Market Monitor - Chemicals - Turkey 2016

Market Monitor

  • Turkey
  • Chemicals/Pharma

21st July 2016

The number of payment delays was high at the end of 2015, with financially weaker players leaving the market. Insolvencies are expected to level off.

  • Turkish chemicals sector growth levelled off in 2015 as domestic demand was affected by increased political volatility (two major general elections in June and November 2015). In 2016 chemicals sales and production are expected to grow again, driven by increasing demand from main buyer industries like construction and textiles.
  • As the Turkish chemicals sector is mostly domestic market-oriented and dependent on imports, businesses’ profit margins were negatively affected by increased exchange rate volatility over the last 12 months. Due to the expected stability of the exchange rate of the Turkish lira against the euro and the US dollar, it is forecast that profit margins will rebound in 2016. Lower oil prices also have a positive effect on industry performance.
  • As foreign global players have entered the Turkish market (especially in the paint and pharmaceuticals segments) competition is high for local players, despite regulations to support domestic companies in some segments.
  • The overall indebtedness of businesses is average in this sector, but has increased recently for many businesses due to the lira depreciation. That said, banks are generally willing to provide loans to the chemicals industry.
  • The average payment duration in the Turkish chemicals industry is 150 days. The number of payment delays and insolvency cases was high at the end of 2015, with financially weaker players leaving the market. Insolvencies are expected to level off in 2016.
  • Due to the currently more volatile economic and political situation in Turkey and the increase in insolvencies and deteriorated payment behaviour seen at the end of last year, our underwriting stance on chemicals is currently more restrictive, especially if the buyers are not part of a large group.

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The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.