Cement Sector Analysis

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CEMENT SECTOR ANALYSIS SEVİM ŞAYAN OSMAN TURAN GÜLSÜM DİKMEN

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Cement Sector Analysis in global and Turkey

Transcript of Cement Sector Analysis

CEMENT SECTOR ANALYSISSEVM AYAN OSMAN TURAN GLSM DKMEN

CEMENT SECTOR ANALYSISQuestions we are going to answer

1)What is Cement? 2)Swot Analysis of Cement Sector 3)General Condition of a Cement Sector in the World 4)General Condition of a Cement Sector in Turkey 5)Related Sectors 6)Cost Components and Problems of Sector 7)Porters Five Forces Model 8)Future Prospects of Cement Sector

What is Cement?A cement is a binder, a substance that sets

and hardens independently, and can bind other materials together A cement includes calcium, silicon, aluminium, iron-oxide, calcareous, clay, marn, iron gem. Clinker is ground to become Portland cement. It may also be combined with other active ingredients or chemical admixtures to produce: q ground granulated blast furnace slag cement q pozzolana cement q silica fume cement

Types of CementPortland cement:The most common use for

Portland cement is in the production of concrete Non-Portland hydraulic cements Pozzolan-lime cements Slag-lime cements Supersulfated cements Calcium aluminate cements Calcium sulfoaluminate cements

Production of Cement

http://www.tcma.org.tr/index.php?page= icerikgoster&menuID=54

SWOT Analysis of Cement SectorStrengths Cement is, literally, the building block of the construction sector Almost every building constructed relies on cement for its foundation The cement business is a $10 billion sector, measured by annual cement shipments There is also a strong reputation behind the cement sector

SWOT Analysis of Cement SectorStrengths Cement is a solid material and consumers rarely have complaints about the product Regional distribution plants have also made cement widely available to any type of buyer.

SWOT Analysis of Cement SectorWeaknesses The cement sector is not without its drawbacks The cement sector relies on construction jobs to create a profit The cement sector heavily relies on weather About two-thirds of cement production takes place between May and October Cement producers often use the winter months to produce and stockpile cement, to meet demand

Weaknesses The cost of transporting cement is high and this keeps cement from being profitable over long distances In other words, shipping cement costs more than the profit from selling it

SWOT Analysis of Cement Sector

SWOT Analysis of Cement SectorOpportunities One opportunity is the cement sector's efficiency The cement sector has recently streamlined its production efforts, using dry manufacturing instead of wet, which is heavier and more time-consuming The cement sector has also invested about $6 billion in expansion efforts to meet unmet cement needs Projections show that by 2012, the cement sector will have 25 percent more production

SWOT Analysis of Cement SectorThreats The nature of the economy have uncovered a number of threats to the cement sector The cement sector greatly relies on construction The current economy has lessened the number of construction jobs, which in turn hurts the cement sector Kyoto Protocol and EU Environmental Legislation has introduced regulations for the cement sector to cut down emissions

General condition of a cement sector in the worldIn 2008, world cement production reached 2,87

billion tons European Cement Union countries produces 11 % of total world cement production In 2008 and 2009, because of the economic crisis, production of cement is decreased

General condition of a cement sector in the world

General condition of a cement sector in the world

General condition of a cement sector in the world

General condition of a cement sector in the world

General condition of a cement sector in the worldIn 2008, exporting value of China was 26

million tons but in 2009, it dropped to 14 million tons and its capacity increased to 1,3 billion tons It indicates overcapacity problem of a sector

General condition of a cement sector in the world

General condition of a cement sector in the worldGlobal

economic crisis in 2009, affected mortgage market in USA, after that construction sector and so cement sector are affected Consumption of cement is decreased mostly in America and Europe continents Consumption is decreased most in Russia (25%) Although these decreases, cement consumption increased in Mediterranean Countries such as Libya, Algeria, Syria and Iraq

General condition of a cement sector in TurkeyTurkish cement sector is in the first ten

countries in the world In Europe, Turkey is third in production and fourth in selling cement In 2009 production reached 54 million tons and capacity reached 90 million tons.

General condition of a cement sector in TurkeyBy

the modernization investments in the sector, Turkey became the biggest producer in Europe Also, Turkey became fourth biggest country in domestic consumption and the biggest exporter in Europe

General condition of a cement sector in Turkey

General condition of a cement sector in Turkey

General condition of a cement sector in TurkeyAt the end of 2009, there are 64 cement

factories which 48 of them are integrated plants and 16 of them are grinding-packaging plants In cement sector, there are approximately 15.000 people works

General condition of a cement sector in Turkey

General condition of a cement sector in Turkey

Manager

Engineer

Technician

Technicer

Officials

Worker

Total

Contractor Employees

Technic

Administrative

Basic

Qualified

Marmara Aegean Mediterrean

83 46 66

73 69 49

56 65 65

116 31 98

3 5 9

254 194 216

286 100 507

1180 717 476

2051 1.227 1.486

1114 529 871

Black-Sea Middle Anatolia

56 94

55 60

51 55

48 65

14 23

187 137

463 203

487 862

1.361 1.499

503 856

East Anatolia 25

25

26

27

8

135

208

419

873

157

S.East Anatolia 58

42

53

48

0

232

363

548

1.344

341

Total

428

373

371

433

62

1.355

2.130

4.689

9.841

4.371

General condition of a cement sector in TurkeyIn 2009, cement grinding capacity was 103,5

million tons, clinker production capacity was 62,5 million tons In 2008, cement production was 51,4 million tons and domestic sales was 40,6 million tons In 2009, cement production increased to 54 million tons and domestic sales dropped to 39 million tons

General condition of a cement sector in Turkey

General condition of a cement sector in Turkey

General condition of a cement sector in TurkeyIn Turkey, cement sector is an important sector

which has approximately 4 billion dollars endorsement and 1 billion dollars exportation Overcapacity problem in the market is solved by exportation Russia, Middle Eastern Countries, Egypt, Libya and Western Africa became important markets for Turkish cement exportation

General condition of a cement sector in TurkeyComparison of Cement Exportation between 2008 and 2009 2008 Cement Amounts Value (tons) (1000$) 11.125.51 969.650 3 2009 Amounts Value (tons) (1000$) Change(%) Amounts Value

16.686.04 1.042.211 50 3

7,5

General condition of a cement sector in Turkey

General condition of a cement sector in TurkeyIt can be seen that in three regions of Turkey

(Marmara, Aegean and Mediterranean) cement exporting values increased very high. These regions are coast regions and increasing in exporting became because of this factor

General condition of a cement sector in Turkey

General condition of a cement sector in TurkeyTop Ten Countries in Cement Exportation in 2009 (in 2008 in parentheses) Countries Tons Iraq 3.415.182 (2.243.451) Syria 2.073.096 (1.564.652) Italy 1.339.964 (630.714) Libya 1.030.694 (65.973) Egypt 901.143 (-) Nigeria 650.845 (127.844) Russia 615.298 (3.192.015) Israel 489.206 (285.886) Azerbaijan 354.161 (342.479) Bulgaria 333.355 (7.953)

General condition of a cement sector in Turkey

General condition of a cement sector in Turkey

Related SectorsCement sector is only sector which is not

unregistered in construction sector Demand in cement sector changes according to economic conditions and investment environment in related country and it stagnates the period that there is no expenditures Especially, the last global economic crisis affected construction and real estate sectors, so demand of cement is decreased

Cost Components and Problems of SectorIn cement production raw material, auxiliaries,

energy and fuel are important cost components Also transportation is other important component Especially cost of energy, fuel and transportation demage competitiveness of the cement sector in the market Turkish cement producers have disadvantages in cost according to the international competitors in the market

Cost Components and Problems of Sector

Cost components and problems of sectorCapacity Problem Because of overcapacity and intensive competition, prices are decreased and sector is in trouble In 2008 Feb, average cement price was 120 TL, but it decreased 27 percent to 88 TL in 2009 Feb, also in 2010 average price is 85 TL It is expected that the capacity problem will continue for a while because of stagnation in the market

Cost Components and Problems of SectorCapacity Problem To solve this problem investments must be planned and controlled For using all of the current capacity, investment of civil infrastructure and urban regeneration projects must be increased

Cost Components and Problems of SectorTransportation In fact increasing in domestic and international markets, increased production cost affect export in bad manner The most important factors in the exporting cement is inadequate railways and export ports Because of the inadequate ports, exports are made by highways

Cost Components and Problems of SectorTransportation High transportation cost is important barrier in exportation To solve his problem there must be policies to increase exportation Ports and logistic projects must be improved

Cost Components and Problems of SectorEnergy Especially high petroleum prices affect cement sector badly Because of low sale prices which is caused by overcapacity, sector is in trouble because of incerasing production cost There must be fiscal policies in energy costs Also companies are sensitive about energy efficiency and increase environmental awareness

Cost Components and Problems of SectorEnergy Also companies are sensitive about energy efficiency and increase environmental awareness There must be trainings about energy efficiency and cost advantages must be determined

Cost Components and Problems of SectorEnvironmental Regularization Kyoto Protocol and accordance to EU Environmental Legislation are important problems about environment In this process sector will have to make high technological investments and establish new treatment plant For this expenditures and investments finance and timing are main problems

Cost Components and Problems of SectorResearch&Development Projects must be developed to decrease gas emissions and energy consumption It must be provided that sector has to give importance to R&D activities

Porters 5Forces-Barriers to EntryThere are no barriers to entry But if you want to build a cement factory

capital cost is high (approximately 130 million dollars to build 3500 tons/days capacity)

Porters 5 Forces-BuyersThe main consumer is housing markets Housing is now booming as a part of the

remittances is being used for construction of houses Commercial banks with liquidity are finding housing sector potential area for lending Infrastructure is the another segment of cement sector Cement demand in emerging economies is much higher than developed countries where the demand has reached a plateau

Porters 5 ForcesSuppliersLicensing of main reserves is controlled by

government The shortage of a raw material remain a concern Transportation and packaging suppliers can affect bargaining power so backward integration can be used

Porters 5 ForcesSubstituesGypsum

plaster is a good substitue for construction purposes Gypsum plaster is also useful in construction in regions of extreme cold and hot climate for isolation

Porters 5 Forces-RivalryExisting

firms are trying to expand their

capacity Government enforce the improvement quality of the cement and rivalry by the anti-trust laws Competition Board is analyse the sector, for mergering, acqusition, and price statement activities

Porters 5 ForcesThreat of Threat of New New Entrants Entrants ( HIGH )

Bargaining Power of Suppliers ( MEDIUM )

Rivalry Among Competing Firms in sector ( MEDIUM TO HIGH )

Bargaining Power of Buyers ( LOW )

Threat of Substitute Products ( LOW )

Future Prospects of Cement SectorAs it is mentioned before global economic

crisis affected construction sector so cement sector is also affected The world have experienced a recession in demand in 2009 Turkey also affected by the recession and declines in domestic consumption was observed 170 million tons in the entire world experienced an increase in capacity, and this has created excess demand

Future Prospects of Cement SectorExperienced decline is foreseen in the coming

years, increases in capacity, capacity increases are expected to be provided by the majority of developing countries Losses in the demand recovery is expected in the coming years, in Europe such a recovery is not expected in the short term The investment in the sector is thought to increase in the United States and Russia Cement consumption in the two countries share most of the India and China have shown differences in the predictions for 2010, India's growth potential is expected to be higher than Chinas

Future Prospects of Cement SectorIn the winter of 2014 there is going to be

Winter Olympics in the city of Sochi in Russia For Turkish cement sector, it is expected that exportation to Russia will be increased in 2014

Thanks For Listening