International Observation: How Much Does The Turkish Earthquake Affect The International Textile Industry? What Other Impacts Will The Global Supply Chain Suffer?

The strong earthquake in Turkey touched people's hearts. On February 6, several strong earthquakes occurred in southern Turkey and the border area with Syria, causing serious casualties and property losses.

The earthquake also caused heavy damage to Turkey's economy. Among them, Turkey's textile industry, which accounts for one tenth of Turkey's gross national product, was also affected to some extent by the earthquake. In 2022, Turkey's textile and clothing exports will reach 34.4 million US dollars, which is an important part of the country's economy.

From the perspective of Turkey's geographical conditions, the impact of this earthquake may even affect the global supply chain.

Turkey is an important textile production and export country in the world

On February 7, the Turkish securities trading platform Borsa Istanbul disclosed on the public platform that the strong earthquake centered on Kahramamarras had affected 10 provinces in Turkey. The company decided to terminate the stock trading of enterprises in the earthquake area until these companies made special disclosure on how they were affected by the earthquake.

Among those enterprises whose stock trading was suspended, the Turkish textile news media Textilegence reported that 8 of them were textile and clothing enterprises. These enterprises include suppliers and foundries of textile materials such as cotton and cotton textiles, polyester fibers and related textiles, and their customers include well-known European brands H&M, ZARA, Puma, Boboli, Louis Vuitton, etc.

According to the data of Turkish Ministry of Commerce, as of 2021, Turkey is the sixth largest textile and clothing production and export country in the world. The textile industry of this country is particularly important to Europe, and it is the third largest textile and clothing import source of the EU, while the EU is the largest exporter of Turkey's textile industry.

According to the data in 2021, Turkey's textile and clothing exports to the EU in that year reached 129 billion US dollars, up 33.8% year on year, a record high. For EU textile retailers, Turkish cotton woven fabrics, knitted or crocheted fabrics, floor covering fabrics, tapestries and tablecloths, and home textile products are very competitive in the global market.

Therefore, once the Turkish textile industry stops, it will have a greater impact on downstream enterprises. While the above enterprises suspended stock trading to assess the damage caused by the strong earthquake, a spokesman of the IHKIB Istanbul Apparel Exporters Association said on the first day of the earthquake that the agency was trying to confirm the potential impact of the earthquake on the textile and clothing industry.

How much is the international textile industry affected?

The spokesman of IHKIB said: "As the textile industry is mainly concentrated in Istanbul, we do not expect (the earthquake) to have a material impact (on the Turkish textile industry). However, we are still clarifying the specific impact of the earthquake."

It is reported that in recent years, some European and American brands have relocated their supply chains around the world and transferred some orders from markets in China and other regions to other countries. For European brands, Istanbul's textile industry, which is at the core of the Eurasian border, has just accepted some orders transferred from the previous production area.

Istanbul is the largest city in Turkey and the center of the country's economic life. As it is located at the junction of international land and sea trade routes, Istanbul has also been the core area of the country's textile industry for nearly a century. Around Istanbul, there are a large number of textile processing, clothing manufacturing and trading companies.

The Turkish Ministry of Commerce mentioned in the 2022 textile industry report that since Istanbul has become a fashion and shopping center, most textile enterprises have transferred production to the provinces, including Bursa and Tekirdag, which are close to Istanbul, and cities in the northwest of Turkey, such as Denizli, are the main cities of textile and clothing production in the country. Data shows that the production scale of textiles and clothing near Istanbul accounts for about 75% of the country's exports.

However, the focus of this strong earthquake in Turkey is located in the region of Turkey's Kahlamamarash Province, and the Gaziantep region near the province, which is expected to have limited direct impact on the textile industry in Istanbul and northwest Turkey.

However, it is worth noting that the Gaziantep region, which was greatly affected by the earthquake, has also developed into an important textile region in Turkey in recent years. According to the data cited by CCF group, a textile industry think tank, 7% of Turkish textile enterprises and workers come from this region. The transportation and logistics interruption, house collapse and equipment damage caused by the strong earthquake in this area are expected to affect the manufacturers in this area to varying degrees, although the impact degree still needs further assessment.

However, among the above-mentioned large Turkish textile enterprises that suspended stock trading, polyester fiber manufacturer Sasa Polyester, jeans manufacturer Bossa, and cotton and cotton textile manufacturer Rubenis Tekstil have issued a statement saying that their factories near the epicenter of the earthquake are not affected and production is still continuing. Sasa Polyester and Bossa both have production bases in Adana.

Strong earthquake or global industrial chain

From the perspective of Turkey's regional conditions, the impact of this earthquake may affect the whole world. Turkey is known as the crossroad connecting Asia, Europe and Africa, and it is also a major traffic artery.

According to CCTV News, affected by the earthquake, some containers at Iskenderun Port in Khathai Province collapsed, causing circuit failure, and then a raging fire. Until the morning of February 7 local time, the fire in Iskenderun Port continued and spread to several areas of the port. According to the Reference News, the operation of Iskenderun Port has been suspended due to the damage caused by the earthquake.

Iskenderun Port is the second largest port in southeast Turkey. According to the navigation search network, there is a deep-water jetty in Iskenderun port area that can accommodate three 10000 ton ships at the same time, and there are two floating tanker berths. Near the northwest, there are two 150000 ton and 300000 ton tanker berths at G-OLOVASI, the terminal of the Iraqi oil pipeline. In addition to crude oil, the main import goods include food and industrial products, while the export goods mainly include grain, olive oil, cotton, wool, fruits and minerals.

In addition to the port of Iskenderun, the crude oil loading work at Ceyhan, the main oil export terminal along the Mediterranean coast of Turkey, was suspended for a time, but the Turkish pipeline operator Botas said that neither of the two pipelines was damaged. The latest news shows that the Turkish side has ordered the resumption of crude oil delivery to the Ceyhan export terminal, and the previous suspension was only a preventive measure. Data shows that the daily export volume of the port exceeded 1 million barrels in January, accounting for 1% of the global supply.

For the global market, Turkey's own geographical location determines that its role is relatively obvious, and it is an important transit station for crude oil and natural gas. After the earthquake, it may have a relatively obvious impact on the whole crude oil supply and demand, and may also have a relatively large impact on the prices of some commodities.

In addition, according to the Associated Press of Finance, the Turkish earthquake caused the interruption of port operation or affected its chrome ore export. According to the data of Shanghai Nonferrous Network, Turkey's chrome ore output will be about 7 million tons in 2021, accounting for 16.9% of the world's total. According to customs data, in 2022, China will import 947800 tons of chrome ore from Turkey, accounting for 6.33% of the total import. Industry insiders believe that at present, the domestic chrome ore inventory has been at a relatively low level in history. With the gradual resumption of production of the South Iron Plant in the future, the prices of raw ores, lump ores and other minerals are likely to rise.

Turkey is also the main transit point for food exports in Eastern Europe. Istanbul has previously established a joint coordination center to ensure food transport security. At present, the impact of the Turkish earthquake on global shipping and trade is not clear, but some analysts pointed out that Turkey is located in the global shipping fortress, and the Bosporus Strait in the middle is an important channel for world freight transport. The earthquake that Turkey encountered this time may bring more uncertainty to the normal navigation of the country and the strait.