Europe, especially Western Europe, is one of the most heavily impacted regions by the COVID-19 pandemic. As a result, the lockdown and general containment measures imposed to delay its spread continue to significantly impact the European construction sector. Moreover, the construction industry was on a downward trend before the COVID-1 9 impact, further delaying the full recovery expected somewhere in late 2022. The stimulus packages announced by the European Union might accelerate the recovery process, but the demand for the construction sealants is likely to be curtailed in the short run.
- In the medium term, factors such as the increasing demand from the packaging sector are expected to drive market growth.
- Molded pulp as a green alternative is expected to hinder the growth of the market studied.
- Recycling in the expanded polystyrene industry is likely to act as an opportunity, during the forecast period.
Key Market Trends
Building and Construction to Dominate the Market
- EPS has excellent mechanical properties making it ideal for load-bearing roof insulation, sub-pavement flooring, road-building, as loadbearing insulation, and so on. Furthermore, EPS does not absorb moisture and its thermal & mechanical properties are unaffected by damp, humidity or moisture.
- It is used in the construction of flat roof insulation, pitched roof insulation, floor insulation, insulated concrete form systems, interior wall insulation with gypsum board, exterior wall insulation or external thermal insulated composite systems (ETICS), cavity wall insulation boards, cavity wall insulation loose fills, civil engineering applications, insulated concrete forms, foundation systems and other void forming systems, load-bearing foundation applications, core materials for EPS used in sandwich and stressed skin panels, floor heating systems, sound insulation in floating floors (to avoid transmission of contact sound), seismic applications, and EPS drainage board, among others.
- In the construction sector, EPS is used in combination with other materials, such as steel (in sandwich panels, used for cold store construction), concrete (as an insulation core in tilt-up wall panels), gypsum, and plasterboard (as skins for ceiling panels and other prefabricated components). The sheathing is one of the most basic and widely-used EPS insulation applications in residential and commercial constructions. EPS is also completely compatible with other materials used in construction including cements, plasters, salt, fresh water and so on.
- Floorings and ceilings account for the largest market share of EPS applications in the construction sector, followed by roofing systems. Moreover, EPS roofing insulation is used in roofing systems and provides cost-effective and consistent thermal performance.
- Increasing energy price is forcing consumers to work toward increasing thermal efficiency of constructions to reduce their energy consumption, thus, driving the market for EPS-based roofing systems.
- The building and construction industry is the largest consumer of EPS. The consumption of EPS is increasing across the world due to growing applications. Moreover, the European construction industry is recovering. Therefore, the EPS market is expected to augment over the forecast period.
- Furthermore, consistent growth registered by the European construction industry is expected to increase the expanded polystyrene market demand. However, due to the onset of the COVID-19 pandemic, the economic growth of the region now seems to be contracting to a considerable extent. Many manufacturing and associated activities have already taken a hit, and the economic situation is expected to remain dire if the manufacturing activities are not set back on track by mid-2020.
Germany to Dominate the Market
- Germany has been one of the worst-hit countries in the world by the COVID-19 outbreak. In response to the outbreak, the German government had observed several containment measures, including closing down non-essential businesses, to slow the spread of the virus across the country.
- Germany has the largest construction industry in Europe. The country's construction industry has been growing at a slow pace, which is majorly driven by the increasing new residential construction activities.
- According to the industry experts, the number of completely constructed new houses was estimated to around 315,000 in 2019, which was higher than the total number of completed constructions in 2018, comprising 300,000 units. This positive momentum has taken a huge blow from the devastating pandemic situation in 2020.
- The increasing migration to the country has been stimulating the demand for new residential construction. â€‹About 3.6 million migrants were expected to arrive in Germany, by the end of 2020-2021, which may require at least 350,000 new dwellings per year. The German government has announced the construction of around 1.5 million housing units by 2021 (delay is expected due to the COVID-19 situation). Thus, this is expected to boost the residential construction sector, which may convert into demand for construction materials inlcuding EPS.
- Low-interest rates, coupled with rising incomes, have contributed to increased property prices, particularly in big cities, making it more difficult for middle-class households to afford housing. To alleviate some of the pressure in the housing market, the government introduced the Housing Construction Campaign, a comprehensive package of measures aimed at tackling housing shortages and rising house prices.
- The country is witnessing a demand for smaller pack sizes in some packaged food and personal care industries. The countryâ€™s food and beverage industry is fourth-largest, in terms of possibilities of growth in the future. The industry is characterized by its small and medium-sized enterprise sectors of about 6,000 companies.
- There is a growing demand for value and quality enriched products, including organic and fair trade and health and wellness goods, indicating a favorable potential demand for packaging materials. EPS are approved for use in conjunction with food products.
- Hence, the trends mentioned above about the end-user industries are likely to influence the overall consumption of EPS in the country during the forecast period.
The European expanded polystyrene market is concentrated, with the top 5 players accounting for over 50% of the production capacity in Europe. The key 5 players in the market are Synthos Group, BASF SE, Ravago, SUNPOR and BEWiSynbra Group etc.
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