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.

Romania: Belgium-based Etex invested Euro1m on upgrades to the logistics capacities of its Turceni gypsum wallboard plant and its Aghiresu plaster plant. It also started work on a Euro6m sludge drying unit at coal-fired power plant in Oltenia that will supply synthetic gypsum for use at Turceni, according to See News. The company operates locally under the Siniat Romania brand. It reported a 20% year-on-year rise in turnover to Euro59.6m in 2021.