Factors Affecting the Insulation Market

Stephen Harrod

July 1, 2014

The insulation market has seen steady growth in demand over the past decade, increasing on
by just under 3% annually between 2000 and 2010. The global
market for thermal insulation materials totalled 37.1 million tons in 2012, worth an estimated
billion, including materials used in wall, floor, and roof
applications. This is expected to pick up further in the coming years.
In this article, the 5 main trends and drivers in the global sustainable insulation market are

In this article, the 5 main trends and drivers in the global sustainable insulation market

1) Building Codes
and Regulations

The main influences on demand for insulation materials are various international building
and regulations. While these regulations act as a catalyst for
growth, they also impose limitations by restricting the use of certain materials in specific
applications. The introduction of new codes can have a marked effect on
the insulation market, which is expected to be seen particularly in Russia and Mexico in the
future—quantifying this effect, however, is difficult and highly

2) Construction of New buildings

The effects of the global recession on new building construction are also evident,
especially in
the United States and Spain. Construction did enjoy a boost from
the recovery shown in many countries in recent years, especially during 2011 and 2012—with
the exceptions of France, Spain, and the United Kingdom in 2012. While no
reliable predictions are available, the general opinion in the insulation industry is that a
is underway in most regions, with the exception of Spain, whose
construction industry remains stagnant.

3) Population Growth and Urbanization

According to the latest predictions, the worldwide population is growing at a rate of 1.2%
annually from 2000 to 2018, and is set to reach over 7.5 billion by 2018.
Although the Asia-Pacific region accounts for the majority (55%) of the 2012 population, the
growth rates will be seen in Africa and the Middle East.

Most importantly in terms of sustainable insulation, however, is that the global
population is
not only growing, but is moving from the countryside to the
towns and cities, stimulating demand for both commercial and residential buildings as well
associated infrastructure and services. Just over half of the
global population can now be said to be urbanized and this is expected to grow on average
almost 2% annually over the medium term, based on the latest
statistics available from the Central Intelligence Agency’s (CIA’s) almanac-style
reference guide
The World Fact Book.

4) Energy Costs

Energy costs are another significant driver of the consumption of insulation materials.
costs are widely accepted as the prime motivator driving growth in insulation—both in
commercial and residential applications—though other costs come into it as well,
in tightly managed projects or budgets. This is also true of production costs, of which energy
constitutes a large proportion, especially in the glass and mineral wool market, which uses
considerable amounts of energy in furnaces and ovens.

In this regard, the development of shale gas as a feedstock for many monomers and polymers
is seen
as a significant opportunity for the insulation market as it will help to hold down production
and may offer new projects. However, it may also have a negative effect on insulation demand
since it
will likely decrease heating costs, reducing the obvious incentive for Facility Owners to

The volatility of oil prices serves as an encouragement for Plant and Facility Managers to
insulation, partly as a result of uncertainty over future fuel
price rises, and partly due to the perceived (if not real) belief that oil price reductions
find their way through to consumers’ heating bills.

5) Sustainability

Sustainability is the major force behind the development of new technologies, but there is
no easy
answer to the complex issue of sustainability of insulation
materials. Even the oil-based materials offer a degree of sustainability when measured against
competing materials in cradle to grave life-cycle analyses. It is not
correct to assume that natural fibers such as wool will automatically be more sustainable
than, say,
expanded polystyrene rigid boards. Regardless of the material
used, insulation is expected to save up to 12 times as much energy in its first year of
making it an attractive option for both commercial and residential