This study analyzes the global insulation industry. It presents historical demand data for the years 2001, 2006 and 2011, and forecasts for 2016 and 2021 by material (e.g., foamed plastics, fiberglass, mineral wool), market (construction and industrial, HVAC, and OEM), world regional market and for major national markets. The study also considers market environment factors, details industry structure, evaluates company market share and profiles industry players.
Demand to rise more than 5% annually through 2016
Global insulation consumption is forecast to rise more than five percent annually to approximately 29 billion square meters of R-1 value in 2016, a substantial acceleration from the 2006-2011 rate. In developing countries, insulation demand is expected to expand at a healthy pace due to rising building construction and industrial activity as well as growing per capita incomes that will lead to the adoption of modern building techniques and materials, including insulation. In most developed countries, insulation sales are expected to rebound after falling in 2008 and 2009 due to housing market collapses in several countries. In addition, governments will adopt new regulations concerning building insulation in an effort to reduce energy consumption, further boosting demand.
Building construction to be primary driver of demand
Solid residential building construction expenditure gains will be the primary driver of demand. In North America alone, insulation sales for residential applications will rise approximately nine percent annually between 2011 and 2016, primarily due to a recovery of the housing market in the US. In Western Europe, a rebound in several countries’ housing markets will cause insulation demand to post moderate gains through 2016, as opposed to the decline of the 2006-2011 period. In many West European countries, government efforts to encourage insulation use in order to lower energy consumption will also contribute to demand. In developing countries in the Asia/Pacific region, Africa/Mideast region, and Central and South America, rural-to-urban migration will stimulate building activity in urban areas, and therefore insulation demand. In some countries, the adoption of minimum insulation requirements will also contribute to demand. Demand for insulation in the industrial, HVAC, and OEM markets will be driven by expanding manufacturing activity, appliance output, and HVAC system installations.
Asia/Pacific region to be fastest growing market
The fastest growth in insulation demand through 2016 is forecast in the Asia/ Pacific region, due to advances in building construction activity as well as manufacturing and industrial output. More than 65 percent of new demand generated between 2011 and 2016 will be attributed to this region. Several Asia/ Pacific countries are expected to post solid growth, including China, India, Indonesia, and Thailand.
Foamed plastic insulation to lead value gains
In value terms, worldwide insulation consumption is projected to advance roughly seven percent per annum through 2016, approaching $60 billion. The fastest growth is expected in the foamed plastic insulation segment, as these products will be used more frequently in construction applications because of their high insulation values, allowing them to capture market share from fiberglass and mineral wool insulation. Foamed plastic insulation is also used extensively in refrigerator and freezer manufacture, further boosting demand. Demand for fiberglass insulation will benefit from the rebounding residential construction market in North America, as the material is widely used in the US and Canada. Other insulation materials, such as cellulose, will also see strong gains, as environmentally friendly options continue to gain popularity.
Profile global industry players including Johns Manville, Knauf Gips, Owens Corning, Rockwool, and Saint-Gobain
This comprehensive study analyzes the world market for thermal and acoustic insulation. Products include foamed plastic insulation (e.g., polyurethanes, polystyrenes, phenolics, polyimides, vinyl, and polyethylene), fiberglass insulation, mineral wool insulation (e.g., rock and slag wool), and others (e.g., cellulose, perlite, vermiculite). Foil and reflective insulation products are not covered by this study. Insulation markets include construction; industrial processes; heating, ventilation, and air conditioning (HVAC); and original equipment manufacturing (OEM).
Historical data for 2001, 2006, and 2011 and forecasts for 2016 and 2021 are provided. The term “demand” refers to apparent consumption and is defined as production (also referred to as “output,” “shipments,” or “supply”) from a country’s indigenous manufacturing facilities plus imports minus exports. “Demand” is used interchangeably with terms such as “market,” “sales,” and “consumption.” Data are presented in millions of square meters of R-1 value and millions of US dollars.
Note that the metric measures of thermal value used in this study cannot be converted to English units (those used in the US insulation study) simply by converting square meters to square feet. The metric version of thermal value defines heat transfer in metric units (watts) and is based on a material sample one meter thick; the English version of thermal value defines heat transfer in British thermal units and is based on a material sample one inch thick. Taking into account all of the differences in measurement, approximately 16.4 square
meters of R-1 value (metric system) is equal to 1,000 square feet of R-1 value (English system).
For individual countries, historical demand data were determined in the local currency and then converted to US dollars using the average annual exchange rate of that country’s currency to the US dollar as determined by the International Monetary Fund. Consequently, countries whose currencies appreciably changed in value relative to the US dollar from one presentation year to the next will have historical growth trends for insulation product demand that differ significantly from those measured in local currency terms. Forecasts for 2016 and 2021 assume no change in the exchange rate from 2011, and as a result reflect expected future growth in both local currency and US dollar terms.
In addition to providing a market outlook, the study identifies and profiles the major industry participants and discusses the key strategic competitive variables. The report is framed within the world insulation industry’s economic and market environments, and therefore environmental variables affecting demand are emphasized. World insulation market share data by company presented in the “Industry Structure” section are estimated based on consultation with multiple sources.
Data on global insulation demand are derived from differing sources and developed from statistical relationships. Variations are commonplace in this type of international reporting and, consequently, data presented in this study are historically consistent but may differ from other sources. Variances may occur because of definitional differences, inventory accumulations, and goodsin- transit. Tabular details may not always add to totals due to rounding. Ratios are rounded to the nearest significant digit. All dollar values cited for the industry are at the basic manufacturers’ level.
Macroeconomic and demographic indicators presented in this study were obtained from The Freedonia Group Consensus Forecasts dated June 2012. Gross Domestic Product (GDP) historical data are derived from the national income and products accounts from the Organisation for Economic Co- Operation and Development (OECD) for its member countries, from the European Bank for Reconstruction and Development (EBRD) for its member countries, and from the International Monetary Fund for its member countries that are not part of the OECD or EBRD. Sources of GDP estimates for other countries are based on information from the World Bank and a variety of sources including the countries’ statistical bureaus. GDP forecasts are developed from a consensus of public agencies and private firms.
All estimates of gross domestic product and components of GDP are done in terms of constant purchasing power parity in a benchmark year (2010) that is one year before the base year (2011) used in this study. Purchasing power parity GDP estimates for the benchmark year are obtained from the OECD; Eurostat; the World Bank; the International Monetary Fund; the US Central Intelligence Agency; and selected other sources. These purchasing power parity GDP estimates for the benchmark year are based on gross domestic product data expressed in the individual countries’ local currency, which are then converted to US dollars by valuing each country’s output at US prices in the benchmark year. This approach values the same physical output at a consistent price for all countries, thereby reducing the distorting influence of different price levels in the different countries.
The alternative approach of using exchange rates to convert local currency GDP to US dollars would tend to overvalue the output of countries with high average price levels and undervalue the output of countries with low average price levels, because exchange rate conversions only partially reflect the relative prices for goods and services that are domestically consumed and invested. Furthermore, factors other than relative prices, such as demand and supply in currency markets, interest rates, and capital flows, affect exchange rates.
Once the GDP values for a country are estimated for the benchmark year, we then calculate inflation-adjusted GDP for all other years for that country based on historical and forecast growth rates of GDP expressed in inflationadjusted units of that country’s local currency. This approach ensures that the GDP series for any given country is an accurate index of changes in inflationadjusted GDP for that country. However, it also implicitly assumes that the price structures across countries do not change from those of the benchmark year. Therefore, caution should be used in comparing the relative GDP of countries in years other than the benchmark year. If the ratio of prices across two countries in a given year differs from the ratio of prices across those countries in the benchmark year, then the change in the relative sizes of those two economies as measured will not accurately reflect changes in output.
The benchmark year is chosen to be one year prior to the base year for the study for reasons of data availability. One benefit of that choice is that the ratio of prices across countries in the base year is usually similar to that in the benchmark year. Therefore, the ratio of real GDP between two countries in the base year of 2011 is generally a reasonably accurate representation of the relative sizes of their economies.
A wide variety of primary and secondary sources were used in the compilation of this report. These include national government statistical agencies, trade associations, industry experts, financial sources, online databases, other Freedonia studies, and insulation company sources. The Organisation for Economic Co-Operation and Development, World Bank, International Monetary Fund, European Union, and various national government statistical publications were among the public sector sources utilized.