Big deals see Saudi market for chemicals grow

Kingdom closes in on UAE as biggest market for specialist products

The chemicals market is shifting to Saudi.
The chemicals market is shifting to Saudi.

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Saudi Arabia is catching up with the UAE as the biggest market for construction chemicals and their related specialist products, according to research.

Frost & Sullivan, the US-based research and consultancy firm, indicates that the high volume and value of projects under construction in the Kingdom means it is likely to now claim around a third of the market share, representing swift change in the industry this year.

“There have been a lot of changes in the market and not all of them for the good,” said Rahul Khare, senior analyst for the chemicals market for South Asia and Middle East. “The UAE is down 60-70% down, led by the downturn in the Dubai market.”

In the company’s original 2009 survey of the sector - Strategic Opportunity Assessment of GCC Market for Construction Chemicals - the UAE was still by far the biggest market for construction chemicals on the back of Dubai’s booming market. But the impact of the wider economic slowdown meant up to US $449 billion in projects have been shelved in the country as a whole.

At the same time, the explosion of projects in Saudi Arabia in the form of economic cities, a high speed rail projects, a brace of metro systems in Jeddah and Riyadh and numerous housing developments has led to chemical companies seeing more opportunities in the market.

The 2009 survey covers the sales of some of the biggest building-linked chemical suppliers – such as BASF, Grace Construction, Fosroc and Dow Chemicals – along with specialist product suppliers, which can include admixtures, sealants, waterproofing groutings and others. The region was split into three areas of focus based on the size of revenues: UAE, Saudi Arabia and the rest of the GCC.

Last week, Khare estimated that the UAE market share by volumes has fallen from between 40-45% in 2009 to around 35% by mid-2010. At the same time, the volumes in Saudi Arabia have lifted to between 25-35%.

Though big projects have meant bigger sales, Khare says the UAE is perhaps still the regional leader in terms of familiarity with advanced products deriving from the latest scientific research.

Further, the last few years of Saudi projects have centred around social infrastructure, such as the construction of affordable housing or maintenance to roads and utilities, which would not have required the higher-end, specialist products.

The construction chemicals market – valued at US $770 million in 2009 – would grow by 4.2% until 2015, according to Frost & Sullivan.

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