Global Demand for Insulation

Nick Cunningham

Nick Cunnigham started with Freedonia Group as an Industry Analyst in 2013 and specializes in construction, writing such titles as World Insulation, Wood & Competitive Decking, Decorative Tile and Siding. He holds 2 MA degrees, one in International Commerce and Policy from George Mason University and the second in Political Science from Oklahoma State University. He completed his BA in Political Science (minor in Russian) at Oklahoma State. He has held several internships at The Brookings Institution and with the Department of Commerce. For more information, please contact info@freedoniagroup.com.

November 21, 2016

Global demand for insulation is expected to rise 3.7% per year to 26.0 billion square meters of R-1 value in 2020. Developing countries are expected to account for the majority of insulation demand gains, with rising building construction activity and industrial output driving growth. For example, over half of new global demand generated between 2015 and 2020 will occur in the Asia/Pacific region. China, India, and Indonesia are among that region’s developing countries expected to post solid growth in insulation demand. In high-income countries, a combination of recovery in construction activity and efforts to make existing buildings more energy efficient will boost insulation demand.

World demand for insulation in the industrial, HVAC, and OEM markets is expected to grow 3.2% per annum to 9.2 billion square meters of R-1 value in 2020. Industrial applications for insulation include coverings for machinery, boilers, pipes, and tanks. HVAC uses include coverings and linings for HVAC equipment. Insulation is used in OEM applications such as major household appliances (especially refrigerators, freezers, and ovens), refrigerated transport, motor vehicles, aircraft, shipping, containers, fire doors, solar panels, and coolers. The pace of growth will be slightly slower than the rate in the construction market. The Asia/Pacific region will greatly contribute to demand, as manufacturing activity in many countries expands rapidly. For example, refrigerator and freezer shipments in the region are projected to increase 3% annually through 2020.

China accounted for the largest share of insulation demand in the industrial, HVAC, and OEM markets in 2015, due primarily to its vast appliance production levels. More developed countries in North America and Western Europe, as well as Japan, also contribute to demand for insulation in these markets due to their mature industrial sectors and high per capita incomes that allow for greater use of HVAC units.

Here is an overview of the insulation market in the most relevant countries and regions.

China

Demand for insulation in China totaled 5.9 billion square meters of R-1 value in 2015, representing 60% of regional demand and making it the largest national consumer of insulation materials in the world. The country’s rapidly growing construction and industrial markets contribute to the high levels of insulation demand. However, intensity of insulation use relative to fixed investment spending and population is lower than more developed countries in the region, including Japan and Australia. China’s generally moderate climate, traditional building practices, and relatively low living standards are responsible for this underutilization of insulation materials. However, the Chinese government has imposed updated insulation requirements for buildings in order to reduce energy consumption in the country, implementing design standards for energy efficiency for residential buildings (2001), public buildings (2005), and green buildings (2006).
North America—In 2015, insulation demand in North America totaled 5.0 billion square meters of R-1 value, representing 23% of global consumption. The regional market is dominated by the U.S., which comprised 86% of regional demand in 2015. Per capita usage of insulation in Canada and the U.S. is among the highest in the world, while in Mexico, intensity of insulation use is low by global standards due to the country’s warm climate and less developed economy.

United States

In 2015, demand for insulation in the United States totaled 4.3 billion square meters of R-1 value, representing 86% of North American demand. Intensity of insulation use in the United States relative to GDP, population size, and fixed investment spending exceeds global norms due to the country’s massive construction sector and diverse industrial base. Construction firms use an extensive amount of insulation materials, due in part to building codes concerning insulation usage. Also, homes in the United States are larger, on average, than those in many other countries, and high per capita incomes mean that U.S. households can afford effective insulation materials.

Western Europe

Demand for insulation materials in Western Europe totaled 3.8 billion square meters of R-1 value in 2015, comprising 17% of the world total. The region’s mature construction sector and diverse industrial base generated demand for these products. Also, the colder climates of many countries in the region mean that structures require more insulation. Although prices for insulation in Western Europe are generally among the highest in the world, households can afford it due to the high standard of living.

Japan

Demand for insulation in Japan totaled 960 million square meters of R-1 value in 2015, representing 10% of regional demand. Intensity of insulation use in terms of fixed capital spending and population is well above the regional average but below that of other developed countries in North America and Western Europe. Insulation is used less frequently in building construction in Japan due to its moderate climate and less demanding requirements (compared to other developed countries). However, the country’s diverse industrial sector comprised 44% of insulation demand in 2015.
World Insulation, a new study from The Freedonia Group, a division of MarketResearch.com, offers historical data plus forecasts for 2020 and 2025 for supply and demand, as well as demand by market and product, in 6 regions and 26 countries. The study also examines materials utilized (foamed plastics, fiberglass, mineral wool, other). More information can be accessed directly through their website at www.freedoniagroup.com.

 

 

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