Extruded Polystyrene XPS Market

The global extruded polystyrene market is projected to register a significant CAGR during the review period. The market is primarily driven by its use as an insulation material for building & construction industry. Increasing investment in commercial building & construction activities due to the high demand for office spaces, industries, and retails across the various sectors is projected to fuel the demand for XPS during the review period. High disposable income of the consumers as well as their changing lifestyle trend is projected to propel the demand for XPS in residential sector as well. However, high cost of XPS is a key factor restraining the market growth.

Extruded polystyrene (XPS) is widely used as a rigid foam in the construction industry in insulating applications. It finds application in slabs, floors, roofs, walls, decks, and balconies. It offers excellent flexibility, compatibility, thermal efficiency, lightweight, high strength, and available in a wide range of colors. XPS foam insulation is an excellent choice for insulation as it is energy efficient; its use helps to reduce energy consumption and costs. Additionally, it is moisture resistant, which reduces the need for replacement. According to American Chemistry Council, Inc, rigid foam building insulation materials help to save up to 40 BTUs of energy for every BTU of energy consumed to make the material and make the building up to 70 percent more energy efficient. Moreover, flame retardants are added while manufacturing foam insulation materials; their use helps to manufacture XPS foams that comply with the international fire safety codes and standards. XPS sheathing boards increase the R-value of the walls and are also used to cover wood studs and other un-insulated parts of the walls, e.g., frames, ducts, and wiring, which account for over 25% of a structure. XPS acts as an air barrier and reduces air infiltration, which are the leading causes of energy loss.

The increasing demand for commercial spaces, especially in developing countries of Asia-Pacific, due to the growth of service sectors such as information technology (IT); banking, financial services, and insurance (BFSI); and telecom is driving the growth of the commercial construction sector, which as a result is projected to drive the demand for extruded polystyrene.

According to the Committee for European Construction Equipment, the construction sector is among the largest economic sectors in Europe and employs 18 million people directly. The construction industry in Europe accounts for nearly 9% of the region’s GDP.

The increasing investments in infrastructure development to promote tourism have fueled the growth of the construction industry in the Middle East. The mega events such as Expo 2020 and FIFA World Cup 2022, UAE and Qatar are expected to increase the number of construction and renovation activities, thereby fueling the demand for extruded polystyrene. Dubai has allocated USD 7 billion for infrastructure development and construction for the World Expo 2020, while Qatar is spending in the country’s economic transformation program, National Vision 2030. Under the National Vision 2030, the government plans to invest some USD 16.4 billion in infrastructure and real estate projects over the next four years.

Thus, the growth of the construction industry across the globe is expected to boost the demand for the product and drive the growth of the global market during the forecast period.

Green buildings are designed to reduce the overall impact of the living and working environment on human health and nature. It can be achieved through efficiently using water, energy, and other resources and by reducing waste, pollution, and environmental degradation. With the advent of green technologies, the potential for saving energy through advancements in design can be achieved up to 40–50%. Building insulation plays a key role in reducing the energy consumption and impacts the overall energy efficiency and sustainability of buildings by improving the insulation of the building envelope, appliances, or other equipment. Insulation in buildings is gaining popularity, it has the potential to reduce energy consumption to the extent of 6–8%.

According to the US Department of Energy, the heating and cooling of buildings account for over 40% of the energy consumption in the US and generates over 35% of the country’s GHG emissions. Insulation reduces energy consumption in residential homes by around 50% and over 30% in commercial buildings. Adding insulation to new and existing buildings helps in energy savings and reducing GHG emissions. Various insulation materials can be used to reduce energy use in new buildings (near-zero-energy buildings) as well as in refurbishment (renovation) projects. The most commonly used insulation materials used include mineral (stone or glass) and plastic foams (polyurethane and polystyrene). Extruded polystyrene (XPS), a polystyrene plastic foam, is a type of insulation material that exhibits properties such as moisture resistance, high R-value, high structural strength, and low weight. It is extensively used as thermal insulation in residential, industrial, and commercial construction in wall and roof applications. As low to zero VOC emissions are achieved with the use of these products, the demand for extruded polystyrene in the sustainable constructions is expected to increase during the forecast period.

The increasing focus on green and low-carbon economy by the EU has increased the funding in research and development programs, e.g., Horizon 2020 Program. It is the EU’s most significant program with funding of Euro 80 million and is designed to focus on topics such as energy-efficiency; low-carbon technologies; and smart cities & communities. The research and development for these factors in Europe is projected to fuel the growth of the construction industry in the region.

The growing concern regarding global warming, increasing energy consumption, and stringent emission regulations across the globe are estimated to be the prime factors fueling the demand for green buildings. The rapidly growing construction sector in Asia-Pacific and increasing adoption of green buildings in the emerging economies, such as China, India, Singapore, South Korea, and Australia, are further expected to offer lucrative opportunities to the manufacturers of extruded polystyrene during the assessment period.

Extruded polystyrene is produced from polystyrene crystals, additives, and blowing agents. Polystyrene is a petroleum-based plastic product, which is also a cancer suspect agent. It contains toxic chemical compounds such as benzene and styrene. In the manufacturing process of extruded polystyrene, the plastic resin is first liquefied and then extruded through a die to form a closed-cell material, which uses trapped air as an insulating medium. Besides, the manufacturing process is energy intensive, which increases the cost of the final product. The cost of extruded polystyrene product is 10–30% higher than its substitute, i.e., expanded polystyrene. Expanded polystyrene offers better performance and is available at a lower cost. Expanded polystyrene offers a high rate of permeability and contains up to 15% of recycled material as well as it does not comprise hydrochlorofluorocarbons (HFCs), chlorofluorocarbons (CFCs), formaldehyde, or color dies, which makes it less toxic than extruded polystyrene.

Thus, the availability of low-cost substitute with better features is likely to restrain the growth of the global extruded polystyrene market during the review period.

Cost of plastic production is correlated to the crude oil price, which is a major determining factor for polymer raw materials prices. Extruded polystyrene, a thermoplastic polymer, is produced from styrene, which is derived from benzene and ethylene, both crude oil (petroleum) products. However, crude oil prices are constantly fluctuating since the last five years. According to Crude Oil Investing, there have been large swings in crude oil prices from USD 140 per barrel in 2008 to as low as USD 34.74 per barrel in 2016.

During 2014–2015, the crude oil prices witnessed an approximate 65% decline due to sluggish global demand. In 2016, the Organization of the Petroleum Exporting Countries (OPEC) and its allies decided to reduce crude oil production, which resulted in a continuous rise in the prices. In the above figure, the crude oil prices since 2014 can be observed. Crude oil prices were always more than USD 100 per barrel prior to 2015. In 2015, the price declined by 51% and reached USD 52.09 per barrel. The price did not cross USD 100 per barrel since 2015.

With the oversupply of crude oil, there was a sudden drop in the price due to less demand. The fall in demand was observed mainly from the US, China, and other European countries. The other factor that led to a fall in crude oil prices was the pricing from the Organization of Petroleum Exporting Countries (OPEC). The oil price is decided based on different factors such as the economic growth of countries, weather conditions, demand and supply analytics, and the presence of alternative energy resources.

Thus, fluctuating crude oil prices have affected the production of petrochemicals and consequently, polymer production. The high cost of polymers is thus indirectly affecting plastic production. Hence, the fluctuating crude oil prices are estimated to be the major challenge for the players operating in the global extruded polystyrene market.