Frost & Sullivan expects the market to consolidate as large multinationals venture into new product segments
Declining water quality and rising costs are compelling industries in South Africa to recycle water, in turn lending momentum to the industrial water and wastewater treatment chemicals market in the country. Although the market is experiencing challenges, due to an uncertain economic climate, the combination of stricter legislations and greater environmental awareness among end users is boosting the treatment and reuse of effluents.
New analysis from Frost & Sullivan, Overview of the Industrial Water and Wastewater Treatment Chemicals Market in South Africa, finds that the market earned revenues of $148.9 million in 2013 and estimates this to reach $176.4 million in 2018. The study covers key chemicals, including coagulants and flocculants, corrosion and scaling chemicals, disinfectants and biocides, and pH adjustment chemicals.
"The recovery of the mining industry, expansion in the power generation industry, higher use of gas to liquid technologies, as well as the emergence of the shale gas industry in South Africa will heighten the need for water resources, thereby aiding the uptake of treatment chemicals," said Frost & Sullivan Chemicals, Materials and Food Research Analyst Constance Nyambayo. "The adoption of zero liquid effluent discharge principles by several companies will further increase the consumption of water treatment chemicals."
Although South Africa has long-standing and well-established water and wastewater regulations, enforcement bodies have been highly fragmented and ineffective. Nevertheless, a notable shift over the past decade has seen the Departments of Water and Environmental Affairs jointly enforcing standards, which will encourage the use of water and wastewater treatment chemicals in South Africa. Stringent penalties, including large fines and jail terms to deter offenders, and incentives to ensure water quality are also expected to boost compliance.
The poor operating conditions caused by the volatility of the rand have also affected the market. The unstable currency has escalated the cost of imported chemicals and raw materials, thus reducing profitability. While this augurs well for local manufacturers as it decreases competition from imports to a certain extent, the rise in imports from low-cost production regions such as the Middle East will cause market attrition.
"With end users looking for more efficient, cost-effective chemicals to conserve energy and extend equipment lifespan, the entry of innovative participants will be necessary to shift away from commodity chemicals towards high-value, low-volume specialty chemicals," noted Nyambayo. "Meanwhile, large multinationals will look to acquire smaller manufacturers and service providers in order to penetrate new product markets and facilitate expansion into the rest of Africa."
