The fiberglass manufacturers are at it again. With no market justification they have raised prices on all fiberglass products ranging from 8% to 10%. Fiberglass prices have been rising steadily since 2012. And seemingly, there is a notice of a pending price increase from the big 4 fiberglass manufacturers, every quarter.
The market forces of supply and demand for fiberglass seem to be in balance. Demand is healthy but there’s plenty of production out there. In fact, if you order a truckload you’ll get it in a couple days. In addition, raw materials costs are flat and production costs including fuel to manufacture and ship are dropping everyday. Increased labor costs may contribute to higher costs but, overall, prices should be flat or even down. So this price increase seems illogical.
But that’s not the story. What the manufacturers don’t realize is that the price variance between its product and that of competing products is forming a vise that is squeezing market share from fiberglass on both sides.
One side of the vise is cellulose. The price premium between fiberglass and cellulose is now a whopping 53%. Price increases by fiberglass and stability in cellulose pricing have led to this discrepancy. This kind of spread does not go unnoticed by the insulation contractors. For retro jobs, most contractors can convert homeowners from fiberglass to cellulose about 80% of the time. For new construction, it’s a little more complicated but remember, this is not a visible product so most homeowners don’t care if its cellulose or fiberglass. They are paying for the end result - a more comfortable home. This spread is a tremendous boon to contractors/builders and many are actively converting their jobs to cellulose.
The other side of the vise is spray foam. Over the years, spray foam has made significant inroads into the residential insulation marketplace. When foam first arrived, the price comparison to fiberglass was about 5X. Since its inception, the cost has come down dramatically due to more efficient manufacturing and more competition. In fact, one of our contractors recently said that the upcharge for spray foaming an attic instead of reblowing fiberglass was a mere $600. The way things are going, in just a few more quarters we will see price parity between fiberglass and spray foam.
The squeeze is on!!