Gypsum industry news

Gypsum wallboard or drywall got name-checked by the commander-in-chief of the US last week. President Joe Biden announced during his State of the Union Address to the US Congress on 7 February 2023 that he was going to require that, “all construction materials used in federal infrastructure projects to be made in America.” He then expressly mentioned wallboard along with lumber, glass and fibre-optic cables before adding the catchy sound-bite, “American roads, bridges, and American highways are going to be made with American products as well.” Although for the wallboard sector he might as well have been saying that American walls are going to be made from American wallboard.

Biden’s focus on gypsum wallboard and other building materials is linked to the US$1.2Tn Infrastructure Bill that was signed in late 2021. The White House Office of Management and Budget (OMB) issued guidance in mid-2022 on how the spending should be targeted at US manufactured construction materials. At that time it excluded steel, cement, aggregates and additives but included non-ferrous metals, plastic and polymer-based products, glass, lumber and wallboard in its category of ‘construction materials’ that should be sourced locally. Its definition of ‘construction materials’ meant that the manufacturing process for the construction material occurred in the US. Although combining some of the materials above as a composite would then be classified as a ‘manufactured product,’ at which point, 55% of the total costs of the components would have to be mined, produced or sourced in the US to meet the so-called ‘Buy America’ preference. The new bit following Biden’s recent speech is that the OMB has released further guidance for the ‘construction materials’ mentioned above. So far, so much legalese.

Canada-based manufacturers of building materials are understandably wary of this kind of talk. However, ‘Buy America’ has been around since the 1930s and there have often been ways around it. As Jean Simard, the president and chief executive officer of the Aluminium Association of Canada, told CBC, in practical terms, the math is on Canada's side. "Canada represents about 70% of total US imports. That's not going to change."

Data on how much wallboard is actually exported from Canada to the US is hard to find but the former’s wallboard sector is about 10 times smaller than the latter’s. Most of the gypsum producers in Canada are owned by international companies with a presence in the US also. This created an interesting situation in October 2022 when CertainTeed Canada welcomed the Canadian International Trade Tribunal's ruling in favour of six provinces and territories' anti-dumping measures on imports of gypsum wallboard from the US. CertainTeed is owned by France-based Saint-Gobain, which also runs Continental Building Products. Together, Saint-Gobain is the second largest wallboard producer in the US by installed capacity. It seems unlikely that the current US rhetoric will reduce Canada’s exports of crude gypsum south of the border. Data from the United States Geological Survey (USGS) shows that the US imported 1.57Mt of crude gypsum from Canada in the first nine months of 2022, an increase of 12% year-on-year from the same period in 2021. Imports from Mexico had been similar so far in 2022, although they are down compared to 2021.

The other reason Biden may have mentioned wallboard specifically in a patriotic speech may have been in relation to the long-running defective China-based wallboard story from the early 2000s. Although the legal cases associated with this have mostly died down, one popped up in early February 2023 when Knauf and its China-based subsidiaries managed to avoid a product liability claim because the Florida-based plaintiff had waited too long. Knauf now owns the US’ largest wallboard producer, USG.

It is worth remembering that the US remains the largest wallboard market in the world by production capacity. So calls by a politician to ‘Buy America’ may be more for the ears of voters rather than industry. Although that’s not to say that the situation won’t change in the future. The examples above also show that the US may have been guilty of dumping wallboard upon its neighbours and that the two largest producers in the US are both foreign owned. The other thing that Joe Biden said in his State of the Union Address was that buying American was “totally consistent with international trade rules.” This comment may have been made in response to European criticism of some of the implications of the Inflation Reduction Act with its incentives for industrial supply chains supporting renewable energy production and electric vehicles, be they based in the US or in ‘friendly’ countries. The wallboard sector seems unlikely to be caught up in this directly but protectionism is in the air. How this manifests in corporate strategy over the next few years may be telling.

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.

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.

Mexico: The price of gypsum and its derivatives has risen by up to 12% in April 2022 compared to pre-Russian invasion of Ukraine levels. Along with a rise in the price of other materials, this has increased the cost of new house builds by 25 – 30%.

The Mexican Ministry of Foreign Affairs has reported that Russia was previously Mexico’s 35th largest trade partner.

Oman: Oman exported 8.74Mt of gypsum in 2021. Data from Oman-based Zawawi Minerals shows that the country had a 44% share of the gypsum export market to Asian, the Middle East and south-east Africa. Its main destination was India, followed by Bangladesh. Thailand followed with exports of 4.91Mt for both gypsum and anhydrite (32%) and then Iran with 4.2Mt (21%). Other exporting nations included Australia, Mexico and Bhutan. Total recorded exports to the region were 19.8Mt.

Mexico: Saint-Gobain has agreed to acquire construction chemicals producer IMPAC. The company operates a construction chemicals plant in Monterrey, where it employs 630 people. The takeover aims to strengthen Saint-Gobain’s Latin American regional position and to accelerate its growth by growing its light and sustainable construction product range. The transaction is due to close in late 2021 or early 2022.

Mexico: Panel Rey celebrated the 35th anniversary of its first day in the gypsum wallboard business on 20 September 2021. The company thanked everyone involved in bringing it to its present prominence in the industry.

Panel Rey said “As a 100% Mexican company, we are very proud to have achieved national and international recognition throughout these years. Thanks to you we have achieved it and together we will continue to build great things!”

US: The US Geological Survey (USGS) has reported a 13% year-on-year increase in national calcined gypsum production in the first half of 2021 to 9.57Mt from 8.5Mt in the first half of 2020. The country’s gypsum mines produced 10.1Mt of natural gypsum, down by 3.8% from 10.48Mt in 2021. Synthetic gypsum production remained in line with first-half 2020 levels at 7.2Mt. In total, the US exported 17,900t of natural and synthetic gypsum, up by 8.2% from 16,600t. It exported 49,000t of calcined gypsum, up by 10% from 44,500t.

In the second quarter of 2021, the US exported gypsum wallboard to 29 other countries. Volumes totalled 19Mm2, up by 40% year-on-year. Canada accounted for 95% of gypsum wallboard exports. The US imported 20.9Mm2 of gypsum wallboard during the quarter, up by 54% year-on-year. All imports came from Mexico and Canada, of which Mexico supplied 16.7Mm2 (85%).

US: Data from the United States Geological Survey (USGS) shows that national natural gypsum production was 20.5Mt in the US in 2020, down by 5% year-on-year from 21.5Mt in 2019. Synthetic gypsum production remained constant at 14.4Mt and calcined gypsum production fell by 2% to 17.2Mt from 17.5Mt. Crude gypsum exports fell by 13% to 32,200t from 37,000t and calcined gypsum exports fell by 21% to 89,400t from 113,000t.

Domestic calcined gypsum consumption totalled 17.2Mt, down by 1% from 17.4Mt. Calcined gypsum imports rose by 8% to 29,000Mt from 26,900Mt. Crude gypsum consumption also fell, by 3% to 40.9Mt from 42.0Mt. Crude gypsum imports fell by 2% to 6.03Mt from 6.14Mt. Mexico overtook Spain as the leading exporter of crude gypsum to the US in 2020.

Mexico: Saint-Gobain has completed the acquisition of Knauf Mexico for an undisclosed sum. Knauf operates a 26Mm² gypsum wallboard plant at Queretaro that it purchased from PPG in 2017.