Dr. Gupta Verlag

Spray Foam 2013

Hyatt Regency, Jacksonville, FL

Angela Austin, Editor - PU Magazine International

Review of the Global Spray Foam Industry

International Headlines for 2012

SPF grows only 2.3 % globally due to lower

construction activity and use in China

Global construction spending stalls in Europe,

but recovers in Asia, Middle East & Africa

Chinese SPF construction drops sharply but

recovery expected in 2013

SPF installation standards become a more

global issue

Dr. Gupta Verlag

NAFTA Headlines for 2012

NAFTA PU production up 6.2 % to 6.9Bn lbs

NAFTA SPF grows 6.6 % to reach 517 MMlbs

US construction forecasts very positive

Growth spurred on by shale gas effect

US housing starts up

US manufacturing up 34 months in a row

Dr. Gupta Verlag

Dr. Gupta Verlag

Estimated Global PU Production by

Region ( MMlbs) 2010-2012

Region 2010 2011 % AAGR 2012 % AAGR

MMlbs 2011/2010 2012/2011

NAFTA 6255 6540 4.6 6945 6.2

South America 1455 1765 21.3 1785 1.1

China 12105 12785 5.6 13270 3.8

EMEA 11685 12235 4.7 11950 -2.3

Asia Pacific 4910 5400 10.0 5675 5.1

Total 36410 38725 6.4 39625 2.3

GDP Growth for Major Economies

2010-14 (F) (%)

Source UN

Country 2011 2012 2013(F) 2014(F)

China 9.2 7.7 7.9 8.0

India 6.9 5.5 6.1 6.5

USA 1.8 2.1 1.7 2.0

Canada 1.6 1.1 1.8 2.1

Mexico 3.9 3.9 3.9 4.6

Brazil 2.7 1.3 4.0 4.4

Russia 4.3 3.7 3.6 4.2

Japan -0.7 1.5 0.6 0.8

EuroZone 1.5 -0.3 0.6 1.7

World 2.7 2.2 2.4 3.2

Estimated Global PU Raw Material

Demand ( MMlbs) 2012

Dr. Gupta Verlag

(MMlbs) NAFTA S.America EMEA

Asia

Pacific China Total

MDI 2105 275 3640 1985 3085 11090

TDI 595 330 1380 465 1325 4095

Aliphatic

Isocyanates 145 20 140 55 265 625

Polyester

polyols 770 120 880 450 1100 3320

Polyether

polyols 2205 830 4960 1785 4850 14630

Additives 1125 210 950 935 2645 5865

Total 6945 1785 11950 5675 13270 39625

Market Drivers for the Global

Construction Industry

Greater globalisation needing higher living

standards

Increased urbanisation

A shortage of talent

More energy efficient buildings

Greater use of new technologies

Higher demand for sustainable living

Source: Accenture

Growth in Construction Spending

2010/2011 vs 2012-2013 (%)

IHS Global Insight

-4 -2 0 2 4 6 8

Asia Pacific

Latin America

Middle East & Africa

Eastern Europe

NAFTA

Western Europe

2010-2011

2012-2013

Continued Decline in Western European

Construction Markets 2011-2013 (%)

Dr. Gupta Verlag

(%) 2011 2012 2013

Italy -1.3 -3.0 1.3

Germany 4.2 2.6 2.0

France 1.6 -0.1 0.2

Spain -8.8 -10.1 -8.4

Turkey 5.7 5.1 4.9

UK 1.8 0.1 2.0

US Construction Outlook

House sales remain lower than pre crisis but

the foreclosure pipeline is emptying

A significant improvement in housing starts-

mainly multiple family

Non-residential construction started to pickup

especially repair and retrofit.

House prices on the rise in some States

Government has initiate house purchase

programmes in some States

Energy security remains a key driver

US Construction Spending Growth

Forecasts 2011-2016 (%)

IHS Insight

Source: US Census Bureau

US Housing Activity 2008-2012

(‘000 units)

US Housing

Activity

( ,000 units) 2007

200

8

200

9

201

0

201

1(f)

201

2(f)

Total Housing

Starts

1,34

2 900 554 529 708

1,0

63

Single Family

1,03

6 616 442 415 575 860

Multifamily 306 284 112 114 133 203

New Single

Family Sales 769 482 374 310 405 605

Existing Single-

Family Home

Sales

4,95

9

4,3

38

4,5

67

4,2

08

4,4

50

5,3

00

US Housing

Activity

( ,000 units) 2007

200

8

200

9

201

0

201

1(f)

201

2(f)

Total Housing

Starts

1,34

2 900 554 529 708

1,0

63

Single Family

1,03

6 616 442 415 575 860

Multifamily 306 284 112 114 133 203

New Single

Family Sales 769 482 374 310 405 605

Existing Single-

Family Home

Sales

4,95

9

4,3

38

4,5

67

4,2

08

4,4

50

5,3

00

US Housing Type 2008 2009 2010 2011 2012

Total housing starts 900 554 585 685 861

Single family 616 442 435 447 585

Multiple family 284 112 150 238 276

New family sales 482 374 310 327 377

Existing single family

sales 4,338 4,567 4,208 4,500 5,040

Source: CMHC

Housing starts in Canada 2006-2012

Year

(units)

2006 227,000

2007 228,000

2008 211,000

2009 149,000

2010 180,000

2011 191,000

2012 212,000

Canadian Construction Industry

Household debt to income ratio reached 152%

in 2012 - spending slowdown

Property market still buoyant due to overseas

investment

Housing starts remain below historical

average and are forecast to fall 9-10%

Federal regulations to drive public

construction spending

Dr. Gupta Verlag

Mexican Construction Industry

Grew by 3.1 % to USD 86 million in 2012

Government initiatives increased housing

starts by 8 % in 2012

A slight trend to more eco- friendly buildings

Currently there are 5 LEED certified buildings

but over 80 are “ in the process” of

qualification

Dr. Gupta Verlag

Global Trends in SPF Production

Global: Demand growth up by 2.3 %

Western Europe: Growth for underfloor heating , weatherisation and wall insulation continues to develop due to EU legislation.

Eastern Europe: existing housing badly needs insulation, SPF offers a solution

Middle East & Africa: new energy efficiency regulations introduced, new markets open

China interim ban lifted in December

Asia Pacific: Energy prices and rebuilding after natural disasters create opportunities

ISOPA – Passive House in Belgium

Dr. Gupta Verlag

SPF Growth in Europe

Underfloor heating market booms in France &

Benelux

More energy efficiency required to reach

202020 EU initiative

Europe learns from the US…”one example

being the adoption here of the US HSE

package developed by for the spray foam

industry”. Dr Frank, ISOPA

Dr. Gupta Verlag

UK Green Deal – benefits for SPF?

Government backed loan of up to £10 K

paid back from savings in household fuel

bills

Includes insulation, windows and

furnaces

UK SPF market is 5-6Mlbs only

2 major system houses

Dr. Gupta Verlag

Challenges for SPF & Green Deal

Not enough qualified assessors

Small sized housing & building density makes

access difficult.

SPF is relatively unknown vs competition

SPF contractors NEED training

…….however, small rooms become even

smaller when insulated with “ Earth Wool”

Most UK houses have a “ cavity wall” void

suitable for filling with PU foam.

Dr. Gupta Verlag

Waterproof your roof in Thailand!

Dr. Gupta Verlag

“Spray foam…makes your roof

WATERPROOF! And Protects Against

Heat.”. Bangkok Post

Security Features of SPF in South

Africa

Dr. Gupta Verlag

Emergency shelters for Turkish

earthquake c 1960 – Future potential

BayerMaterialScience Archives

PU Magazine

Global Production Trends in SPF

2009-2012( MMlbs)

SPF Production

(MMlbs) 2009 2010 2011 2012

% change

2011/2012

NAFTA 410 448 485 517 6.6

South

America 12 14 15 16 6.7

Europe 192 145 164 175 6.7

Middle

East &

Africa 25 26 28 27 -3.6

China 172 198 205 175 -14.6

Asia

Pacific 115 105 110 120 9.1

Total 926 936 1007 1030 2.3

Source Gupta Verlag

Leading SPF Producing Countries

2011 & 2012 ( MMlbs)

Leading

producer 2011 2012

% change

2011/2012

Spain 29 26 -10.3

Russia 30 35 16.7

Benelux 33 40 21.2

Japan 50 57 14.0

China 205 175 -14.6

US 350 370 5.7

Canada 105 115 9.5

Ban on PU in China’s buildings lifted

With effect from December 2012 the use of

the use of Class A materials is not mandatory.

Class B3 ( easily combustible materials remain

banned and Class B2 are limited, meaning

Class A & B1 are now preferred

Insulation material will be included in the Fire

Safety Supervision Process meaning stricter

examination and implementation of codes

Local fire safety codes are required in 50 major cities requiring

all insulation to be B1 or better

Source: Chinese Media

Mobile SPF “ Bao house” in China

Dot architects China

Source: PU Magazine/ CPI/ IAL

Estimated SPF Production – NAFTA

2009-2012 (MMlbs)

Country 2009 2010 2011 2012

% change

2011/2012

US 305 323 350 370 5.7%

Canada 90 90 105 115 9.5%

Mexico 21 25 30 32 6.7%

Total 416 438 480 517 6.6%

Estimated Production of ccSPF &

ocSPF 2011 & 2012 ( MMlbs)

Gupta Verlag

2011 2011 2011 2012 2012 2012

Country Open Closed Total Open Closed Total

US 120 230 350 140 230 370

Canada 60 45 105 70 45 115

Mexico 12 18 30 10 22 32

Total 192 293 485 220 297 517

US Market Drivers for SPF

Commercial wall insulation grows

New promotion and financing options offered

to homeowner to grow demand

US “exports” health & safety “know-how” to

European SPF industry

New housing starts increasing

US SPF Industry Overcomes Problems

Overspray – dry fall technology

Fire risks - thermal and fire resistant

barriers

Health & Safety issues – certification

and training

Environmental issues – 4 G blowing

agents, low VOC, recycled and

renewable content

Dr. Gupta Verlag

Canadian Growth Slows

Dr. Gupta Verlag

• CUFCA continues to develop brand

and best practices

• No of certified installers has

increased by 56% since 2002

• No. of SPF suppliers has more than

doubled to 12 in 2012

• Problems of “ unique specifiers”

• Stagnation in market due to fewer

tax incentives and greater

competition

SPF Market in Mexico

Applications MMlbs

Residential walls & roofs 12

Cold storage 6

Industrial roofs 2

Commercial roofs 3.5

Agriculture 6

Other uses 3.5

Total 32

Dr. Gupta Verlag

• Reputation of contractors

still a problem

• PU boardstock takes market

share from SPF in food

industry & agriculture due to

cleanliness and efficient

installation

• Residential market continues

to grow due to Government

incentives to insulate homes

Future challenges

Class actions, homeowner complaints and

contractor problems

Proposal for contractor licensing

Volatile raw material costs

Increased competition due to higher number

of system suppliers

New technologies such as fiber glass with air

sealants

Dr. Gupta Verlag

Future opportunities

Government stimulus for more energy

efficiency

Growth in the housing market

Extension of tax credits for insulation

Rising standards of installation and better

communication with customers and home

owners

SPF remains a great problem solver!

Dr. Gupta Verlag

Dr. Gupta Verlag

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