New Market Research Report: Turkey Petrochemicals Report Q2 2016

Turkish petrochemicals production growth has slowed over the past year and the country's industry entered 2016 with further downward pressure on prices in an increasingly challenging market. Greater political certainty has not provided sufficient basis for stronger growth in the immediate future, but the country continues to invest in refinery and petrochemicals capacities in a drive to become self-sufficient.

BMI estimates that Turkey's overall chemicals growth in 2015 was 3.2%, while rubber and plastic grew 1.2%. This marked a significant downturn from the 4.6% chemicals growth and 3.0% rubber and plastic growth reported in 2014 and is in line with the country's overall industrial slowdown. Turkish petrochemicals producer Petkim's output totalled 4.84mn tonnes, down 1.6% y-o-y, which was in spite of capacity expansion, due primarily to polyethylene market weaknesses.

The situation in Q116 appeared to show no significant change with weakening prices. However, the feared influx of Iranian product did not transpire. BMI believes it will not be until mid-2016 that Iranian polymer starts impacting on markets, with Europe likely to be a prime destination. Turkey's weak domestic prices may prompt Iranian producers to export to Europe instead.

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The growth of the Turkish petrochemicals industry will be influenced by both the large and growing domestic market as well as export-oriented industries. Turkey's construction and automotive sectors are set to maintain positive growth trajectories over our forecast period, thanks to continued investment in urban regeneration and strong growth for vehicles, albeit following a deep slump.

In order to overcome any domestic weaknesses over the medium term, Petkim has established its export targets to 2018. It is hoping to raise them from USD110mn in 2015 to USD155mn in 2016, USD175mn in 2017 and USD200mn in 2018. Although this almost doubles the value of exports over three years, compared with other producers in the region it will remain a relatively minor regional player.

By 2020, BMI forecasts capacities of 1400,000 tonnes per annum (tpa) ethylene, 700,000tpa polyethylene, 960,000tpa polypropylene, 300,000tpa polyvinyl chloride and 986,000tpa polyethylene terephthalate (PET).

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