COVID-19 Impact on Thermal Insulating Materials in Chemical & Materials Industry

Posted by Rajesh M on April 27th, 2021

COVID-19 Impact on Thermal Insulating Materials in Chemical and Materials Industry

INTRODUCTION

Home insulation is an emerging trend in most of the countries. There are multiple benefits of insulating a building. Insulating can help in saving energy and reduce bill amounts, add comforts to the building and also create healthier and positive environmental impact. The major functioning of insulation material is to regulate the temperature of a building and thus making living a pleasant experience even at those places where weather is either extreme cold or extreme hot. The use of insulating materials or insulated building have an advantage that they require less amount of heating and cooling appliances and thus saving lot of money for the consumer.

Around 50%-60% of the insulation material is consumed by building and construction sector followed by consumer goods and transportation industry. As these sectors have faced major hit due to the breakout of coronavirus, the entire insulation industry is struggling for margins. Regions such as Europe and North America where thermal insulation regulations are very stringent are also under the pressure. People are avoiding building any type of new constructions or purchasing any electronics until the need is really high. Also, region such as Asia-Pacific which was growing with the highest rate in thermal insulation consumption as residential building area is still untouched and have a lot of scope for expansion, is also struggling.

IMPACT OF COVID-19 ON DEMAND

The demand for thermal insulation has faced a dip due to the breakdown of COVID-19 globally. As most of the countries are running under lockdown, new construction activities are kept on hold and thus no insulation material is getting consumed. Also the old buildings that are compelled to get insulated due to the new rules and regulations passed by the local government are also on hold as neither the material is available nor the labor to install.

As per the Crisil, the Indian construction industry has witnessed a decline of 12-16% in the current fiscal year due to the breakout of COVID-19. According to the same agency, as the construction activities has declined, major players in the construction sector are expected to register a 13 to 17% drop in revenue in fiscal year 2021. Also there have been changes in the budgetary support from the government for the next fiscal year keeping the revised estimate of this fiscal year in concern.

Another application of thermal insulation is in consumer goods and transportation industry. Since the automotive industry has registered very poor sales during this pandemic, the demand of foam insulation from OEMs has also declined.

IMPACT ON SUPPLY DURING COVID-19

As thermal insulation materials are made up of polymer resins, any crunch in supply of these materials will have direct impact on the thermal insulation supply. Before the COVID-19, the polymer industry has mostly suffered shortages of the product. And to avoid this, the manufacturers keep stock of polymers and polymeric resins to overcome the shortage. But due to the outbreak of COVID-19, the supply chain has suffered abruptly. Manufacturers of raw materials have stock but they are not getting demand for it. Moreover, companies are facing issue with the supply of raw materials as most of the countries are under complete shutdown. In this situation, both manufacturers and consumers are facing the timely availability of raw materials.

The restriction over transportation and labor availability is another factor that has affected the supply chain of thermal insulation. At several parts, the manufacturers are struggling for raw material reach and at the same time, some are struggling for delivering the product. For few manufacturers, the end-product is ready but are not able to reach their customers due to restriction on transportation and thus losing money. Thus, the impact on supply is not due to one factor but is facing hit from multiple points.

IMPACT ON PRICE

Due to breakdown of COVID-19, the prices of insulation materials such as thermal insulation has fallen a bit especially post May 2019. Read more…