Construction Chemicals in China (Industry forecasts for 2012 & 2017)

Abstract

Demand for construction chemical products used in on-site applications in China is forecast to reach 129.5 billion Chinese yuan in 2012, increasing 14.8 percent per annum from 2007. Growth will be primarily driven by increasing construction expenditures in both new construction, and improvement and repair projects. These advances will in turn be fueled by continuing industrialization and urbanization in China. A focus on improving the general quality of construction will boost construction chemical gains by increasing the intensity of use of these products, as well as spurring demand for higher priced, value added types used in both decorative and structural applications. Elevated petrochemical prices and other production costs will also contribute to chemical products accounting for an increasing share of construction spending going forward.

However, construction chemical gains will decelerate from levels seen over the past decade. This will result from government efforts to prevent key sectors of the Chinese economy, such as construction, from overheating. Another related trend restraining faster construction chemical gains will be the rising importance of government infrastructure spending in rural areas. These projects typically generate lower levels of chemical product demand, as the performance enhancements offered by construction chemicals are offset by the high marginal benefit to rural communities of introducing high volumes of low quality paved roads or utilities networks.

Coatings and sealers will remain the largest construction chemical product category in 2012, accounting for 46 percent of total industry sales. Demand will be driven by their established use in all major construction markets, as well as by a shift toward higher priced, waterbased products. Polymer flooring will be the fastest growing construction chemical segment through 2012, reflecting the low base from which these gains are derived, as well as these products' penetration in high-end car park applications. Caulks and adhesives, and cement and asphalt additives will be the second and third largest product segments, respectively, in 2012. Demand for these products will be primarily boosted by improving standards in building construction markets. All other construction chemical products used in on-site applications will benefit from overall improvements in construction quality in China.

Demand for chemical products used in nonresidential building construction in China will reach 51.5 billion Chinese yuan in 2012, driven by sustained foreign investment in the Chinese industrial sector, as well as by the prevalence of high-end products in these applications. Residential building related consumption of construction chemicals will be spurred by continuing urbanization, as well as by rising income levels and the ongoing privatization of home ownership. However, building construction spending in both segments will decelerate following government measures to prevent economic overheating. Nonbuilding construction chemical demand will benefit from high levels of government investment in utilities, power generation and other non-transport related infrastructure, although demand will be restrained to some extent by the low intensity of chemical use in road construction.

Study coverage

This new Freedonia industry study,Construction Chemicals in China, presents historical demand data (1997, 2002, 2007) plus forecasts for 2012 and 2017 by, product, market and region. In addition, the study considers market environment forces, evaluates company market shares and profiles industry participants.