Gypsum industry news

Philippines: Knauf Gypsum Philippines has petitioned the Philippines Tariff Commission to reduce the import duty on imports of Omani gypsum to 0% of value. Currently, Oman’s gypsum enjoys a most favoured nation (MFN) reduced tariff rate of 3%. The Oman Daily Observer newspaper has reported that high gypsum wallboard demand has created short supply of gypsum in the Philippines, according to Knauf Gypsum Philippines. Beside the company’s wallboard operations, the raw material is also critical to cement production in the country.

The Philippines receives a minor share of Oman’s 8.74Mt/yr of natural gypsum exports. The Southeast Asian country has a housing backlog of 6m units.

US: Total sales of gypsum boards products grew by 2% year-on-year to 1.99Bnm² in the first nine months of 2022, from 1.94Bnm² in the same period in 2021. Sales grew particularly fast in the South Atlantic and East South Central regions, but they fell in the Pacific region. Data from the United States Geological Survey (USGS) shows that the total of uncalcined gypsum used in the reporting period rose by 5% to 15.7Mt and the total of calcined gypsum used increased by 2% to 17.9Mt. The supply of mined crude gypsum fell by 6% to 15.9Mt, imports rose by 1% to 5.11Mt and the supply of synthetic gypsum remained stable at 9.75Mt. Spain became the biggest source of crude gypsum imports so far in 2022 followed by Canada, Mexico and Türkiye.

New Zealand: The government has renamed its Plasterboard Taskforce as the Critical Materials Taskforce and extended its remit to other building materials alongside gypsum wallboard. The expanded taskforce's aim will be to prevent product shortages, with a focus on maximising productivity and cushioning the effects of supply-side dangers. The government foresees further materials shortages amid anticipated 'global trade headwinds.'

Minister for Building and Construction Megan Woods said “While we can be optimistic about the opportunities for our economy, we also need to remain cautious. We know we are facing a period of global turmoil." Woods continued “The Critical Materials Taskforce will build on the successes of the Plasterboard Taskforce, and use the valuable lessons learnt to be proactive and forward-looking, so we can identify emerging risks and respond as quickly as possible. Bringing together construction, building consent and supply chain experts into a taskforce earlier this year showed how government and the sector successfully worked together to troubleshoot plasterboard shortages quickly and pragmatically.”

New Zealand's gypsum wallboard imports grew by a factor of five year-on-year to 4.6Mm² during the first 10 months of 2022. Domestic producer GIB said that it will continue to operate at full production capacity through the 2022 Christmas - New Year period in order to rebuild resilience stock levels. The company continues to make deliveries based on an allocation system. It asked customers to contact their retail suppliers if they have any spare pallets for collection, to help with deliveries.

New Zealand: Winstone Wallboards says that the allocation model it introduced in July 2022 and other measures it has taken are starting to ease a shortage in gypsum wallboard. The company’s general manger David Thomas said that by operating both of its wallboard plants continuously and an upgrade to its Auckland plant in July 2022 had increased its production capacity. It has also been able to resume importing wallboard from Australia. The company is currently despatching around 3.25Mm²/month of gypsum wallboard.

The company said that is going to reduce merchant lead time between order placement and delivery from October 2022 in order to improve the effectiveness of its allocation system. It hopes that doing this will provide more flexibility along the supply chain for end-users to secure product when it is needed for installation. It also asked tradespeople to continue communicating with merchants about requirements and timings in order for the wallboard producer to understand real demand levels.

Thomas said, “The team and I recognise the responsibility Winstone Wallboards has in supplying plasterboard to the New Zealand market and want to assure you we are committed to living up to that responsibility. That we have retained such a role is not just an outcome of what we do but, a result of the high level of support the market has provided us over decades.”

New Zealand: Fletcher Building Materials recorded consolidated sales of US$5.37bn during its 2022 financial year, up by 4.7% year-on-year from US$5.13bn in the previous year. Its net earnings also rose by 42%, to US$273m from US$193m.

The group's building materials division, which includes Winstone Wallboards, contributed US$1.02bn-worth (17%) of group sales. The business delivered 'strong' volumes, with pricing initiatives effectively offsetting cost inflation. The latter particularly impacted imports of raw materials. The business made capital expenditure investments of US$129m, of which US$98.4m went towards the construction of Winstone Wallboards' upcoming Tauriko gypsum wallboard plant in the Bay of Plenty region. The plant's commissioning in 2023 will increase the company's production capacity by 30% and reduce its CO₂ emissions and waste generation.

Fletcher Building Materials chief executive officer Ross Taylor said "The 2022 financial year has not been without its challenges. Global and national supply chain disruptions have continued into the third year of the Covid-19 pandemic. In New Zealand, surging plasterboard orders following the first quarter lockdown outstripped our ability to supply, despite our manufacturing facilities running at record levels. In recognition of our key role as a local manufacturer in keeping the market supplied, we carried out a range of measures to address the shortage including operating production lines 24/7, running down inventory, importing additional product, and establishing an emergency supply pool." Taylor added "The New Zealand Commerce Commission recently published its interim market study report into residential building supplies. The final report and recommendations will be published in December 2022 and in the meantime we will continue to work collaboratively with both the commission and the government."

Winstone Wallboards has been in the spotlight in recent months over ongoing supply issues of gypsum wallboard in New Zealand. Many places around the world have suffered from similar shortages of building materials following the coronavirus lockdowns. However, the shortages in New Zealand have started to generate a considerable response, as we detail below.

Rightly or wrongly, Winstone Wallboards’ dominance in the market locally has been perceived as part of the problem. It operates the country’s only two wallboard plants and it is frequently reported to hold around a 95% share of the market. It is also currently building a new 10Mm²/yr gypsum wallboard plant at Tauriko near Auckland. Commissioning is planned for mid-2023. Once completed the company will have a total national wallboard production capacity of around 40Mm²/yr.

The current problems date back to the start of the coronavirus pandemic when New Zealand started implementing its lockdowns and residential renovation work increased. The issue then gained prominence in September 2021 when Winstone Wallboards started issuing regular supply updates on its website as the government began to relax the lockdown at that time. It says that order volumes more than doubled from November 2021 to February 2022 as customers started to bring forward their orders to cope with general building material shortages. It coped for a while by using its inventory stock and by bringing in imports from Australia but the latter stopped in November 2021 due to shortages there also. So it proposed introducing an allocation model from July 2022 whereby customers could place orders no more than one month in advance. It then says it worked on increased output through plant and process upgrades with the installation of a heat exchange system for its Auckland plant planned for July 2022 and by securing further imports from an Australian producer for the second half of 2022. As of late June 2022 it expected the market to return to equilibrium by October 2022.

Unfortunately, some consumers have been vocal about their unhappiness with the supply situation. Rental property developer Simplicity Living took to the press to complain about the delays in June 2022. It added that it had started importing its own wallboard from Thailand instead. The story then became nastier when Simplicity Living alleged that Winstone Wallboards’s parent company, Australia-based Fletcher Building, was blocking imports of certain colours of wallboard. Fletcher Building clarified in the same article that it had trademarked “specific” shades of blue, green, mauve and pink to differentiate its products in the marketplace. This, of course, will be familiar to insulation sector readers of Global Gypsum as Owens Corning is arguably the world’s most famous and successful example of how to copyright a colour. It’s unclear how much of an impediment Fletcher Building’s colour trademarks have been to imports to New Zealand. The company did say in an investor presentation in late June 2022 that it had granted 10 trademark royalty-free licenses so far to allow other companies to import wallboard. To give readers an idea of the amount of attention being focused on Winstone Wallboards and its connected companies, when a shipment of wallboard was delivered early to a construction subsidiary of Fletcher Building, apparently breaking the company’s own supply rules, a video of the incident started circulating on social media before being picked up by national news channels.

Government oversight then stepped up a notch in late June 2022 with the formation of a ministerial taskforce to tackle the wallboard shortage. It plans to troubleshoot the regulation of alternative plasterboard products, look at ways to streamline the use of products that are currently untested in the New Zealand market, provide advice on building consent and explore new distribution models, amongst other goals. Alongside all of this, the New Zealand Commerce Commission started a market study into residential building supplies in November 2021. Its aim is to look into any factors that may affect competition for the supply or acquisition of key building supplies. A draft report for consultation was scheduled for release in July 2022 and the final report should be due in December 2022.

Winstone Wallboards’ woes are clearly down to the disruption caused to supply chains by the coronavirus pandemic. However, fairly or unfairly, its local market dominance has exposed it to most of the blame for the situation in the eyes of some of the New Zealand public. Its products are so integrated into the usage of wallboard in the country, for example, that the Gib brand is specified by name in many of the region’s building consent application documents. The government has now become involved adding further to the public scrutiny. Structural changes may or may not be required at some or multiple levels of the New Zealand wallboard market to fix the current crisis. Yet, funnily enough, in one interview Fletcher Building chief executive officer Ross Taylor raised the issue of customers developing the ‘fear factor’ in response to hearing about shortages and then buying more than they might need. This may sound familiar because it is exactly what happened at the start of the worldwide coronavirus lockdowns when people started panic buying toilet-roll. Whatever else is happening in New Zealand, human nature can’t be helping either.

US: Gypsum wallboard companies sold 629Mm² of gypsum wallboard in the first quarter of 2022, in line with first-quarter 2021 sales, according to US Geological Survey (USGS) figures. They exported 16.9Mm², up by 6% year-on-year from first-quarter 2021 volumes. Canada received 15Mm², 94% of exports. The US Census Bureau recorded gypsum wallboard imports of 22.2Mm², up by 28% year-on-year. Mexico supplied 19.1Mm² (86%), while Canada supplied 2.89Mm² (13%).

In the first quarter of 2022, national natural gypsum production was 5.33Mt, up by 2.1% year-on-year from 5.22Mt in the first quarter of 2021.

New Zealand: Winstone Wallboards says it will increase the supply of gypsum wallboard available for distribution by merchants by 1Mm² from July to September 2022. It said this will equate to a 7 – 8% increase of various types of plasterboard.

Fletcher Building chief executive Ross Taylor said “The increases we will be bringing to market are possible because we will soon commission changes to the configuration of our manufacturing that we have been working on over the past three months which will produce extra, locally produced, volumes. We have also been able to secure and will import additional board from an Australian manufacturer that we can feed into our supply chain.” He added that the allocation model the company has introduced had started to help supply levels and that the completion of the new plant at Tauranga in June 2023 would also help.

In early June 2022 social housing developer Simplicity Living said it had cancelled all of its orders of Fletcher Building Gib board. In an interview with Stuff, Shane Brealey - the managing director of Simplicity Living, said that the company had decided to import wallboard instead. It said it could source equivalent wallboard products at a 20% discount or more. It added that it was taking it eight weeks to import wallboard from South-East Asia compared to eight months from Auckland.

Winstone Wallboards responded to the criticism by saying it previously had been importing wallboard from Etex Australia for around six months until the end of 2021. The arrangement ended as Australia also has a wallboard shortage. However, it added that the import arrangement might restart from August 2022 onwards.

US: The United States Geological Survey (USGS) reports that total gypsum board product sales grew by 4% year-on-year to 2.54Bnm² in 2021 from 2.43Bnm² in 2020. 22.4Mt of gypsum was mined in 2021, a 1% rise from 21. Synthetic gypsum supply decreased by 10% to 13Mt from 14.4Mt. Imports declined by 11% to 25,700t from 29,000t but exports grew by 11% to 98,800t from 89,300t.

New Zealand: Winstone Wallboards has decided to move to an allocation model of supplying its GIB plasterboard products from July 2022 due to mounting lead times in manufacture. It said it would, effective immediately, not be accepting or processing new GIB plasterboard orders for July 2022 deliveries onwards. Instead it plans to assess the situation in the coming months and it anticipates moving to a process where customers order plasterboard products one month in advance.

The gypsum wallboard producer blamed the situation on significant disruption across the building industry caused by local-coronavirus-related lockdowns in August and September 2021. It said that this caused a backlog of orders. Subsequent record manufacturing output and imports were insufficient to alleviate the situation.