Costs of Construction Materials Industry Keep Increasing

According to the Construction Materials Industry Composite Index and Foreign Trade Index, which are published monthly by the Association of Turkish Construction Material Producers (Turkey IMSAD), costs keep increasing despite the decrease in exchange rates.

According to construction cost indexes, while cost increases accelerated by mid-2020, industry costs increased by 10.76% in December 2019 on an annual basis; by 2.68% compared to the previous month in December 2020; and by 25.02% compared to the same month of the previous year. According to the January results of the Construction Materials Industry Composite Index, the Composite Index, which declines in January due to seasonal impacts, increase in January 2021. Similarly, Construction Materials Industry Foreign Trade Index, prepared by IMSAD, closed the year with only a 1.5% loss, according to the December 2020 results.

December witnessed the highest performance in export

December was the strongest month of the year in terms of export. Thanks to the US$2.16 billion obtained in December, export volume of the last quarter reached US$2 billion. Despite the seasonal impacts, the highest export volume was obtained in December. Fears of a new wave in the COVID-19 pandemic increased the foreign demand in foreign markets.

Construction materials exported in December 2020 equal 5.37 million tons, with an increase of 27.7% compared to the same month of the previous year.

The Construction Materials industry closed the year with US$21.16 billion of export volume, despite the 1.5% annual decline in 2020, and reached an all-time high export quantity with an increase of 16.2%.

All-time high export quantity achieved in 2020

Construction materials export increased by 16.2% in terms of quantity in 2020. The 51.6 million tons of export in 2019 increased, reached 59.96 million tons in 2020, especially thanks to the increase in cement export. The construction materials industry achieved an all-time high annual export quantity.

Limited increase starts according to the Composite Index

Construction Materials Industry Composite Index entered the new year with limited increase. Composite Index increased in the second month, too. While a limited decline is experienced in the drivers of the Composite Index in January, Confidence and Expectation Indexes showed an increase at the beginning of the year.

Composite Index, which increased 0.43 points in January 2021, surpassed January 2020 figures. In January, activities declined on a limited scale due to the seasonal impacts and closing decisions.  Domestic and foreign sales, production and volume declined. International sales continued increasing. Expectation Index also started the year with an increase. Domestic and foreign orders increased. Production expectations also leaped forward.

Recovery of industry led to increase in export

In 2020, imports of construction materials increased by 3.5% in value and reached US$7.03 billion. In the same year, imports of construction materials increased by 5.2% in terms of quantity. An increase has been experienced in import activities of the construction industry, which recovered in the second half of the year thanks to the supports granted.

Highest monthly import volume in 2020 was achieved in December

In December 2020, US$740 million of import volume was achieved, the highest monthly import volume in that year. In terms of quantity, construction materials import decreased by 2% with an amount of 264,400 tons.

TUIK Data: Construction Costs, Housing Prices Increase

Construction costs indexes published by Turkish Statistical Institute (TUIK) point out that cost increase accelerated by midyear in 2020. According to the latest construction costs index, costs increased 2.68% compared to the previous month and 25.02% compared to the same month of the previous year.

Increase in exchange rates, especially since the beginning of 2020, import became more expensive and it also affected the increase in costs. Costs in the industry increased by 10.76 percent on an annual basis in December 2019 and increased by 25.02 percent in December 2020. The annual increase in the index was recently 25.65 percent in December 2018.

Even if the decline in the exchange rate continues in February after hitting record high experience in November, its reflection on import costs still continues. Within this context, prices in construction industry hit record high both due to the increase in exchange rates and the costs.