21 September 2018

Table of Contents for Industry Focus: Construction Chemicals





Lead- Construction Chemical

The Chemical surge!

 

With the Construction Chemicals market expected to reach a valuation of $2,600 million, construction chemical industry possesses huge scope for growth. A booming economy, increased investments from the government as well as participation by domestic and overseas investors, can greatly boost the growth of the industry.  Rohan Ambike writes about the rise of construction chemicals, the tone of the market and the path ahead.

 

 

Construction chemicals like concrete and steel are vital materials that are used in the development of projects, both residential and commercial. Construction chemicals are special products which come into use either in the 'pre' or 'post' construction stages. They provide special properties to the concrete which in turn gives the entire structure the required stability and protection. Construction chemicals can also be used for renovation and for the reinforcement of older structures

 

 

Trends and key drivers of the construction chemicals industry

 

With the consistent growth in the demand and the utilisation of these products, there has been a considerable growth in the production of construction chemicals. They are important for enhancing the workability, performance, functionality, chemical resistance and durability of the construction materials. Another usage of these chemicals is to add life to the structures but also to aid in minimising quantities of cement and water required during construction. India today has numerous buildings that require extensive renovation work. Some buildings have also crossed 40 to 50 years and are fighting each day for survival. All this has triggered the demand for such chemicals.Being a competitive and fragmented market, the construction chemicals industry is mostly dominated by several small and specialised suppliers. The major factors that are driving the market are the increase in foreign investment activities, government regulations that are based on concepts of 'Green Revolution', urbanisation and rise in housing demand, as well as the growing preference for ready-mix concrete (RMC). Moreover, renovation and repairs of older structures also contribute to the substantial demand for construction chemicals. Increased preference for green buildings among property buyers, has also led to the development of the global construction chemicals industry.

 

 

A few trends that have been observed in the construction chemicals sector in India, include:

 

  • Increased investments in research and development (R&D), especially in Asian regions, and the entry of new players.
  • Use of sustainable products and technological advancements.
  • Overall demand for construction chemicals in India is expected to rise further due to the increase in the construction of new buildings as well as renovation activities.
  • In the Asia Pacific region, India and China together, contribute over 50 per cent of the total regional market size.

 

In the past few years, there has been an increased awareness among consumers regarding the benefits of construction chemicals' usage in increasing the longevity of buildings. However, at present, wide disparities remain among people in the metro cities as compared to the Tier-II and Tier-III cities in terms of adoption of newer products.

 

Additionally, with the sector becoming more organised, there has also been a rise in the understanding of the concept and the value addition that can be offered to the end-user by using the right construction chemical during the construction process. While the availability of skilled labour for executing the installation and application of the construction chemical has improved in the recent times, there's still a gap between the skillset of the applicators in India as compared to those in the west.

 

The use of right construction chemicals enhances the capabilities, performance, functionality, chemical resistance and longevity of the construction materials. It minimises the project completion time and the need for regular repair, thereby reducing the overall average project and repair cost in the longer run. They also add value by augmenting the look and feel of the building.

 

There are many structures that are old or built using sub-standard construction materials. These buildings face the danger of collapse. Furthermore, the climatic conditions in certain parts of India cause serious damage to buildings, which can be eradicated by the use of construction chemicals.

 

 

Opportunities

 

The growing construction chemicals sector in India is an outcome of a series of developments including greater focus on infrastructure investment; increase in foreign direct investment; public-private partnerships in key projects; the Smart Cities project; expansion of urban India and the consequent demand for affordable housing in tier II & III cities; maintenance, repair and renovation of structures; expected 20-25 per cent increase in the ready-mix concrete segment driving demand for mechanised concrete; growing awareness for the use and application of construction chemicals; and new product innovations and technologies in the market.

 

The high import cost of construction chemicals offers the domestic industry immense opportunity to expand its base and manufacture greater quality of advanced as well as green and energy-efficient products and solutions. This will also help to meet the growing demand for construction chemicals. Although the opportunities outweigh the challenges, there is a flipside to the construction chemicals industry. The market is still highly fragmented with a mix of national and regional players of differing expertise, capability and quality generating a requirement for further awareness training on the benefits of construction chemicals in modern construction methodology.

 

 

 

Smart cities: The game changer

 

The Goverment of India has lauched '100 Smart Cities’ mission, an ambitious program of Prime Minister Narendra Modi in June 2014. Under this program, the government plans to spend a whopping Rs 48,000 crore on building smart cities with smart technologies. This will open up huge growth opportunities for the construction chemicals sector. The development of Smart Cities will ensure high-tech urban economic zones with new housing, and the rejuvenation of existing urban sprawls and slums. The aim of this mission is to enhance the quality of urban life and provide a clean and sustainable environment for its inhabitants. It is highly believed that the construction chemicals sector will play a crucial role in developing robust and sustainable infrastructure in the planned cities and towns. This has in turn made construction chemicals a key enabler of smart cities of the future.

 

Another program that will play an important role for this sector is ‘Housing for All’. To make new housing units affordable, it is important that the government plans vertical cities— high-rise structures. High-rise construction will require modern construction technology aided by specialty construction chemicals.

 

Today, the desire for faster construction, sustainability and use of numerous binders and raw materials is a catalyst for growth in the construction chemicals industry. Economic expansion, higher public investment in infrastructure and real estate, and the participation of overseas investors and contracting companies in the Indian construction industry are driving demand for construction chemicals. Additionally, the Government restrictions on on-site mixing have boosted demand for ready-mix concrete, a sector expected to rapidly increase which will in turn drive the demand for the use of concrete admixtures. Admixtures account for the largest share in the construction chemicals market in India.

 

Construction chemicals are also assisting the economic uptake of manufactured aggregates especially in states where excavation of sand beds is either restricted or banned. These concrete admixture solutions are assisting in the robustness of the concretes produced with manufactured aggregates.

 

 

 

Market Maths

 

The construction chemicals market in India is on the rise. According to a report by Persistence Market Research, the market is expected to reach a valuation of over $2,600 million by the end of 2025, growing at a robust CAGR of 13.7 per cent during the forecast period. Construction chemicals have always been in demand by the real estate and infrastructure sector. As both the sectors are presently booming in India, the market is poised to expand.

 

The report states that the The Indian construction chemicals market is believed to be dominated by the ‘four brothers’, i.e. BASF India Limited, SIKA India Private Ltd., Fosroc Chemicals India Pty. Ltd, and Pidilite Industries Limited, which together contribute around 30 per cent to 80 per cent of the market revenue.

 

Among these companies, Pidilite marked the highest revenue generation of around $840 Mn in 2016. There are other companies too, which are expected to expand vigorously in India’s construction chemicals market, with concrete admixtures emerging as the most preferred product type.

 

A knowledge paper on construction chemicals published by Tata Strategic Management Group and commissioned by FICCI, projects the Indian CC industry at `7,000 crore by 2018-19 on the back of demand from India’s Smart City Mission. "The industry is expected to grow by 15 per cent per annum over the next five years to reach `7,000 crore by 2018-19," the report says, adding that admixtures constitute majority of the CC market with a 42 percent share, chemicals for repair and rehabilitation constitute another 12 percent of the market, while remaining 18 percent per cent is accounted by adhesives and sealants.

 

Giving an individual breakup of CC product verticals across the CC spectrum, the ‘India Construction Chemicals Market By Type (Concrete Admixtures, Waterproofing Chemicals, Flooring Chemicals, Repair and Rehabilitation Chemicals and Others), By Application and Competition Forecast and Opportunities, 2010 – 2020,’ published by TechSci Research, the construction chemicals market in India is projected to grow at a CAGR of over 15 per cent by 2020. In 2014, concrete admixtures accounted for the majority share in the country’s construction chemicals market. Increase in the number of high rise buildings coupled with growing need for fast and high quality construction is driving demand for concrete admixtures for blending purposes.

 

 

 

Global market scenario

 

According to the new research report published by P&S Market Research, the global Construction chemicals market is projected to reach $80,025.4 million by 2023. The market growth is driven by growing urbanisation and increasing demand for aesthetically appealing residential and commercial infrastructures. On the basis of type, the construction chemicals market is categorized into concrete admixtures, adhesives, sealants, protective coatings, asphalt modifiers, and others. Others include flooring chemicals and flame retardants.

 

Experts have also predicted that the chemicals market in Asia-Pacific (APAC) is expected to register a CAGR of 7.1 per cent by 2023 in terms of value. The market growth in the region is mainly driven by the growing demand for construction chemicals from countries such as China and India. China is regarded as the construction capital of the world and the scale of construction in the country is gaining momentum at a fast rate. The strong demand of construction products in the country is mainly driven by huge government investment in infrastructure projects in recent years.

 

Owing to the presence of stringent environmental regulations, players in this market have been focusing on R&D activities to launch new products which comply with guidelines set by different regulatory bodies.

 

Usage of biochemicals as construction chemicals is in introductory stage. This factor could prove to be a breakthrough technology in coming years. Economies including China and India are expected to drive the market on account of numerous upcoming infrastructure projects to connect and develop cities.

 

 

 

Impact on cost of construction

 

It is a known fact that the entire cost a real estate project depends largely on the prevailing labour costs, land cost and construction material cost.  The addition of construction chemicals during the construction phase increases the overall cost of the real estate projects. However, construction chemicals roughly comprise of five to seven per cent of the total project value.

 

So, the total prices of construction chemicals do not significantly alter the overall project cost and because of this reason people tend to ignore the need and quality of the right products.

 

 

 

Benefits of construction chemicals

Construction chemicals commonly fall under the following category:

  • Concrete and Mortar (Grout) Admixture
  • Waterproofing Compounds
  • Floor Hardeners and Floor Topping
  • Protective Coatings and Surface Treatment
  • Adhesives and Sealants

 

These chemical substances facilitate the reduction of abrasions and increase in bond strength, thus, increasing the life of buildings. They add value to the structures by making them dust-proof and augment the look and feel of the structure. Buildings that are older or built using sub-standard construction materials face the danger of collapse. Besides, the climatic conditions of the country cause serious damage to the structures, which can be eliminated by the use of such chemicals.

 

 

Challenges involved

 

Like every sector, there are some roadblocks in the growth of the segment. Here is a list of some of the major challenges

 

  • Construction chemicals increase the overall costs to the developers, by about two to five per cent.
  • The sector is not much explored and is presently in the nascent stage. There is a lack of awareness among end-users about the benefits of construction chemical usage. Close to 85 per cent of the construction industry personnel, are not aware of the concept and the value addition made to construction works, if used in the right way, at the right time.
  • Application of chemicals involves excellent technical guidance which is presently lacking in the industry.
  • Skilled labour for executing the industry processes, is also difficult to obtain.

 

 

 

Conclusion

 

The construction chemicals market is assured of substantial growth due to the construction and manufacturing boom in India.

 

The demand for construction chemicals is expected to develop steadily and will be visible throughout the remainder of 2018, as the earlier announcements by the government regarding the projects related to infrastructure are now taking shape on ground.

 

The sector is geared to play a constructive role in sustainable and energy-efficient infrastructure development.

 




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