Considering Turkey and the world market, Kastamonu Integrated Wood Industry and Trade Co. General Manager Haluk Yıldız, has evaluated the industry overview in 2013. As ORSIAD, we would like to share his comments below with our valued readers.
“2013 has become one of the most diverse and challenging year of recent years.
In Kastamonu Integrated, we continue to progress towards our goals of sustainable growth and Europe 4. For sustainable growth, we need new forest resources and new markets. Turkey has reached the saturation point for forest resources and market size. Between 2011 and 2012, investments were made greatly and new capacities have set in the industry. Therefore, for sustainable growth, we continue to invest abroad.
As you may know, Adana MDF plant that we were planning five years ago, has started to operate in 2012. In the last year and day by day, they are reaching their targets of production and sales slowly. Through our investment in Adana MDF and with our increasing MDF capacity, now we aim to fullfill our customers’ demands of raw MDF with all of our MDF plants.
Again in 2012, our chipboard production investment made in Romania is approaching to the target value of production capacity. Also as for the sales, our goal is to take place in the markets that we have never been active before. In this regard, we are getting closer to our goals.
Our goal is to take market share from countries like Romania, Hungary, Greece, Azerbaijan, Bosnia and Herzegovina, Serbia, Moldova and Ukraine. We do not have an idea of bringing products from our facility in Romania to Turkey.
Currently, we continue our largest MDF investment in Tatarstan. Because of the conditions in Russia (bureaucracy, weather conditions, technical difficulties, permissions, etc.), our investment had some challenges that caused us a little bit delay. We revised our goal to start operating at the end of the first quarter of 2014. With the other investments that we will make in the Elabuga SEZ Industrial region, Tatarstan may be recorded as the world’s largest single location for production capacity.
Again, going back to the year 2013, primarily as I said, it was a different and a difficult year.
While Turkey is moving towards being a global country, it is no longer possible not be to affected by the events happening in the world.
First of all and unfortunately, the crisis that happened in the European Union countries of Greece, Spain and Portugal, had a negative impact on our economy. Later on the rumors of America might stop the monetary development programs that has been going on for the last 10 years, again unfortunately, affected us negatively.
As you know, with the lessons we learned from the 2001 crisis and a stable single-party government and the juxtaposition of monetary developments in the world, we had become one of the countries that benefit most from this wind.
First, when we look at Turkey’s own geography in 2012, five new facilities have started to operate. An additional capacity over 2 million m3 has occured. The total capacity of approximately 8 million m3 per year has increased by 25% to 10 million m3 capacity.
In an environment where market contracted, additional capacity increase of 25% is impossible to digest.
The second important issue is our export markets. Events like, embargo on Iran, Syria civil war, the North African countries not being able to be back to normal after the Arab, unfortunately, have negatively affected our exports of panels and furniture.
Thirdly, due to troubles in the European market, European countries have continued to export to Turkey.
Fourthly, all of the problems that have been experienced, caused a contraction in the domestic market.
Finally, all this negativity caused an internal competition, which unfortunately resulted with price cuts and delayed terms of payment in the market, and eventually the merchant group has strived to minimize their inventories. After all, the stocks they suppose to keep, came to our warehouse as an additional burden.
In short it was a difficult year. For now, 2014 may be a bit more comforting because of Americans monetary expansion might continue, crisis in Europe has slowed down and the relations with Iran softening, but still the market is not a position to absorb the additional investments made in 2012.
However, the price and term competition came to the last point in terms of cost and profitability since Euro and USD increasing against the TL. Thereafter, even though stock occupancy and market competition, there’s nowhere to go. Gradually prices have to increase to meet the increased costs.
Nevertheless, we should not forget that Turkey’s one of the world’s biggest country with market size of 8-9 million m3/year in total panel production. Turkey is the world’s 2nd biggest consumer of laminate flooring, Europe’s largest MDF producer and the 3rd of Europe in the particleboard production. This market size has given us power all the time.
Nevertheless, we want to be hopeful for 2014. Each new day, each new year is open to new prospects.
As much as experiencing the disadvantages of being in the most difficult region of the world, Turkey will also continue to experience the advantages of this location. We are in the middle of developing countries and the ones that can not produce. Turkey will continue to serve these countries with its production capacity, dynamism, technology and skills. Turkey is always one of the biggest players in the world in panel market and will continue to be.”