The construction industry in Egypt accounts for 14% of the country's GDP according to Modor Intelligence. It is expected to grow by 6.8 percent year-on-year in 2023, with an average annual growth rate of 7.4 percent predicted between 2024 and 2027, according to a report by Fitch Solutions.
An overview of Egypt's construction chemicals industry
Construction chemicals are an essential component of the construction industry in Egypt. The demand for construction chemicals in Egypt is driven by the growing construction industry, increasing urbanization, and the need for sustainable and energy-efficient buildings. There are several companies producing construction chemicals in Egypt. Some of the major players in the market include: Sika, BASF, CMB Group, Drymix, Chema Foam, NCC X-Calibur, EAMIC, Bitumode, Prokem, Fosroc, Pachin, SwissChem, Hemts, ACC, Polymar, and Space Chemical.
Mergers and acquisitions shaping Egypt's construction chemicals sector
Several significant developments have been observed in the Egyptian market for construction chemicals recently. Saint-Gobain, through its Chryso business, has fortified its construction chemicals portfolio through the complete acquisition of United Paints and Chemicals (Drymix) and is in exclusive talks to acquire IDP Chemicals. This follows the successful acquisition of Matchem in Brazil. Drymix is renowned for its prepared mortar mixes and additional services, while IDP Chemicals is poised to serve Egypt's vibrant construction market. These strategic moves are expected to leverage Saint-Gobain's robust presence in Egypt, where it has been operating seven manufacturing facilities since 2006.
Orascom divests construction chemicals subsidiary in strategic move
In another significant transaction, Orascom Construction divested its entire stake in its construction chemicals subsidiary to Switzerland-based Sika for EGP 1.80 billion ($107 million), aligning with Orascom's aim to concentrate on growth areas like concessions and renewable energy. The sold unit was a producer of specialty chemicals such as admixtures and construction products in Egypt and Algeria.
Towards a green economy: the Elsewedy-BASF sustainable logistics hub
Meanwhile, Elsewedy Industrial Development and BASF signed an MoU to establish a green logistics hub in Sokhna 360, Egypt's first sustainable and integrated industrial city. This hub, spanning 470,000 square meters, is part of Egypt's Vision 2030 to boost the green economy. BASF will contribute its broad portfolio of products and innovations to create a sustainable business framework in the hub, which allows for 100% foreign ownership and control of import/export activities, along with total exemption from customs duties and sales taxes.
Demand factors for construction chemicals in Egypt
The demand for construction chemicals in Egypt is primarily driven by the growing need for durable, long-lasting construction materials such as concrete admixtures, waterproofing chemicals, and protective coatings, which enhance building material properties. This demand is also fueled by increased urbanization and infrastructural development, escalating the construction industry's growth. Simultaneously, the desire for sustainable, energy-efficient buildings, aimed at reducing energy consumption and greenhouse gas emissions, necessitates the use of construction chemicals for improved insulation and thermal performance. Moreover, government initiatives partnering with private firms on various low-income housing schemes are anticipated to stimulate further the demand for construction chemicals in the country.
Product segmentation in Egypt's construction chemicals market
The market is segmented by the following product types: concrete admixture, surface treatment, repair and rehabilitation, protective coatings, industrial flooring, waterproofing, adhesives, sealants, grout and anchor, and cement grinding aids. The most commonly used construction chemicals in Egypt include:
Concrete admixtures: These chemicals are added to concrete to improve its workability, strength, durability, and other properties. They can enhance the setting time, reduce water content, and increase the resistance to chemicals and weathering.
Waterproofing chemicals: These chemicals are used to protect structures from water penetration and damage. They create a barrier that prevents water from seeping into the building, ensuring its longevity and structural integrity.
Flooring chemicals: These chemicals are used for various flooring applications, such as leveling compounds, epoxy coatings, and sealants. They provide protection, durability, and aesthetic enhancements to the floors.
Adhesives and sealants: These chemicals are used for bonding and sealing purposes in construction. They are essential for joining different materials together, providing structural strength and preventing leaks or gaps.
Five trends that will shape the chemical industry
There are five main trends that will shape the chemical industry. These include expanded digitalization, sustainability and circularity, supply chain resilience and agility, innovation and collaboration, and talent management. Here are some important trends and developments in the special field of construction chemicals:
Sustainability: As with many industries, sustainability has become a key focus in construction. There is growing interest in construction chemicals that can reduce the environmental impact of construction projects. This might include materials that are made from recycled or renewable resources, materials that can improve energy efficiency, or materials that can increase the lifespan of a building to reduce the need for replacement or repair.
Nanotechnology: The use of nanotechnology in construction materials can improve their properties significantly. For instance, nano silica in concrete can improve its strength and durability. Nanotechnology can also be used to create materials with unique properties, such as self-cleaning or air-purifying abilities.
Self-Healing Materials: There's ongoing research into self-healing materials, which can repair themselves to some extent when damaged, thereby increasing the lifespan of the building and reducing maintenance costs.
Smart Materials: These are materials that can change their properties in response to changing conditions, such as temperature-responsive materials or materials that can absorb or release moisture in response to changes in humidity.
3D Printing: As 3D printing technology advances and becomes more commonly used in construction, there's a need for specialized materials that can be used with this technology.
Green Building Standards: Related to the trend towards sustainability, there's an increased emphasis on meeting green building standards like LEED (Leadership in Energy and Environmental Design) and BREEAM (Building Research Establishment Environmental Assessment Method). Construction chemicals can play a role in achieving these certifications, for instance, through low-VOC (Volatile Organic Compounds) products or materials that contribute to improved energy efficiency.
Promising future for the industry
The Egypt construction chemicals market, encompassing products like concrete admixtures, waterproofing chemicals, flooring chemicals, adhesives, and sealants, is projected to reach $444.5 million by 2027, growing at a CAGR of 7.6%. This growth is anticipated to be driven by the expansion of the construction industry at a compound annual growth rate of 6.6% between 2021 and 2025. Government initiatives like low-income housing schemes, in collaboration with private firms, and the development of smart cities further support this upward trend. As the market becomes increasingly competitive with the presence of numerous global, regional, and local players, the demand for sustainable and energy-efficient buildings is set to drive the construction chemicals market in Egypt, rendering a promising future for the industry.