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Infrastructure Development Continues to Drive the South African Chemicals Market Finds Frost & Sullivan - The economic turmoil of 2009 had a profound impact on the global chemicals industry. Demand for chemicals fell off sharply as end-users came to terms with low consumer confidence and declining purchasing power
Infrastructure Development Continues to Drive the South African Chemicals Market Finds Frost & Sullivan

 

PRZOOM - /newswire/ - Cape Town, South Africa, 2010/02/08 - The economic turmoil of 2009 had a profound impact on the global chemicals industry. Demand for chemicals fell off sharply as end-users came to terms with low consumer confidence and declining purchasing power.

   
 
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However, Frost & Sullivan notes that South Africa's chemicals markets remained fairly robust last year, thanks mainly to significant investments in infrastructure leading up to 2010 FIFA World Cup. So far, a total of R11.92 billion has been spent towards stadium construction alone, and suppliers of construction chemicals have benefited from this spending.

"Government spending leading up to the World Cup has buffered the local economy from the demand concerns facing the global market," notes Frost & Sullivan chemicals programme manager Mani James. "The construction sector performed well through the recession and was growing at just over 10 percent last year. However, demand from other end-user groups, including the agriculture, mining and consumer sectors, is still under pressure."

James notes that the last few months leading up to the World Cup will see the final drive in infrastructure preparations. As this activity subsides in the second half of 2010 the economy is expected to slow and this will be the major challenge facing local industries. However, transportation, water works and electricity infrastructural projects continuing over the next two to three years will provide opportunities.

"The local automotive industry is also expected to return to a growth cycle for the first time in three years, albeit at a slow rate," James adds. "This will present opportunities for automotive suppliers including platinum producers, plastics manufacturers and all associated consumable materials suppliers."

Palladium has also become pegged as a valuable investment opportunity as an affordable substitute for platinum in automobile production. This might present opportunities for chemicals companies to target the expected growth amongst palladium miners.

"Our advice would be for chemicals manufacturers to target their production strategies towards the construction industries and palladium mining," James says. "They should also prepare for the risks of a strong inflationary environment, and high labour union costs."

James also sees a need for the local industry to become more globally competitive in order to boost export profiles and the associated production. However, the strength of the rand could make this difficult.

If you are interested in more information on Frost & Sullivan's analysis of the South African chemicals industry, then send an email to Patrick Cairns, Corporate Communications, at patrick.cairns[.]frost.com, with your full name, company name, title, telephone number, company email address, company website and country.

About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.

 
 
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Infrastructure Development Continues to Drive the South African Chemicals Market Finds Frost & Sullivan

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