High-End Insulation Material Market Expected to Double... LG Hausys and Others Seen as Beneficiaries
[Asia Economy Reporter Kum Boryeong] Due to the Green New Deal promoted by the government, market interest, which had been focused on renewable energy such as solar and wind power, is expanding to insulation materials.
According to the 'Korean New Deal Comprehensive Plan' announced by the government on the 28th, 6.2 trillion KRW of national funds will be invested in zero-energy public facilities. The zero-energy public facilities closely related to people's lives include 'Green Remodeling.' This involves constructing or remodeling eco-friendly and energy-efficient buildings by using renewable energy facilities and high-performance insulation materials in public buildings. It is expected to be applied to 225,000 public rental housing units, 440 national and public daycare centers, and 1,148 cultural facilities.
The total New Deal investment plan is allocated as 67.7 trillion KRW by 2022 and 92.3 trillion KRW from 2023 to 2025, with insulation material investment expected to be concentrated in 2021-2022. The remodeling plan for aging rental housing is set at 186,000 units by 2022, energy-efficient daycare centers at 194 locations, and energy-reducing cultural facilities at 287 locations.
The investment amount for projects solely for insulation materials is estimated to be at least 500 billion KRW annually. Considering that the annual construction insulation material market is 1.5 trillion KRW and the market for fire-resistant or higher insulation materials is 600 billion KRW, government investment could double the market for high-priced insulation materials.
Beneficiaries include LG Hausys, KCC, Byucksan, SH Energy Chemical, and HDC Hyundai EP. Researcher Kim Seungjun of Heungkuk Securities explained, "The company expected to benefit the most is LG Hausys, which expanded its existing phenol foam (PF) insulation production capacity from 9 million ㎡ to 19 million ㎡ in April." He added, "As the operating rate gradually increases, the government's Green Remodeling investment could increase the market share of PF boards in the fire-resistant or higher insulation material market." In the case of SH Energy Chemical, the domestic production capacity of expandable polystyrene (EPS) is 120,000 tons annually, and HDC Hyundai EP is about 60,000 tons. EPS sales proportions are 100% for SH Energy Chemical and 13.5% for HDC Hyundai EP. As of 2016, EPS accounted for 67% of the domestic insulation material market.
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