Soaring costs, freight pressure Turkey cement, clinker exports: official

Turkey's cement producers are battling a dual crisis of soaring costs and acute ship shortages that threaten to disrupt exports even as demand from key markets strengthens, Ender Sahin, president of Turkish Cement, a semi-governmental association representing cement producers and exporters in Turkey, told Platts, part of S&P Global Energy, in an interview on March 26.

Clinker spot offers have risen to $47/metric ton FOB, while a recent cement contract for ASTM Type I/II to the US was concluded at $58/mt FOB for two shipments totaling 60,000 mt, up from annual prices of $53-$54/mt FOB agreed earlier this year. Domestic cement prices have already climbed 5%-10% since the start of the war in the Middle East, he said.

The cost pressures stem from energy expenses that have risen more than 30% for Turkish cement manufacturers, while transport costs and port charges have also increased sharply, Sahin said. Many factories located far from ports face additional logistics expenses, with producers on CIF contracts particularly exposed as freight rates have nearly doubled on some routes.

"The freight on some routes has nearly doubled," Sahin said. "It is impossible to survive and continue the business."

Shipping crisis

The ship shortage has hit contracted volumes hardest, with even large buyers holding contracts of affreightment struggling to secure ships. Mid-sized contract holders who failed to fix freight in advance are now unable to perform their obligations, leading to cargo defaults expected in the coming months, Sahin said.

Demurrage costs have also risen for producers facing delays.

Sahin anticipates that defaulted quantities will become available in subsequent months, particularly for clinker cargoes destined for West Africa. March shipments were disrupted by laycan complications, and this is expected to continue in April if the geopolitical situation does not improve, he said.

"The problem is not on our side but globally because of freight and a shortage of vessels," Sahin said. "We are chasing shipowners to honor laycans, but there are no vessels, so it is not a production issue but an operational one."

Despite operational challenges, Turkish cement producers are benefiting from increased demand amid disruptions at UAE ports. The freight advantage for Turkish cement to the US market versus Vietnamese supplies has also nearly doubled, potentially opening new opportunities. However, producers have limited excess quantities available for spot sales and are struggling to offset elevated costs with higher prices.

"Most factories are looking to sell some export quantities at a higher price, but even the current price levels are not suitable for many producers because domestic prices are comparatively better," Sahin said.

Platts assessed cement clinker FOB Turkey at $45.50/mt on March 19, unchanged week over week.