Gypsum industry news

Two news stories to note over the last two months indicate growth in the gypsum wallboard market in Romania. Firstly, Knauf announced plans in mid-October 2022 to build a new 30Mm²/yr gypsum wallboard plant at Huedin in Cluj County. Then, Germany-based Grenzebach’s local subsidiary revealed that it had broken ground on the construction of an upgrade to its Iasi production centre.

Knauf’s announcement follows work by the existing wallboard producers with plants in the country to increase their own local capacity. Saint-Gobain started building a new production line at its Turda plant in mid-2021 at a cost of Euro45m. It hopes to have the project completed by April 2023. Etex started work in mid-2022 on a Euro6m sludge drying unit at a coal-fired power plant in Oltenia that will supply synthetic gypsum for use at its Turceni plant. It is also working on logistics upgrades to Turceni and a separate plaster plant at Aghiresu.

Graph 1: Growth rate of the construction market in relation to market volume in selected emerging countries, 2020 – 2030. Source: Saint-Gobain financial report using data from IHS.

An indication of Saint-Gobain’s interest in the Romanian market can be seen in its universal registration document for 2021 where it outlined its strategy. It presented a graph of forecast growth rates in construction markets in selected developing markets between 2020 and 2030. The countries that are underlined in Graph 1 (above) are those where Saint-Gobain made large acquisitions or investments in 2021. Romania is interesting on this graph because it is the European country with the largest predicted growth rate. It also has a relatively low market volume suggesting potential for market growth, although note that the graph only shows selected countries.

Another reason why Knauf might be interested in Romania is that it is the largest country in the European Union in which the company does not have a wallboard plant. Knauf’s own take from its press release about why it decided to build a plant in Romania was that local per capita consumption of gypsum wallboard was around 3m²/yr compared to at least 6m²/yr in more mature markets elsewhere in Europe.

Etex’s subsidiary Siniat Romania reported a 20% year-on-year rise in turnover to Euro60m in 2021. This compares to a 24% rise in turnover to Euro307m by Saint-Gobain Romania. Andrei Popa, Etex’s Country Sales Manager Romania & SEE, told Agenda Constructiilor that Siniat Romania’s turnover grew by 25% year-on-year in the first eight months of 2022. However, it is unclear what difference Etex Group’s acquisition of insulation producer URSA in June 2022 made to the figures in Romania. Popa also revealed that the rise in turnover so far in 2022 was mainly down to price rises. This in turn had been promoted by mounting energy costs, particularly gas. The company described itself as a ‘big consumer of gas’ and reported that the price had risen seven times over the past year. One more point of interest to mention is that Popa described Etex as one of the largest exporters in the country, with 40% of local production sent over national borders. This also aligns with what Knauf said about its new plant. It intends to deliver half of the production from its proposed plant at Huedin to Hungary, Serbia and the Republic of Moldova. The other half will serve the domestic market in the north of Romania with imports from Bulgaria expected to continue to supply the south of the country.

The data above suggests why Saint-Gobain, Etex and Knauf have all invested in wallboard production units in Romania over the last two years. The local market has growth potential and the companies are also focused on exports to neighbouring countries. All this investment may also have contributed to Grenzebach’s decision to enlarge its production site at Iasi too. The ‘fly in the ointment’ here in the short term is the disruption to energy markets caused by the war in Ukraine. Siniat Romania mentioned its concern over gas prices above. Saint-Gobain also made similar comments on a general basis for Europe in its nine month financial results in late October 2022. It said that it was preparing continuity plans for its gas-consuming plants in Europe but added that its gypsum wallboard production lines were ‘extremely flexible.’ However, Romania is better prepared for problems with gas supplies compared to elsewhere in Europe because it produces around 90% of its requirements locally. Despite energy concerns at the moment, the long term potential for the wallboard market in Romania remains promising.

Norway: Norgips has appointed Christian Stålem as its managing director. He was previously the commercial director of the subsidiary of Knauf since May 2022. His promotion follows an interim period with Jan Ellringmann, a member of the group management, covering the position. Stålem previously worked as a sales director at BMI Group. Prior to this he held sales, business development and marketing positions at Circle K, Statoil and Capgemini Consulting.

UK: Knauf UK and Ireland has appointed Paul Campbell as its Commercial Director. He will be responsible for the strategic development of supply chains, customer support, marketing and technical functions. Campbell previously worked for British Gypsum for over 10 years in product management and marketing roles before becoming the Marketing & Technical Director, UK & Ireland at BMI Group in 2019.

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: GMS’ net sales grew by 27% year-on-year to US$2.79bn in the half year to the end of October 2022 from US$2.19bn in the same period in 2021. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 34% to US$356m from US$265m. Sales of wallboard increased by 37% to US$1.11bn from US$0.80bn.

John C Turner, Jr, the president and chief executive officer of GMS, said, “A significant backlog of homes under construction, continued strength in multi-family, and improving levels of commercial activity helped drive exceptional results for our fiscal second quarter.” He continued, “As a result, with favourable pricing across our product categories, positive volume growth in wallboard, ceilings and complementary products and the benefit of our AMES acquisition, our team achieved another quarter of record levels of net sales, net income and adjusted EBITDA and generated significant levels of cash flow.”

US: Georgia-Pacific’s Sweetwater West gypsum wallboard plant in Texas has completed an upgrade to its board-drying equipment. It has installed an Energy Optimization System (EOS), also known as a waste heat recovery unit, including new ducting, two new fans and a new exhaust stack, to an existing four-zone dryer. The newly upgraded system enables the collection of the waste exhaust from three zones of the plant and injects it into a fourth zone. This enables the burner in that zone to operate at a lower capacity. Around 2500t/yr of CO₂ is saved in the process.

David Neal, vice president of Gypsum Operations for Georgia-Pacific said, “Advancements in energy savings and resource consumption reduction are goals toward which Georgia-Pacific works every single day.”

Georgia-Pacific started building a second wallboard plant next to its Sweetwater West plant in late 2020. The new 65Mm²/yr unit was scheduled to start production in late 2022.

New Zealand: Fletcher Building says it will stop using retroactive quantity-based rebates after it learned that the Commerce Commission had started an investigation into the practice in November 2022. The owner of Winstone Wallboards defended the use of such rebates and said they were common in the sector. However, it added that it was showing ‘leadership’ and had considered the commission’s preference that it not use quantity rewarding rebates. It will instead switch to a flat pricing model based on volume.

The Commerce Commission published its final report look at general residential building supplies following the release of a draft in August 2022. It set up nine recommendations to improve competition and supply of such products generally. Two main factors it identified as making it difficult for competing products to be introduced and expand in the market were the building regulatory system and quantity-forcing rebates paid by established suppliers to merchants. It noted that, under certain conditions, these types of rebate could reinforce the way the existing regulatory system was making it harder for new or competing products to access the market.

India: Saint-Gobain India is planning to invest around US$215m towards capacity expansion plans in 2023. The building materials producer said in an interview with the Financial Express newspaper that it is part of a wider scheme to spend up to US$970m between 2022 and 2025. It aims to increase its annual revenue to US$3.7bn by 2030. The expenditure is separate from any plans for mergers and acquisitions. The company is expanding all its businesses in the country, including gypsum wallboard, glass, construction chemicals and ceramics.

Saudi Arabia: USG Boral Middle East has rebranded as USG Middle East (USG ME) with the tagline ‘Innovative Solutions Everytime.’ The company is a joint venture between Knauf-subsidiary USG and Juman Industrial Investment Company. It was originally founded in 1985 and later become part of USG Boral. It produces gypsum wallboard, ceiling, interior finishing, substrate and metal framing products.

Japan: Two workers have died at Chiyoda-Ute’s Yokkaichi gypsum wallboard plant in Mie Prefecture. The accident occurred when three sub-contractors were conducting regular maintenance work near a wood waste boiler at the site. Local press reports that the workers became trapped in a dust collector during the incident. Chiyoda-Ute is investigating what happened.