUIK), T.R. Prepared in the light of the data and information provided by the Central Bank, the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the data and information provided by THBB and its members, the Report includes detailed analyzes, evaluations and projections for the Turkish economy, the construction industry and the ready mixed concrete industry. The Report, which reveals that the ready mixed concrete sector has shrunk significantly in recent years, draws attention to the need to prepare a "Construction Sector Strategy Document" for the sustainable development of the country.
Turkey is Europe's leader in ready mixed concrete production
THBB, which has been working for 33 years in order to produce concrete in accordance with the standards in Turkey and to ensure correct concrete applications in construction, makes a great contribution to the development of construction, ready mixed concrete and related sectors with its quality, environment, sustainability and occupational safety practices.
The ready mixed concrete industry, which THBB is the representative of, stands in a very important place in terms of the Turkish economy and the construction industry with its annual production of 77 million cubic meters, turnover exceeding 17 billion Turkish lira, and employment volume exceeding 31 thousand, according to 2019 data. Our country has been the leader of Europe in concrete production since 2009. Our industry makes a great contribution to the construction industry and, accordingly, to the national economy. This shows that the ready mixed concrete sector is the most basic branch of the construction sector.
The ready mixed concrete sector showed a steady growth trend until 2017 and reached its peak in 2017 with an annual production of 115 million cubic meters. With the contraction of the construction sector in 2018 and its continuation, there was a sharp decline in 2019. The ready mixed concrete industry has gone back 10 years with its production value in 2019. Along with the volumetric decrease, there has also been a significant decrease in the number of companies and facilities.
Ready-mixed concrete price lagged far behind both PPI and CPI.
While CPI increased by 14.6% and PPI by 25.2% in 2020, the Ready-Mixed Concrete Price Index increased by only 11.3%. Ready-mixed concrete price lagged far behind both PPI and CPI. In the light of this information published by TURKSTAT, it is seen that the news and press statements about the abnormal increase in the price of ready mixed concrete in 2020 are not realistic. Despite many negative developments such as increase in raw material prices, increase in interest rates and fluctuations in demand, ready mixed concrete producers could not keep the ready mixed concrete price at the required level. Between 2016 and 2020, the PPI increased by 128% and the dollar rate increased by 158%. This increase remained as 78% in the ready mixed concrete price. In short, there was a 50% loss compared to the PPI.
The sudden and high increase in raw material prices has made the ready mixed concrete producer victims.
Due to the fluctuating demand, rapidly changing conditions and uncertainties in 2020, there were problems in the cost and pricing (cost-oriented) policy of the sector. Particularly, fixed-price contracts have made the ready-mixed concrete producers aggrieved by the sudden and high increase in raw material prices. Cash flow management, receivables and risk monitoring and market analysis were also issues that companies had problems with. Some companies closed or reduced their facilities and had to sell their equipment to African and Middle Eastern countries and turn to cash. However, the sudden demand, which occurred at an unexpected level after the pandemic, caught the companies off-guard in equipment and personnel management. The high level of competition was another factor that negatively affected the producers.
The sector is estimated to have grown by 17%-22% in 2020.
The ready-mixed concrete industry, which experienced a period of ups and downs in 2020, managed to grow despite all the negativities. Of course, the main reason for this growth was that the housing loan interests remained at low levels in the June-August period in order to increase the demand for housing and accordingly facilitate the start of new projects. However, the momentum gained with the increase in interest rates decreased. It is estimated that the ready mixed concrete industry has grown by 17%-22% in 2020.
Within the scope of the sector research, it is estimated that the ready mixed concrete sector will remain the same as in 2020 in the pessimistic scenario and may grow by 9% in the optimistic scenario in 2021. As a result; When these two different scenarios meet at a common point, it can be said that the sectoral growth expectation for 2021 is around 5%.
Ready-mixed concrete sector does not receive sufficient support
Making evaluations about the Ready Mixed Concrete Industry Report, Yavuz Işık, Chairman of the Turkish Ready Mixed Concrete Association, said that bankruptcies and concordats in the construction sector in recent years, the prolongation of maturities, unpredictability of demand, sudden increases in raw material prices, high level of competition, investment items depend on the exchange rate He pointed out that many reasons such as downsizing, not taking risks and saving the day are leading manufacturers. In addition to these, Yavuz Işık stated that ready-mixed concrete is an extremely sensitive and critical building material that must be transported and replaced within a short period of time such as two hours after production. He underlined that he was adversely affected by the problems and that much is expected from the ready mixed concrete industry, but that the industry did not receive sufficient support to achieve this.
“Construction Sector Strategy Document” should be prepared and implemented as soon as possible.
Yavuz Işık, who stated that although some difficulties arise in the new normal for the construction sector and ready mixed concrete sector in our country, there are opportunities to be seen when looking at the big picture, said, “The sustainable growth of construction and other sectors serving the construction sector can only be realized with a holistic development model. This model is also necessary for the sustainable development of the country. Therefore, the 'Construction Sector Strategy Document' should be prepared and implemented as soon as possible. In accordance with this strategy, the ready mixed concrete industry and all other relevant sectors should determine their own strategies and roadmaps.” said.
You can reach the Ready Mixed Concrete Industry Report for 2020 by CLICKING HERE.