CEMENT SECTOR

ANALYSIS
SEVİM ŞAYAN
OSMAN TURAN
GÜLSÜM DİKMEN
 CEMENT SECTOR ANALYSIS
Questions 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)Porter’s 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 Cement
Portland cement:The most common use for
Portland cement is in the production of
concrete
Non-Portland hydraulic cements
üPozzolan-lime cements
üSlag-lime cements
üSupersulfated cements
üCalcium aluminate cements
üCalcium sulfoaluminate cements

Production of Cement
 http://www.tcma.org.tr/index.php?page=
icerikgoster&menuID=54
SWOT Analysis of Cement
Sector
Strengths


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
Sector
Strengths


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
Sector
Weaknesses


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
SWOT Analysis of Cement
Sector
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
Opportunities


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
Sector
Threats


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 world
In 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 world
In 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 world
Global 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 Turkey
Turkish 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 Turkey
By 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 Turkey
At 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 Adminis- Basic Qualified

trative

Marmara 83 73 56 116 3 254 286 1180 2051 1114

Aegean 46 69 65 31 5 194 100 717 1.227 529

Mediterrean 66 49 65 98 9 216 507 476 1.486 871

Black-Sea 56 55 51 48 14 187 463 487 1.361 503

Middle 94 60 55 65 23 137 203 862 1.499 856

Anatolia

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 Turkey
In 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 Turkey
In 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 Turkey
Comparison of Cement Exportation between 2008 and 2009

2008 2009 Change(%)

Cement Amounts Value Amounts Value Amounts Value

(tons) (1000$) (tons) (1000$)

11.125.51 969.650 16.686.04 1.042.211 50 7,5

3 3
General condition of a
cement sector in Turkey
General condition of a
cement sector in Turkey
It 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 Turkey
Top 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 Sectors
Cement 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 Sector
In 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 sector
Capacity 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 Sector
Capacity 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 Sector
Transportation


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 Sector
Transportation


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 Sector
Energy


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 Sector
Energy


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 Sector
Environmental 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 Sector
Research&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


Porter’s 5Forces-Barriers to
Entry
There 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)
Porter’s 5 Forces-Buyers
The 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

Porter’s 5 Forces-
Suppliers
Licensing 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
Porter’s 5 Forces-
Substitues
Gypsum 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

Porter’s 5 Forces-Rivalry
Existing 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

Porter’s 5 Forces
Threat of
ThreatNew of New
Entrants
Entrants
( HIGH )

Bargaining Rivalry Among Bargaining

Power of Competing Firms in Power of
Suppliers sector Buyers
( MEDIUM ) ( MEDIUM TO HIGH ) ( LOW )

Threat of
Substitute
Products
( LOW )
Future Prospects of Cement
Sector
As 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
Sector
Experienced 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
China’s
Future Prospects of Cement
Sector
In 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
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