The UK market for building insulation has recovered somewhat in 2014 as housebuilding levels have continued to rise and initiatives such as the Green Deal and ECO have gained some momentum.
This followed a significant downturn in 2013, which was due to a fall in government-subsidised retrofitted installation activity, and saw the total market value fall by around 7 per cent.
Although there has been growth in demand for insulation products from increasing levels of new housebuilding and in non-domestic building, the Green Deal and Energy Company Obligation (ECO) have so far only generated a fraction of the levels of domestic installation activity of previous government initiatives such as CERT and CESP, which ended in 2012.
Other key market influences include changes to Building Regulations and energy prices changes. Although crude oil and gas prices have fallen recently, energy prices are forecast to rise over the longer-term, which is likely to result in higher end-product prices for insulation products.
PUR / PIR products now have the largest market share of insulation products, accounting for ~40 per cent by value in 2014. The market value of mineral wool products has fallen due to the fall in demand for such products under the Green Deal and ECO, but they still account for a third of the total market in the UK. With retrofit the most important market, the key areas of demand by application have been cavity walls and lofts. The share held by solid walls was just 10 per cent, although this is around 10 times higher than under CERT/CESP.
By end-use sector, despite the dramatic fall in demand under the Green Deal and ECO, the most important market remains domestic retrofit, which accounts for ~40 per cent by area installed and the key areas of demand by application have been cavity walls and lofts. The non-domestic market is also significant and mainly consists of insulation for flat roofs and site-built metal cladding and roofing systems. The share for new housebuilding is higher than in recent years due to steadily rising numbers of housing completions.
The key supply route for insulation products are the specialist (interiors) distributors. Builders’ merchants account for approximately 15 per cent of the market, the remainder being split between direct sales to installers, direct sales to external wall insulation systems companies, converters and DIY stores. The installation market is polarised between a small number of national companies and many regional and local independent firms. The leading contractors typically provide other energy efficiency services as well as insulation work.
Keith Taylor, Director of AMA Research, said:
“Although the non-residential and new house building sectors are forecast to continue to show reasonable growth over the next five years, we expect retrofit installations in the residential sector to lag behind in terms of growth. Growth in this sector has been driven by Government funded initiatives in recent years to subsidise the retrofitting of insulation, but due to the end of Green Deal funding and also the uncertainty over the longer-term future of the ECO, this suggests that growth in this sector may be more modest.”
The market for insulation products is forecast to grow by 6 per cent in 2015, after which growth will gradually slow down to reach a level of around 3 per cent per annum in 2019.