Construction Chemicals Market

How Does the Historic and Future Outlook of the Construction Chemicals Market Compare?

Between 2016 and 2020, construction chemicals registered a moderate CAGR of 3.8%. Government investments towards public infrastructure and affordable housing, in addition to the growth of urban populations were key factors fueling demand for construction chemicals during this period.

Market growth was adversely affected amid the covid-19 pandemic, as governments around the world enforced strict restrictions to minimize viral transmission, resulting in delayed or cancelled construction projects. However, this effect is expected to be temporary. Demand is expected to pick up steadily post this long-term lockdown.

Resurgence of activities in the construction, transport & logistics, and mining industries in 2021 will remain major contributors in terms of market recovery. According to FMI, the market will rise at 4.9% between 2021 and 2031.

Aside from new construction projects, construction chemical applications are also essential for maintenance projects. The importance of maintaining, repairing and improving existing structures, especially for residential and infrastructure projects will fuel demand. Positive prospects of the real estate sector and investments into property development will drive growth in the years to come.

How Does Interest in Green Construction Influence Market Developments?

According to the World Economic Forum, the construction industry has an economic influence on almost every other industry, as most economic value creation activities take place in or owing to buildings or other engineered structures. As an industry, the construction sector accounts for approximately 6% of the global GDP. The construction sector is also considered to be the largest consumer of raw materials, and engineered objects in the world, while also accounting for up to 40% of the world’s carbon emissions.

According to a 2020 UN Environment Program report of the Global Alliance for Buildings and Construction, of the 1,005 real estate companies, REITS, developers, and funds accounting for more than US$ 4 trillion in assets under management that reported to the Global ESG Benchmark for Real Assets (GRESB) in 2019, 90 percent align their projects with green building rating standards for construction and operations. Green buildings represent major global investment opportunities in the coming decade, estimated by the International Finance Corporation (IFC) reach a valuation of $24.7 trillion by 2030.

The WEF has stated that the construction sector accounts for 50% of the global steel and 3 billion tons of raw materials annually including construction chemicals. 30% of the global greenhouse gas emissions are attributed to buildings. The UK government has set a target of 50% reduction in greenhouse gas emissions for 2025. Also, the population of the world’s urban areas is estimated to rise by 200,000 people per day. This creates a substantial demand for affordable housing in addition to transport and utility infrastructure. These trends are expected to generate significant challenges and opportunities to players operating in the construction chemicals sector.

How are Efforts Towards Advanced Building Materials Affecting Growth?

A report from the European Commission estimates that 70% of product innovation activity across all industries arises from new or improved materials. Approximately a third of construction costs are attributed to building chemicals and materials. Consequently, the scope for developments in terms of novel building materials is substantial.

Solutions coming out of the construction chemicals industry are wide-ranging including minor innovations of conventional materials and the development of new material combinations to bring out multifunctional properties, to radically bolster innovative materials with wide-ranging uses. These trends are likely to have a substantial impact on developments within the construction chemical sector for the foreseeable future.

For instance, Tarkett unveiled iQ Natural, an advanced, 100% recyclable vinyl flooring made from bio-based plasticizers with TVOC values significantly lower than European standards. Similarly, BASF released Neopor – an enhanced styropor offering which improves insulation efficiency by 20%. Arcelor Mittal launched organic-coted steel with 30-year guarantee. Microtek Laboratories has also introduced Micronal, a micro-encapsulated phase change building material, which is expected to prominently find key roles in intelligent temperature management applications in modern construction projects.  

Country-wise Insights

What Factors Support Expansion in China?

China will remain the largest and fastest growing market for construction chemicals through 2031. According to the Trade Commissioner Service of Canada, the Chinese construction sector grew by 4.5% in 2018, a rise from 3.5% in 2017. Despite the growth of 2018, overall expansion was relatively slow, compared to preceding decade. The Chinese construction industry has been largely driven by railway projects, including high-speed and urban/inter-city rail infrastructure.

Between 2018 and 2022, the industry’s output value is expected to rise at a 4.24% CAGR as per the report, lower than the 6.8% of 2013-2017. Further, according to the Council on Tall Buildings and Urban Habitat (CTBUH), China constructed 11 supertall buildings in 2018, accounting for over 60% of the global number of supertalls. China completed a further 30 supertalls in 2019.

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Also, China also holds the lead in terms of construction of buildings of 200 meters or above, with 88 such projects completed in 2018, accounting for more than 60% of the total number. Government infrastructure investments in the first two months of 2019 grew by 4.3% y-o-y as compared to 3.8% in 2018. Increased spending on roads and railways rose by 13% and 22.5% respectively. Investments in the real estate sector in the first two months of 2019 rose by 11.6% year-on-year, up from 9.5% growth rate in 2018.

Going forward, the construction chemicals industry will challenges including a slowdown in economic activities owing to the pandemic and trade war and the growing public debt. These factors have led to excess infrastructure capacity in and oversupply of real estate influencing future growth prospects.

How will India’s Construction Recovery Support Sales?

As per the FMI report, India is the 2^nd largest market for construction chemicals in the APEJ region following China. Infrastructure development is a major contributor to India’s overall development. The government, has increasingly focused on the development of infrastructure and construction services including higher budget allocation to the infrastructure sector, open FDI norms, smart city initiatives and more.

The government has also proposed an Investment of approximately INR 2 lakh cr for 99 cities under the Smart City initiative. Further, the government’s flagship initiative Pradhan Mantri Awas Yojana (Urban) – continues with the aims to provide housing for all in urban areas by 2022. This has included the construction of 56,368 houses have been approved under PMAY-U.

As per the country’s Department for Promotion of Industry and Internal Trade, cement production grew by 2.8% in October 2020 over October 2019. The overall investment in Urban transformation has risen by 627% from 2014-2021 as compared to the period between 2004-2014. With rapid population growth the demand for construction projects and relevant chemical products is likely to rise through 2031.

Why is the Demand for Construction Chemicals Growing in the United States?

The construction chemicals market of the United States is the largest in North America and the second largest in the world, estimated to reach a valuation of US$ 6 Bn in 2021. According to the U.S. Census Bureau, construction spending during January 2021 was estimated at an annual rate of US$1,521.5 billion, an increase of 1.7% above the December estimate of $1,496.5 billion. The January figure is 5.8% above the January 2020 estimate of $1,437.7 billion.

Spending on private construction was at US$1,160 billion, 1.7% above the December estimate of US$1,140.9 billion. Residential construction reached US$713.0 billion 2.5% above the December estimate of US$695.7 billion.

Public construction spending was US$361.5 billion, 1.7 percent above the December estimate of $355.5 billion. Highway construction reached US$107.8 billion, close to 5.8% above the December estimate of $101.9 billion, creating a conducive environment for construction chemicals sales for the near future.

How are Construction Activities Influencing Growth in Germany?

As per Germany Trade & Invest, Germany is Europe’s leading construction market is also home to the Western Europe’s largest building stock. A number of drivers have led to a boom in German construction investments and this impetus to associated chemicals is largely expected to continue for the foreseeable future.

Aimed towards a sustainable energy system, the German government has been pushing for a climate-neutral building stock with a 2050 deadline. The Federal Statistical Office reports that among the total of 288,000 residential buildings for which permits were granted between January and November 2020, an estimated 169,000 will be in multi-family housing settings.

Also, in building and civil and underground engineering, establishments with 20 or more people, witnessed new orders rising by 3.9% as compared to 2019. These drivers in the residential sector will continue to bolster the construction chemical industry in the near future.

How Large is the Opportunity for Construction Chemicals in the UK?

As per the UK Office for National Statistics, the value of new construction new work in Great Britain rose in 2019, reaching its peak at £118,977 million, driven by increased investments in both public and private sector projects at £3,008 million and £2,897 million respectively.

New construction orders rose by 2.5% in 2019 following a slump of more than 13% in 2018; The UK trade deficit in construction materials and components dropped by £152 million to reach £10,421 million in 2019. However, imports accounted for more than double the value of exports with building materials witnessing a trade deficit, influencing long-term prospects of the UK construction chemicals industry.

Category-wise Insights

Which Type of Construction Chemicals Reflect Stronger Growth?

Concrete admixture products are gaining ground in the global construction chemicals market. As per the FMI report, the segment accounts for more than 36% of the market in 2021. Plasticizer admixtures in particular are reflecting higher demand. This can be largely attributed to the importance of water control in concrete mixes, for pressure points in engineered structures such as joints and beams.

Plasticizers are available in a number of options in terms of base materials including polyglycol esters, calcium, lignosulphonates, sodium, and ammonium among others. However, these materials account for lesser than 0.5% of the overall concrete mixture in most applications, limiting demand in terms of volume.

Innovations in the sector have resulted in the rise of super-plasticizers. Growing applications of high-strength concrete, especially for public infrastructure projects are contributing to demand. Water reduction of up to 40% and superior molecular mass allows for comparable workability at a lower water to cement ratio. This will support applications and demand for these materials in the long term.

How are Residential Applications Contributing to the Industry?

Construction chemicals find roles in residential, commercial & industrial, and infrastructure construction and engineering projects. According to FMI, residential applications will account for larger market share and will also reflect relatively faster growth through the assessment period.

Strong recovery of residential construction activity in 2021, following the lifting of lockdown restrictions and reopening of economies in recent months have provided impetus to construction and engineering sector players. On the other hand, the continuing impact of the outbreak on economy, tight credit conditions, price inflation and low interest rates will remain challenges in the near future. These factors are likely to influence demand for construction chemicals in residential projects in the years to come.

Competitive Landscape

Construction chemicals manufacturers are largely focused on optimizing production assets in line with dynamism of market demand. Portfolio expansion and divestiture strategies have gained ground and are likely to influence developments in the industry for the foreseeable future.

For instance:

• BASF SE closed the divestiture of its construction chemicals business to an affiliate of Lone Star of the MBCC Group.
• Berger Paints have announced a 500 crore rupees investment for the production of construction chemicals in India.
• Nippon Paints entered a collaboration with Choksey Chemicals for the manufacture and supply of waterproofing and sealant chemicals

Some of the leading companies operating in the market include:

• GCP Applied Technologies
• SIKA AG
• The DOW Chemical Co.
• RPM International Inc.
• Ashland Inc.
• MAPEI
• Akzo Nobel NV
• Arkema SA
• Fosroc
• Pidilite Industries
• Covestro AG
• Henkel AG & Co. KGaA
• HB Fuller Company
• Lanxess AG
• The 3M Company
• Wacker Chemie AG
• Huntsman Corporation
• Momentive Performance Materials
• Guangzhou Jointas Chemical Co. Ltd.

*The list is not exhaustive, and only for representational purposes. Full competitive intelligence with SWOT analysis available in the report.

Scope of the Report

Key Questions Answered in the Report

• What is the construction chemicals market size?

  The global construction chemicals market is expected to register a CAGR of 6.7% during the forecast period 2021-2031. As per FMI, the global construction chemicals market valuation is around US$ 82,022.1 Mn in 2021.

• Which is the most lucrative market for construction chemicals?

  Europe currently leads the global market for construction chemicals. Sales in Europe will account for over 26.6% of total demand registered throughout the forecast period. Within Europe, Germany is expected to remain a dominant market.

• Which is the key promotional strategy followed by leading companies in the construction chemicals market?

  Online marketing is considered to be a key tool for promotion. Over the past couple of years, the penetration of the Internet has been surging at a significant rate in the major parts of the globe, especially in the North America, Europe and Asia Pacific regions.

  This has led to a rise in the number of online social media users around the world. Hence, majority of the key players in the construction chemicals market consider the online channel as a grand platform to promote their products and services effectively.

• Which are some of the leading companies manufacturing construction chemicals?

  Some of the leading companies in construction chemicals market are Samsung Electronics Co. Ltd., Logitech International S.A., Plantronics Inc., Apple Inc., Sony Corporation, GN Group, Incipio Group, and Western Digital Corporation.

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Construction Chemicals Market by Category

Product Type

• Water Proofing Chemicals
  • Bitumen
  • PVC
  • EPDM
  • TPO
  • PTFE
  • Silicone
• Protective Coating
  • Epoxy
  • Polyurethane
  • Acrylic
  • Alkyd
  • Polyester
  • Others
• Concrete Admixture
  • Plasticiser
  • Retarder
  • Accelerator
  • Air-Entrainer
• Adhesives & Sealants
• Asphalt Additives

Application

• Residential
• Commercial & Industrial
• Infrastructure

Region

• North America
• Latin America
• Western Europe
• Eastern Europe
• Japan
• Middle East and Africa (MEA)
• Asia Pacific excluding Japan