Market analysis - Thermal insulation industry

Glass wool and rubber foam insulation market

in Italy

Abstract presentation

Mr. Matteo [email protected]/linkedin/matteoboemi

Work objectives

To clarify the milieu surrounding this specific industry

To give evidence of the competitive arena in terms of players, dimensions, trends, drivers

To understand the opportunities with a business2business approach and to understand key factors within actual and potential markets

Analysis method

PHASE 1

OBJECTIVETo analyze market

elements likenormative,

dimensions, trends,

competitors, drivers

METHOD

Data collection and target

interviews to obtain market

structure information

PHASE 2

OBJECTIVETo analyze potential

business to business

markets to obtain potential

METHODTarget interviews

in potential markets with focus on key

buying factors and product requirements

analysis

OUTPUT

Market attractiveness

in each potential segment and forspecific

insulation Product

Insulation: energy efficiency and normative driving the

market !

PHASE 1



dimensions, trends,


METHOD




Why energy efficiency driven? The energetic consumption and the saving opportunities by industry

Source: European, National policy documents

At European level the energy saving and energetic efficiency intent it’s clearly stated as a priority of policies

Building; 32%

Industry; 28%

Transportation; 30%

Other; 8%Agricolture; 2%

Why energy efficiency driven? The European directives

Source: Directive 2006/32/EC

To ensure that “All new constructions are nearly zero-energy constructions by 2020 and new constructions occupied and owned by public authorities are nearly zero-energy by 2018. Member states are encouraged to develop policies to take measures in order to stimulate the transformation”

Policy is a market driver !

20-20-20 objective by 2020

- 20% emission reduction

+ 20% use of renewable energies

+ 20% energy saving

Why energy efficiency driven? In Italy…

Source: Dlgs 311/2006

A country with a major energetic dependence as purchase goes up to 85% of total need while in Europe the average need is 54%

Country posses a very ancient and consuming real estate stock

Proactive and concrete approach towards energy saving since nineties

Only in 2006 a normative for energetic performance of constructions was approved

In Italy…the energetic certification

It’s a requirement for new or renewed constructions, and buildings which are renewed or given for rent stating:

A system of energetic classifications of buildings according to climatic areas, shape of buildings etc.

Limits for thermal heating

Heat transfer limits for walls, covers and pavements

Chilling (yet to be developed..)

In Italy…the incentives

A system of incentives in present and concerns expenses for:

The reduction of energy demand for heating

The improvement of insulation for buildings through windows,frames, doors, insulation, floors

The installation of solar panels

The replacement of winter thermal equipments

In Italy….the public opinion

“The picture is changing in terms of a more favourable environment and normative framework for projects and sectors whose initiative is oriented towards energetic sustainability”

In Italy, public opinion, directives and incentives are market drivers !

The insulation market: figures and specific elements

New insulation products…is outplacement possible?

Market considerations

Insulation as an inner element

A market challenge for insulation under product standards and maturity market conditions

Challenge is an equilibrium between cost (product and energy consumption), performance and endurance

PRODUCT LIFE CYCLET=0 INSTALLATION

T=50 RENEWAL

0% PRODUCT IMPACT

100% PRODUCT REUSE, RECYCLE

MECHANICAL PERFORMANCE

WATER AND HUMIDITY PROOF

STABILITY OF DIMENSION

TEMPERATURE RESISTANCE

CHEMICAL AND BIOLOGICAL RESISTANCE

FIRE AND COMBUSTION SAFETY

ACOUSTIC PERFORMANCE

100% THERMAL INSULATION

100% THERMALINSULATION

EVEN PRODUCT PERFORMANCE

UNDER STANDARDS

TO MAINTAIN ORIGINAL

PERFORMANCE

“0” IMPACT AT INSTALLATION

STEP

TO START A DIFFERENT

CYCLE

EN STANDARDS

Distributive system: the representation (Buildings)

Distributive system: the representation (Technical)

Glass wool insulation

Glass wool insulation in 2010 –

Market estimate

Market share (%)

Company 1 ….(Consolidated: + …

=54.310.934)

..

Company 2 …. …

Market Import** …. …

Total market estimate … 100,0

**Source: Istat, National Bureau of Statistics. Codes 70193900 and 70199030 (Slabs and pipes). Includes ..and .. data whose plants in Italy are not producing

Glass wool market: players and shares

*… is consolidate and includes … (Water proof membranes) which according to association (SITEB) is between 11.000 - 15.000 Mln Euro (5-7 Mln m2 for average price of 2,30 Euro m2)

Productive capacity2011-2012 (in

tonnes)

EffectiveNational market

estimate (in tonnes)

Company 1 .. ..

Company 2 .. ..

Total capacity .. t .. t

Glass wool market: quantitative estimates 2011-2012

Source: company figures+ distributors estimates


estimate (in tonnes) - 2010





Import … … …

Total capacity … t .. t .. t

Rock wool market: quantitative estimates 2010-2012

Source: official statistics+ distributors estimates

Glass wool market: 2007-2010 trend

Source: data analysis on companies full balance sheets figures

2007 2008 2009 2010

Company 1 … .. .. ..

Company 2 … .. … ..

Import … .. … …

Market … … … ….

POSITIVE SHORT AND

MEDIUM TERM OUTLOOK

Glass wool market: short description

Glass wool: the construction market

Source: Evidences from interviews

Glass wool: the technical insulation


Glass wool: the Original Equipment Manufacturers


Product performance and price evidences

A product comparison has shown substantially even performanceof products under standard requirements:A) IBR N Insulation roll – B) DF40 Insulation roll – C) 040 Insulation roll – D) FR Insulation roll -

Thermal conductivity A, B, C) λ 0,040 W/(m•K) at+10°TemperatureD) λ 0,043 W/(m•K) at+10° temperature

Water vapour diffusionresistance

μ =1

Fire class reaction Class A1

Thermal resistance A) 1,25 (50 mm thick)-2,50 (100 mm thick)m2 k/wB) 1,25 (50 mm )-6,00 (240 mm) m2 k/wC) 1,25 (50 mm )-5,00 (200 mm) m2 k/wD) 1,15 (50 mm )-4,20 (160 mm) m2 k/w

Source: Distributors and companies catalogues


A price comparison has shown different positioning between thesame products:A) IBR N Insulation roll – B) DF40 Insulation roll – C) 040 Insulation roll – D) FR Insulation roll -

Source: distributors and companies catalogues

A) IBR N insulation roll – ..

LOWEST PRICEB) DF 40 insulation roll - ..

C) FR insulation roll – ..

D) 040 insulation roll – .. 1,2 width / 50 mm thick: 1,90 Euro/m2

Prices to distribution (an example)

Source: ...distributor

roll 100 mm thick

λ 0,40; Density 12/13 Kg

Glass wool

Lowest price:

…. € mq

roll 40 mm thick Density 40 kg/m3

Rock wool

Lowest price:

... € mq

Mineral wool pipes producers

The market analysis identified the following mineral wool pipers producers among glass wool insulation competitors:

1.. 1000 S: 0.085 W/mK (300°), limit ≤ 620 °

2.. 853: 0.094 W/mK (400°)

3RS1: 0.067 W/mK (250°), limit ≤ 350 °

4..Pipe section: o.083 W/mK (300°), limit ≤ 750 °

5SGR and SGR1 (with aluminium foil): 0.034 W/mK, limit ≤ 300 °C

6 ..: 0.079 W/mK (300°), limit ≤ 700 °..: 0.066 W/mK (150°), limit ≤ 300 °

Mineral wool pipes evidences

Rockwool

Glasswool

OUTPLACEMENT

... IS ABSOLUTE

MARKET LEADER IN ROCKWOOL

PIPES, WITH NEARLY 90% OF

THE MARKET

Strengthen

Glass wool market: swot analysis (Italian point of view)

Weaknesses

Opportunities Threats/Challenges

How is market expected to grow?

Construction industry

Technical insulation

Original Equipment Manufacturers

Volume/Thickness Prices Squared meters

,

Elastomeric rubber foam insulation

Elastomeric rubber foam market: players and shares

Elastomeric rubber foam market in 2010 –

Market estimate Market

share (%) ExportValue of

sold production

Company1 … 44,2 … …

Company 2 … 10,5 … …

Company 3(former …) … 5,8 … …

Company 4 … 4,0 … …Market import

Company 5 … (Jan-Sept) 30,8Company 6 … 4,7Total estimate .. 100,0

Source: data analysis on companies balance sheets figures

Productive capacity2011-2012 (in

tonnes)

Company 1 … m for pipes

…m2 for sheets

Elastomeric rubber market: quantitative estimates 2010

Source: company figures+ distributors estimates+ former employees

... EXPORT

Elastomeric rubber foam: short description

Elastomeric rubber foam: 2007-2010 trend

2007 2008 2009 2010

Company 1* … … … …

Company 2 … … … …

Company 3(former ..) … … … …



Company 6 … … … …Total estimate … … … …

Source: full data analysis on companies balance sheets figures

* Data based on company interviewPOSITIVE

SHORT AND MEDIUM TERM

OUTLOOK

The rubber foam market: HVAC


The rubber foam market: HVAC


The rubber foam market: the Original Equipment Manufacturers


The rubber foam market: renewable energies


The rubber foam market: technical insulation in industrial commercial and public area


The rubber foam market: refrigeration market


The rubber foam market: petroleum and chemical industry


Product performance and price evidencesA product comparison has shown slight differences ofperformance of products under standard requirements:A) ST INSULATING PIPES– B) AC INSULATING PIPES –C) TH INSULATING PIPES – D) C1 INSULATING PIPES -


Temperature range A) -200°/+105° B) -50°/+105° C) -100°/+105° D) -60/+105

Thermal conductivity A) 0,034 W/(m•K) at -20°B-C) 0,035 W/(m•K) at -0°D) 0,038 W/(m•K) at 40°

Fire class A-D) Class B EN13501


A price comparison has shown some consistent differencesbetween similar products:A) ST INSULATING PIPES– B) AC INSULATING PIPES – C) TH INSULATING PIPES – D) C1 INSULATING PIPES -


A) ST INSULATING PIPES – K-FLEX

LOWEST PRICE B) AC INSULATING PIPES – ARMACELL

C) TH INSULATING PIPES – MOBIUS

d) C1 INSULATING PIPES -POLIFLEX

6 mm thick/ 42 mm diameter: 0,48 Euro/ml

Prices to distribution (an example)

Source: ... distributor

sheet 19 mm thick

Rubber foam

Lowest price:

... € mq

Strengthen

Rubber foam market: swot analysis (Italian view) Weaknesses

Opportunities Threats/Challenges

How is market expected to grow? Going beyond commodity

The insulation market: real estate and construction

PHASE 2

OBJECTIVETo analyze potential

business to business

markets to obtain potential

METHODTarget interviews

in potential markets with focus on key

buying factors and product requirements

analysis

PHASE 1



dimensions, trends,


METHOD




Real Estate and construction: a strategic assets for the economy.. why?

20% of Gross Domestic Product

60% of family assets, 4.400 billion Euro

30% of loans and deployments are represented by credit given to real estate

Source: Italian Revenue Agency, Real Estate Report 2011

10% of Gross Domestic Product

Driver for a wider number of sectors

REAL ESTATE

CONSTRUCTIONINDUSTRY

Real Estate patrimony: ancient, residential, owned

Why ancient? 68,2% of units where built before 1976

Sources: Istat, National Bureau of Statistics, Italian Revenue Agency, Cresme

Why residential? 53,3% of real estate stock is residential

Why owned? 70% of families lives in a property house, a percentage 16% greater than European Union average

Real Estate and construction: how are they doing? ….not good with some exceptions

Market lecture:High potential but critical perspectives in the new construction; potential in renewal industry in combination with energy saving policy and intents

Source: ANCE - National Association of private construction contractors

Real estate market: the transactions (In thousand units)

519588

467503 497 504 483

525578

642690 681

762 763828 858 869

809

684609 612

428

0

100

200

300

400

500

600

700

800

900

1000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Construction market in Italy in 2008-2012


-2,7

-8,3

-6,4

-4,0-3,2

-9-8-7-6-5-4-3-2-10

2008 2009 2010 2011 2012

Building Market

135.338 million Euro

in 2010

Construction market in Italy in 2008-2012: residential and non residential


-2,1

-8,9

-4,9

-2,0 -1,7

-3,3

-7,6 -8

-6,5

-5,1

-10-9-8-7-6-5-4-3-2-10

2008 2009 2010 2011 2012

Residential Non residential

\

74.011 million Euro

in 201061.327million

Construction market in 2008-2012: residential new housing and extraordinary maintenance


Room for market in

maintenance -3,7

-18,8

-12,4

-5,9 -5,3

-0,6

0 0,5 0,5 0,5

-20

-15

-10

-5

0

52008 2009 2010 2011 2012

new housing extraordinary maintenance

28.769million Euro

in 2010

45.242million Euro

in 2010

Construction and real estate: main drivers

The negatives

Recession, raising unemployment, high fiscal pressure bringing to decline of public investment and standstill of private

Rising dependence from bank system in growing demand/shortening credit and more severe access criteria during market collapse

The positives

Room for quality real estate growth together with renewal segment of construction industry under weak level of buying opportunities in immigration and demographic growth (though small)

What do we mean with quality? Energy saving constructions/high energetic certification requirements, architectonic quality, relevant urban or tourist location, high level of possible income (rent, transaction etc.)

The insulation market: electro

domestics sector

Market lecture:Changing potential in terms of insulation requirements

Ovens and cooktops industry

Refrigerators and coolers industry

Electro domestic industry and insulation

Mineral and ceramic fibres

Foams, panels polyurethane

mainly

Insulation purpose

Insulation and acoustic purpose

Ovens and cooktops industry: main players (residential market)

..

..

.. ..

..

..

.. ..

.. ..

..

..

PRODUCTION UNDER

DELOCALISATION

PROCESS

Ovens and cooktops industry: market trend

2010 recovery, 2011 negative performance of

electro domestics industry

Ovens and cooktops industry: the role of energetic certification

Source: Enea, Agency for new technologies, Energy and sustainable economic development

Key buying insulation in the industry – Company 1 case

Company 1: OVENS AND

COOKERS

Insulation in stock: yellow glass wool, white glass wool,

refractory ceramic

fibers

Insulation in trend: white wool

outplacing yellow glass wool for

health reasons

Consumption 2011: 1.000.000 m2 white glass wool; 800.000 m2

yellow glass wool; 100.000 m2 ceramic fibers. In 2009, yellow

glass accounted for 90% of purchase (European figures)

Suppliers: ….. (From France)

Suppliers choice driven by product

technological requirements, prices, delivery

time and proximity are a plus.

Product choice driven by

performance, to reach A and B

class, and normative

standards

Procurement structure: global supply with first

steps of transformation

done at local levelShortage of suppliers

and procurement opportunities

Source: Direct interview

Key buying insulation in the industry - Company 2 case

Company 2 : OVENS AND

COOKERS

The product mostly used is white wool which is, in the

last five years trend, outplacing yellow glass

wool

Production of 1.500.000 built in ovens and a 700/800.000 free standings

oven per year. And a consumption of 1.2 mx50 cm glass wool panel for each

oven (European figures, where Italy accounts for 50%)

Suppliers: … Suppliers chosen according to the

cost of installation of the product

provided under a general quality

frame

Possible outplacement of

glass wool insulation given by

spray foam technologies

Choice of insulation guided

by energetic certification, health

of product, easiness of

installation, pair with aluminum

foilsOrganization of

supply centralized in Italy and accounting for all Europe plants

Insulation in stock: rock wool and glass wool

but mostly glass wool used in

floor standing boilers


The insulation market: Heating, Ventilation, Air

Conditioning

Heating industry – boilers scenario

Reduction of energy use is representing a stimulus to investments in HVAC

Decline in the traditional boiler technology which have now reached the maturity

Outlook is for new technologies called "gas power alternatives“. Among these, absorption heat pumps appear as the technologies with the most significant growth

Heating pumps, already widely available on the market, have the advantage of using natural gas, but also to draw a big share of renewable energies (geothermal, aero thermal and hydrothermal), lifting substantially the overall efficiency of the equipment

Heating pumps cover both the winter and the summer requirements with the possibility to work on water refrigeration and heating

Heating industry (Boilers, chimney flues)

Ventilation, Air Conditioning

Heating industry and insulation

Mineral and ceramic fibres

Insulation, acoustic purpose

Mineral and elastomeric rubber foam

Renewable - Alternatives Insulation purpose

Heating industry

Market lecture:Potential but insulation requirements are Expected to change

Heating industry: main players and brands (residential and non residential market)

..

..

.. ..

..

..

.. ..

..

..

..

..

..

..

..

..

Residential heating market in Italy

Source: Cresme

Heating system stock in 2010

29.641.961 units

1.157.175 new units in 2010

236.224 260.939 282.860 309.016 309.345 285.085 241.733 204.034

935.711 944.532 947.641 985.307 997.762 922.012 930.764 953.141

2003 2004 2005 2006 2007 2008 2009 2010

New housing Substitution

Key buying insulation in the heating industry: Company 3

Company 3 : BOILERS

Insulation in stock: utilization of glass wool panels, with the addiction of ceramic fibers, 20,30..up to 80 mm thickness

Insulation in trend: in the last 2-3 years utilization has been

stable along with production

Consumption: range of production of 30.000 boilers per year and

consumption with an average of 1 m2 per heater

Actual supplier of Glass wool is …

Suppliers chosen mainly for technical

characteristics of products and

secondary for cost reasons

Insulation in trend: outplacement of glass wool already in progress with the use of polyurethane and PVC together with a change from insulation of combustion chamber to a direct insulation of walls for weight and dimensional reasons

together with the use of new materials


Heating industry

- A sub group: the

Chimney fluesIndustry

Market lecture:Potential for rock wool and ceramic fibres

Chimneys industry: main players

..

..

.. ..

..

..

..

..

..

..

..

..

Source: Assofumi, Assocamini

Key buying factors in the chimneys industry

CHIMNEYS

Role of insulation is a key to avoid

reduction of stack

effect

Shape, height, diameter have to be

optimal for stack effect

Chimneys made of stainless steel to avoid condensation, corrosion, to encourage stack, to maintain

adequate temperature and to ease insulation

Insulation through ventilated air gap, rock wool pipes or

ceramic fibers

Rockwool pipes specifics: 25-50

mm thickness, high density up to 120

kg m3

Insulation

suppliers: … Employ of

insulation in double wall products


Air Conditioning

Ventilation

Market lecture:High potential in combination with construction renewal industry

Ventilation industry: main players (Thermal units, chiller groups, split/multi split)

..

..

..

…

Source: C.o.a.e.r., National association

..

..

..

..

Air conditioning market in Italy (residential)

Source: Cresme

Air conditioning system stock in

2010

14.918.041 units

736.703 new units in 2010

122.239 136.110 153.920 159.970 153.234 141.224 133.033

1.454.509

895.214 902.2721.122.072

858.703587.800 603.671

2004 2005 2006 2007 2008 2009 2010

New housing Substitution

Conclusions

Conclusions

Thank you!

Business

Market analysis - Thermal insulation industry