Knauf Insulation comment: Q4 2016

John Sinfield, Managing Director Knauf Insulation is BMBI’s Expert for Mineral Wool Insulation.

The latest State of the Trade Survey from the Construction Products Association (CPA) reported that sales in the UK construction products manufacturing market grew for a 15th consecutive quarter in Q4 2016. In addition, the UK economy expanded by 0.6% compared with Q3 2016, and by 2.3% compared with the same quarter in 2015.

Looking at the merchant sector, we have seen significant mineral wool insulation growth over and above those levels, with a high portion of the uplift coming from sales of higher performing products. The growth is due partly to specific initiatives which have been implemented with merchant customers, and partly to overall industry growth as highlighted in this BMBI report and the CPA’s State of the Trade Survey.

In line with many materials, particularly petrochemical based products, insulation is experiencing input cost pressure from the decline in the value of sterling. The mineral wool insulation sector is subsequently benefiting across all applications as merchants & distributors deal with petrochemical-based shortages and price increases.

Looking ahead, there is some nervousness in the global energy efficiency industry as it waits to see how President Trump approaches the Paris Agreement. There is widespread concern that he will make good on his pre-election promise to renege on his predecessor’s ratification of the climate change deal.

Closer to home, we’ve seen a private buy-out of the Green Deal Finance Company in an attempt to stimulate the RMI market. The Government also published ‘Fixing our broken housing market’, its Housing white paper, in which they were expected to illustrate how they would stimulate and facilitate the building of one million homes by 2020. Unfortunately, while acknowledging the problem and many of the causes, the white paper failed to deliver clear answers on that ambition, with all corners of the industry questioning the true merit of its content.

In summary though, the market fundamentals are positive in the merchant sector, and sales of mineral wool insulation products are buoyant, but we wait to see how policy will impact on longer term sales.

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.

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