New market study from IAL Consultants – Global market overview for SPF and OCF
IAL Consultants has published the fifth edition of its report on the spray polyurethane foam (SPF) and one component foam (OCF) markets. The new study updates the information included in the previous study published in 2014. The information contained within the report has been extensively revised through a lengthy programme of interviews throughout the industry during the second half of 2016. The report contains data on the production of both SPF (in tonnes) and OCF (in tonnes and number of cans equivalent) in 2015 and forecast production for 2020 split by major geographic region and country.
SPF market overview
In 2015, global SPF production stood at just under 600,000 t, similar to production volumes witnessed in 2013. Although this implies stagnant growth, it does not truly reflect changes in the market which have taken place at a regional level (fig. 1). China and the USA dominate the SPF market with over 60 % of global production combined, but the past few years have been characterised by falling demand in China and soaring growth in the USA. Although both countries had similar production volumes of around 190,000 t in 2015, the outlook to 2020 for each is markedly different, with average annual growth rates of 9.0 % forecast for the USA compared to 1.7 % for China. Western Europe accounted for approximately half of EMEA’s production volumes in 2015, with production based predominantly in Spain, Belgium and France. In the Middle East, SPF production rose significantly in 2015 to approximately 16,000 t, mainly due to increased demand in the UAE.
SPF production in the USA has risen substantially in the last five years to 190,000 t, with some producers reporting annual growth rates of up to 20 %. North American SPF production is forecast to show an annual growth rate of 9 % to 2020 (fig. 2).
In North America, spray foam was originally used in commercial roofing, but the market has soared in recent years due to rising demand for improved insulation in both residential and commercial buildings. Residential wall insulation is the main growth driver, with both closed and open-cell foam experiencing strong growth in this sector.
Falling polyurethane raw material prices have allowed manufacturers to reduce prices and compete more effectively in what were previously traditional fibreglass markets. SPF has far superior insulation and moisture barrier properties compared to fibreglass, and SPF producers are now in a position where they can compete with fibreglass on both performance and price. Also, in the past, a separate fire barrier coating was required when open-cell foam was applied, but improved formulations have eliminated the need for a separate intumescent coating, which has reduced costs and made SPF more cost effective. As a result, these factors have led to a significant rise in open-cell foam usage, particularly in the residential wall market.
Renovation of existing buildings and weatherisation projects continue to boost SPF demand as the US government moves to improve energy efficiency. The US government’s 2020 environmental targets have provided good opportunities for spray foam manufacturers to supply both the residential and commercial sectors. Also, the introduction of stricter building codes has encouraged the development of external wall insulation systems. SPF is also commonly used for attic insulation in new housing. The growth has been more prevalent in states with hot climates such as Florida, Texas, North Carolina and South Carolina, where there is strong demand for both retrofit and new build applications. In the commercial sector, the demand has grown in facilities where good air quality is of particular importance, including hospitals, schools and offices.
With production at just under 6,000 t in 2015, the South American market for spray foam remains small compared to the North American market, due to limited product awareness and technical knowledge concerning its applications. Nevertheless, there is demand for SPF from the commercial and industrial sectors and some in residential applications. Demand is present in the agricultural industry for crop storage, fish farming tanks, chicken coops, commercial refrigeration, and wine production tanks. Consumption of spray foam for construction applications is estimated to be higher than the production due to imports into the region, mainly from the USA.
The recent slowdown of the Chinese economy has had a major impact on the Asian SPF market. In 2015, the Chinese construction industry, which is the world’s largest construction market, slumped to historic lows, with housing construction registering a decline for the very first time. The Chinese SPF industry also suffered as a result, with production plummeting 15 % between 2013 and 2015 to 180,000 t in 2015. However, following the announcement of new infrastructure investment designed to stimulate the construction industry, SPF production is forecast to recover to 2020 with a CAGR of 4.1 % between 2016 and 2020 (fig. 2).
The main applications for SPF in China are wall insulation, mainly exterior (interior insulation is used for prefabricated buildings only), roofing, and floor and basement insulation. Other applications are in cold storage and food processing factories (for wall and roofing insulation), solar water heaters and pipe insulation.
As most buildings in China are poorly insulated, legislation introduced by the Chinese government to promote the use of insulation materials in the exterior walls should help boost SPF demand in the coming years. However, SPF will face tough competition from cheaper EPS and XPS insulation grades in exterior wall applications. In other countries within the region, such as Japan, South Korea, Taiwan and Australia, demand for SPF continues to show steady growth, mainly in the building maintenance and repair sector.
Europe, the Middle East and Africa (EMEA)
The SPF market continues to rise in EMEA, despite weak economic growth within the region. Europe produced almost 90,000 t of SPF in 2015 and is forecast to show annual growth of 3.2 % to 2020. Middle East SPF production is forecast to experience robust growth of 13.2 % annually to 2020, mainly due to increased production in the UAE. New building regulations within the UAE requiring lower U‑values for thermal insulation have boosted SPF use, mainly in commercial roofing.
Due to the slowdown in the construction industry, the renovation sector has been the key driver for the use of SPF systems, in the insulation of walls, roofs and attics. Energy efficiency requirements will continue to encourage the use of SPF in Europe, the Middle East and, in the long term, Africa, particularly because old housing stock needs to be brought up to modern standards. However, widespread use of SPF is restricted as its fire safety rating is lower than other competing products.
A common fire rating for SPF is B3, which is acceptable in most European countries; however, the performance can be insufficient in countries where fire standards are tougher, particularly in Germany, Russia and the Nordics. Austria and Switzerland are also reluctant to use SPF because they prefer higher fire-rated materials such as mineral wool. There are also additional concerns over the release of isocyanates during its application which have limited the uptake of SPF.
OCF market overview
Global OCF production reached 665 million cans in 2015, with China accounting for almost half of worldwide production, manufacturing over 300 million cans (fig. 3). Chinese OCF production has not been affected to the same extent as SPF by the slowdown of the Chinese construction industry, and its exports have steadily increased within Asia, and to Russia and the Middle East. China’s OCF production is forecast to show annual average growth of 5.8 % to 2020 compared to global production growth rates of 4.1 % (fig. 4).
Eastern Europe is the next largest producing region, with production standing at 111 million cans in 2015. Estonia dominates the region, accounting for half of the area’s production through its two main manufacturers, Henkel Makroflex and Krimelte. Turkey is also a significant producer through its local manufacturer, Akkim.
OCF is less well-established in North America compared to Europe and Asia, with OCF production estimated at just 54 million cans in 2015. Dow is by far the largest producer, accounting for around 80 % of production. Other major global OCF players include Selena (with plants in Poland, Brazil and China), Soudal (Belgium and China), and Henkel Makroflex (Estonia and Turkey).
OCF products can be easily exported for use elsewhere as they are packaged in small, light cans; thus transportation costs do not pose much of a constraint to the final selling price. However, the high levels of isocyanates in the aerosol cans have created more challenges on the route to market for OCF, particularly in certain European countries. Health concerns over the isocyanate contents have led to the development of low-MDI content foams, although their use is not yet widespread. In fact, conventional OCF cans have an outstanding price-quality relationship, meaning that alternative products are overlooked, and thus the demand for conventional OCF cans continues to develop along a positive trend.
The report “Global Overview of the Spray Polyurethane Foam & One Component Foam Markets” is available from IAL Consultants, priced at EUR 3,750 for a single hard copy edition.