Factors Driving and Restraining the Thermal Insulation Material Market

The thermal insulation material market has witnessed steady growth in the last five years or so, reaching a valuation of US$ 41.8 Bn in 2014. Robust demand from the construction industry has provided an impetus to the thermal insulation materials market, and it is anticipated that by 2020, this market will be worth US$ 53.2 Bn. The key drivers and restraints in the global thermal insulation material market have been discussed in this article.

Factors Driving the Demand for Thermal Insulation Materials

• Resurgence in the Construction Industry

When the housing bubble burst in 2007, the global economy went into a period of recession. The construction industry, which had witnessed a period of phenomenal growth, bore the brunt of the financial meltdown. However, as the global economy recovers, the construction sector is witnessing a revival.

The growth of construction industry is especially strong in Asia Pacific. China and India, two of the fastest growing economies in the world, are witnessing increased emphasis on infrastructure activities. Furthermore, frantic construction in Qatar, which is hosting the FIFA World Cup in 2022, is also creating demand for thermal insulation materials.

Europe’s economy, threatened by the Eurozone crisis, is still not anywhere close to its pre-recession levels, as a result of which, demand for thermal insulation materials is expected to remain stagnant in the near future.

• Government Focus on Energy Conservation

Government codes and regulations have the potential to either propel or impede the demand for thermal insulation materials. While implementation of stringent regulations has increased the demand for thermal insulation materials, in some cases, it has led to banning of certain chemicals used for specific applications.

In the European Union, the Concerted Action for the Energy Performance of Building Directive has mandated that all buildings constructed in the member states should comply with zero-energy standards by 2020. In China, residential energy standard requires new buildings to be 65% more efficient than those constructed in the 1980s. These developments are being looked upon as positively by the thermal insulation companies.

• Increasing Demand for LNG

Increased demand for LNG is fuelling the demand for thermal insulation materials. The transportation of LNG requires the lining of pipelines and barrels to maintain the required temperature. Thermal insulation materials are widely preferred owing to their heat retention properties. The demand for LNG is expected to increase steadily in the near future, which in turn, is expected to provide an impetus to the global thermal insulation material market.

• Growing Population & Urbanisation

The global population is expected to reach around 7.5 Bn by 2018. Asia Pacific and Africa are expected to witness high population growth rates in the near future. As global population increases, more and more people are moving from countryside to cities, in search of employment and better lifestyle.

Owing to these factors, the demand for residential and commercial spaces is increasing steadily. This has provided an impetus to the thermal insulation market and the trend is anticipated to continue during the forecast period.

Factors Restraining the Thermal Insulation Material Market

• High Cost

High initial cost remains a key restraint for widespread adoption of thermal insulation materials. Although the initial investment is eventually recovered through savings on electricity bills, for many small businesses, incorporating thermal insulation remains out of budget.

• Fractured Distribution Channels

A strong supply chain is vital for the growth of any market, however, in the case of thermal insulation materials, the supply chain in fractured. Owing to this, manufacturers have difficulty reaching to their target audience, which eventually leads to substitute buying.

• Fluctuation in Price of Raw Materials

The price of raw materials is dependent on crude oil prices. The global crude oil market has witnessed a great deal of uncertainty in the past owing to geopolitical tension in the Middle East, owing to which price of thermal insulation materials have skyrocketed. Uncertainty in the region has the potential to impede the growth of thermal insulation material market.

Related Research Report: Thermal Insulation Material Market: Global Industry Analysis and Opportunity Assessment 2015 - 2020