How the Germany Construction chemicals Market Is Positioned?
Construction chemical market in Germany has the largest share among all European nations accounting for nearly ~% of the entire European market in terms of revenues. Growth in construction sector, robust economic policies and moreover, Germany being regarded as manufacturing hub of Europe along with its central location has supported the economic development. Sale of construction chemical in Germany was reportedly driven by necessity of the usage of construction chemicals in construction of certain type of building and manufacturing unit. For instance, it was required by regulation to waterproof all areas where there are chances of spillage of hazardous chemicals as well as to water proof areas of hazardous garbage disposal areas in Germany.
Real estate construction was the major growth driver for sale of construction chemical in German market as investment in public infrastructure has observed a decline in last few years
Growth prospects for construction chemical market in Germany is bright and is expected to record positive growth in future as construction activities picks up pace along with government investment in infrastructure. Repair and rehabilitation of existing infrastructure and existing buildings will also create huge potential demand for construction chemicals in future.
The market for construction chemical in Germany is very
well organized and is majorly dominated by BASF and SIKA. These two companies has comprehended almost ~% share of the market in terms of revenues. The market for construction chemicals is concentrated by almost 70 players which is quite limited compared to other countries.
The market for construction chemicals in Germany has grown at a CAGR of ~% during the period 2010-2015 with revenues being registered at USD ~ million during 2015.
What have been the Major Segments that has Driven Change
Concrete admixture has accounted for a revenues share of ~% in the overall India construction chemical market. Concrete admixture market in Germany was observed to be majorly governed by cement companies as concrete admixture is provided along with cement. Major concrete admixture manufacturing companies have B2B tie up with these cement companies for the sale of concrete admixture in German market.
Water proofing becomes more important in areas with underground construction and areas receiving heavy rain and snowfall. Germany construction standards are among best in world requiring strict compliance which drives the sale of all type of construction chemical.
Market for sheet membrane is high in Germany because they are easy to manufacture and have long shelf life. They are also easy to apply in already constructed houses. Water proofing market in Germany is mainly dominated by SIKA which is also the major construction chemical company.
Flooring compounds market was observed to have smaller share in 2015 on account of low investment in construction of new malls, parking spaces, sports complexes and other areas of application. Majority of demand comes from renovation and modernization of existing structures.
Flooring material demand mainly comes from the construction of new parking lots, hospitals, indoor playgrounds and manufacturing units. Polyurethane flooring was mainly preferred in Germany as it is more human friendly and is less reactive compared to epoxy flooring. Epoxy flooring is preferred in closed areas of manufacturing floors, commercial kitchens, shopping complexes and other areas.
Germany is in developed stage of economic growth and hence demand for basic infrastructure is observed to be lower and thus majority of demand as observed was created to improve existing quality and facilities. Germany is the manufacturing hub of Europe and manufacturing floors require coating based on product being manufactured. Based on quality requirement demand for type of flooring compound, epoxy polyurethane or cementitious or their combination is required.
Repair and rehabilitation of many old buildings was adopted to accommodate refugees coming in different part of Germany, earlier they were staying in makeshift tents. Major investment were made in these chemical due to large amount of work going on to make building apartments more energy efficient. Buildings in Germany have to comply with German regulation on energy efficiency.
Aging infrastructure in Germany creates high demand for repair and refurbishment chemicals especially epoxy based repair as they give better finish to the infrastructure.
What Have been the Major Trend in the Market
Construction of new residential buildings recorded constant growth during the period 2010-2015 whereas repair and construction of existing residential buildings recorded a constant decline in its share. It was observed that majority of the amount spent on construction was has been made to refurbish the old structures in Germany. Growth in construction of residential sector was mainly driven by internal migration and influx of refugees in Germany.
Influx of refugees has created additional demand for infrastructure development in Germany as it was major receiver of refugees among all European nations. Net migration of foreign people amounted to 1.14 million in 2015 (Based on data from 1st January 2015 to 31st August 2015 and estimate for four months) which was 49.0% higher compared to 2014 when Germany witnessed net migration of 577,000 foreigners as per data reported by statistics office of Germany.
The raw materials mix of the German construction chemical industry will is biased in favor of the renewable raw materials. Today, the German construction chemical industry uses slightly less than 19 million tonnes of fossil raw materials (petroleum products, natural gas and coal), 2.7 million tonnes of renewable raw materials and approximately 20 million tonnes of mineral raw materials.
The chemical industry is one of the most innovative sectors of the German economy. In Germany the research intensity, or the ratio of R&D expenditures to the production value, is slightly less than 5.8 per cent.
How is the Competition Concentrated in the Market
Germany is regarded as the hub for few major leading constructions chemical companies namely BASF and several others. Moreover, achieving economy of scale in operations is important in chemical industry which is highly evident amongst the companies operating in this sector in Germany. There are certain advantages in setting up a construction chemical industry in Germany such as stable supply of raw materials, increasing number of applications of downstream industries, superior management and technology, relative superiority in base environment and others.
The market for construction chemicals in Germany is highly organized with the presence of few major international players in the space such as BASF and SIKA Chemicals. These two companies have dominated the market space with an approximate share of 50% in terms of revenues during 2015. These international players are consistently enhancing their production capacity in the domestic market by acquiring local companies. This trend has been leading the industry to become more integrated in terms of technology and the market is becoming more concentrated.
In addition to this, there are certain government regulations such as initiatives from State Council on accelerating the development of strategically rising industries, regulations related to environmental concerns and others which have been acting as one of the major barriers in the industry. These factors are restraining newer small companies to enter into the market.
Companies Cited in the Report
List of Companies Companies Covered in the Report
- MC Bauchemie Major Players
- SIKA Germany
- BASF Germany
- Quick Mix Group
Key Factors Considered in the Report
- Comprehensive analysis of Germany Construction Chemicals Market and its segments
- Listed major players and their positioning in the market
- Identified major industry developments in last few years and assessed the future growth of the industry
- Construction Chemicals Market of Germany with their Products
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Ankur Gupta, Head Marketing & Communications