Insulation Material Costs Skyrocketing!

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If you are budgeting for future installation of insulation – beware. Today’s estimates will be significantly lower than the actual cost in the months to come.

Here is what we know about insulation price increases now.

From April thru December of 2019 the cost of spray foam insulation materials rose by around 20%. In the first 3-months of 2020, there has been an additional 10% increase.

Why? There are several factors. One big factor is consolidation of the materials manufacturers. In 2019, the most popular open cell foam in Austin was Quadrant.

During 12 months, Fort Worth TX based Quadrant was bought by Georgia based Accella. Then Accella was bought by Carlisle. With each sale, the price of Quadrant increased significantly.

Why not switch to a different foam company? The other manufacturers have followed suit in both the sale of their company, and resulting price increases.

In the last 12 months, there has been great transition among most of the major industry players:

So there is no great option for less expensive QUALITY materials.

Here is a list of early 2018’s North America price increases:

  • SES – $0.10/lb on 2/1/18   and    $0.07/lb on 4/2/18
  • Gaco Western – 7% on 3/16/18
  • Accella – 7% on 3/1/18
  • SWD Urethane – 7% on 1/15/18
  • Demilec – 8% on 3/1/18
  • Icynene/Lapolla 7% on 4/20/18
  • BASF – 10% on 2/16/18
  • NCFI – 10% on 3/19/18
  • Johns Mansville – 7% on 12/1/17 and 7%-10% on 3/6/18

Are the polyurethane manufacturers just gouging the installation contractors and our clients?

Nope. The cost of materials for producing insulation have risen. Here specifically are what we already see:

  • Containers and Packaging have increased as result of steep tariffs on import steel to build 55-gallon drums. Each drum’s material costs have risen by 33% alone.
  • Current announcements of environmental audits in China have shut down 40% of manufacturing capacity in Chinese Flame Retardant, which supplies the majority of the requirements in the US.
  • Polyether Polyols have increased 10% in the first 2 months of 2018.
  • Propylene Oxide prices have risen 40% in the last 45 days.
  • DOW and BASF two of the few manufacturers of MDI, the A-side component of spray foam, are seeing force majeure.

What does the future of insulation costs look like? 

I am being told by the “big-wigs” that we should expect at least 2 if not 3 more price increases by the end of 2018. And most price increases are about 10%.

Plus, you gotta add in the “1% per month increase in construction labor costs,” according to Independence Title. That is 12% per year increase. Hourly labor costs at my company in the last 5 years have increased 73%.

To further increase labor costs, we have the City of Austin new ordinance of mandatory paid sick leave, which increases labor costs about 5%.

What does it all mean? 

If you are pricing spray foam insulation for a future project, plan for a increase in your budget. How much? I’m expecting a 9-13% increase in cost for every 100 days in the future. If you are planning to need insulation installed in 300 days, budget for a 27-36% increase in price.

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