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Thermal Insulation in the Residential and Commercial Construction Markets

Apr 28 2008

Total North American demand for residential and commercial thermal insulation is estimated to be 374 billion square feet at R-1 (abbreviated SFR) and valued at $7.4 billion in 2007, according to Principia Partners. This is down by 10% from 417 billion SFR and down by 7% in value from $7.9 billion in 2006.

Residential and commercial insulation is comprised primarily of blanket, loose fill, board and spray foam products, made from fiberglass, cellulose and foams and used primarily in walls, attics and floors to reduce thermal conductivity, minimize air infiltration, and in some applications provide acoustical benefits.

A new market study by Principia Partners provides a detailed look into the market for thermal insulation in the residential and commercial construction markets in North America, including current and forecast demand estimates as well material trends, energy codes and the latest promotional programs.

Residential markets account for 231 billion SFR valued at $3.1 billion in 2007. Residential volumes declined 18% from 2006 while value dropped 20% driven by a 25% decline in U.S. housing starts. The primary insulating material in residential construction is fiberglass, representing an approximately 80% of volume and 70% value in this segment for 2007.

In 2007, commercial insulation demand represents 143 billion SFR valued at $4.2 billion. While new residential construction in the U.S. suffered its worst decline since 1980, the commercial market continued to grow at a rate of 7% during 2007. Thermal insulation used in commercial applications posted volume growth of 6.7% during this same time while value grew slightly less at 5.5% due primarily to lower pricing. Fiberglass insulation is also the predominant insulation type in commercial construction at just under 48% of total volume followed closely by rigid foam at 39% which is used more extensively in roof and wall insulation. Rigid foam was the largest market value category at $2.5 billion, or 59% of total commercial market value.

On the supply side, significant product volume and revenue are held by a few key players in certain segments. The top ten suppliers overall supply 87% of the volume and 83% of the value, over $6 billion in 2007. Owens Corning holds approximately 20% share of total insulation sales in North America, while Johns Manville and CertainTeed collectively account for a similar share. Smaller fiberglass insulation producers Knauf and Guardian make the top ten ranking. In other insulation types, US GreenFiber is the largest producer of cellulose insulation sold, while Dow is the leading supplier of foamed polystyrene. Atlas Roofing, Firestone Building Products, and Carlisle – primarily supplying commercial insulation – combine to round out the top ten suppliers in North America.

“The major decline in the U.S. residential construction over the past 2 years has impacted the insulation category, but demand from the commercial segment has helped buffer the impact. Overall, it’s a tough market but will improve with the economic and housing cycles going forward,” states John Pruett, Director of Marketing and New Business Development at Principia. Going forward over the next five years, Principia projects that overall demand will increase from 375 billion SFR valued at $7.4 billion in 2007 to 441 billion SFR valued at $8.7 billion by 2012, or nearly 4% compounded average annual growth over this time period.

Principia’s study has analyzed the drivers and trends of the residential and commercial insulation market by material type and segment, distribution channel, and region, and provides forecasts for the next five years. Results of the report will provide subscribers with critical market data and analyses essential for planning purposes including: