World drinking water, wastewater treatment chemicals market to reach $26B by 2017

SAN JOSE, CA, Apr. 30, 2012 -- According to a new report from Global Industry Analysts, the chronic global shortage of freshwater, expected to intensify in the coming years, will help drive growth in the global water treatment market. It's further impacted by population growth, growing industrialization, and pollution of water bodies.

The significant rise in demand for potable/fresh water in turn contributes to the rise in demand for a wide array of water treatment products. Increased demand for food and the subsequent intensification of agricultural operations is expected to exert additional pressure on the supply of potable water. This has and will continue to spur demand for desalination of seawater, as an alternative to fresh water reserves.

Increased focus on water reuse, recycling and desalination measures that are aimed at addressing the rising need for safe and clean water remains a core driver of growth in the market. Developing countries are forecast to drive growth with China, India, and Brazil displaying robust demand potential for water treatment equipment, services and supplies including chemicals. This is largely because per capita consumption of water in these countries is poised escalate in sync with improvements in standard of living and the rapid pace of industrialization.

According to the report, a major factor influencing the global Drinking and Wastewater Treatment Chemicals market is the regulatory environment. Governments worldwide are adopting stringent policies and regulations for promoting environmentally responsible behavior among industries and consumers. New regulations for sludge and wastewater treatment will spur demand for specialty chemicals.

Future growth in the water industry will stem from demand for specialized products capable of meeting the requirements of a rapidly changing global environment. In this regard, specialized chemicals are forecast to witness the maximum growth. Specialty chemicals have superior performance and lower toxicity levels and environmental impact. Demand for water reuse and ultrapure water for industrial applications will emerge into a key factor driving demand for specialty industrial water treatment chemicals. Water reuse, especially presents challenges in producing water with acceptable quality, thus providing a business case for high-performance specialty chemicals capable of addressing these challenges.

The trend towards specialty chemicals illustrates the ongoing shift in the market away from high-volume commodity chemicals such as soda ash and aluminum sulfate towards specialty chemicals such as industrial biocides, organic esters, corrosion inhibitors, coagulants, scale inhibitors, pH adjustors, activated carbon, among others.

The European debt crisis is leaving the domestic water industry nervous over the future playout of the crisis, the analysts said. In the industrial water treatment chemicals market, sentiments remain torn between optimism and fear. Outlook in this sector is tempered by fears over a possible escalation in the severity of the Euro crisis, which could result in industrial plant closures and low capacity utilization rates at customer manufacturing facilities, as a result of weak industrial and manufacturing activity.

At the pessimistic end of the spectrum, bearish market sentiments additionally indicate that a possible shift from fiscal government stimulus to anti-crisis austerity and spending cuts as a measure to tame the towering public debt scenario could impact capital expenditure in manufacturing industries in debt affected economies by limiting borrowing and reducing investments in capital goods.

Interestingly, one of the reasons fingered for the widening debt levels of governments in Southern Europe is the flawed water financing strategies adopted till date. For instance, in Portugal, Italy, Greece & Spain, financing of the water infrastructure is majorly through EU grants and central and local government debts. Investments by private sector have been close to negligible thus resulting in heavy accrued public debts relating to water infrastructure. The austerity measures likely to be initiated to counter the crisis will likely limit the government's investment and expenditure in the water sector, thus impacting new projects, the heat of which will be indirectly felt by the water treatment chemicals market. Also, the European Union has legislated some of the toughest norms for drinking water quality and wastewater treatment and this provides regulations driven demand a tad higher insulation to the economic blues.

The encouraging performance of the electronics and semiconductor industry has additionally helped prop up orders in the ultrapure water supply business. Also forced austerity measures implemented in Greece to reduce the country's widening deficits, are less likely to be adopted in relatively stronger economies with lower debt loads like in Germany, Spain and Italy. Against a backdrop of a creaking water infrastructure that calls for dire upgradation measures, juxtaposed with dwindling funding resources, municipal water and wastewater budgets are not expected to change significantly, despite financial crisis.

As stated by the new market research report on Drinking and Wastewater Treatment Chemicals, Biocides and Disinfecting Chemicals is poised to witness the fastest growth, trailing a projected CAGR of 4.5% over the analysis period 2009 through 2017.

Key players in the marketplace include Ashland Inc, BASF SE, Buckman Laboratories International, Inc, BWA Water Additives Ltd, Calgon Carbon Corp., The Dow Chemical Company, E. I. du Pont de Nemours and Company, Kemira OYJ, Kurita Water Industries Ltd, Norit NV, Nalco, Organo Corp, Qemi International Inc., and Solvay SA, among others.

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