Gypsum industry news

US: November 2011 saw more home starts in the US than any month since April 2010. The surge was reportedly led by an increase in multifamily units. The gypsum industry will be watching to see if the trend continues for December 2011, which might finally signify an upturn in demand for wallboard.

Starts increased by 9.3% to a 685,000 annual rate. Building permits, a sign for future construction, also climbed to a year-high. As well as multifamily homes, typified by apartments, demand for single-family-homes may also be increasing. A drop in house prices and low borrowing costs is thought to be the reason for the increase in demand.

"For months we've been flagging the strength in multifamily construction, but now we're starting to get signs that single-family is pulling itself off the canvas," said Brian Jones from Société Générale in New York.

North America: CertainTeed Gypsum, a Saint-Gobain subsidiary, has announced that UL Environment Inc. has completed its independent Environmental Claims Verification (ECV) process for products manufactured at five of its sites in North America. The company says that the move demonstrates a strong commitment to environmental responsibility and transparency.

UL Environment's ECV process has been completed for products manufactured at CertainTeed's Cody (Wyoming, US), Vancouver (British Columbia, Canada), Toronto (Ontario, Canada), Seattle (Washington, US), and Moundsville (West Virginia, US) manufacturing facilities. Specifically, UL Environment confirmed the pre- and post-consumer recycled content, origination of source materials (and adherence to ASTM D 3273 mould-resistance standards, if applicable) for 19 CertainTeed products. The validation process is currently underway for products manufactured at the company's remaining North American plants.

"CertainTeed has taken a unique approach by seeking validation for environmental product claims based on the specific plant in which they are manufactured," said Steve Wenc, president of UL Environment. "This demonstrates CertainTeed's commitment to providing detailed product information and an unprecedented level of transparency."

"Third party verification of environmental claims is a critical component of today's green building culture, as it provides independent evaluation and enhanced transparency," said John Donaldson, president of CertainTeed Gypsum. "CertainTeed has made significant strides in ensuring that building and design professionals have access to sustainable, high-performance gypsum products that help them to achieve their goals in the responsible development of our built environment."

US: Gypsum consumption in the US has declined steeply in the past five years according to data released from the US Geological Survey, falling by over 50% from 41.6Mt in 2006 to just 19.4Mt in 2010. However, following an announcement that housing starts will increase by 15% in 2012 from the National Association of Home Builders (NAHB), gypsum demand is expected to finally rise.

The increase in housing starts and associated increase in gypsum wallboard demand is forecast to cause an increase in gypsum wallboard prices, with National Gypsum Properties, a North Carolina-based provider of wallboard and related products, announcing plans to raise its prices by 35% from 1 January 2012. Other suppliers and manufacturers may follow suit.

Craig Weisbruch, National Gypsum's senior vice president of sales and marketing, said that manufacturers expect to sell about 17bn ft² of wallboard in 2011, down from 38bn ft² in 2006. "We're changing the nature of the game here," he said. "I don't know if it will work or not, but we're all losing money. The amount of product we're shipping is so little we just can't cover our costs."

US: National Gypsum has announced that an Alabama lawsuit against the company has been dismissed. The suit claimed that National Gypsum wallboard exhibited the same characteristics as allegedly defective Chinese wallboard.

Marshall County, Alabama Circuit Court Judge Tim Jolley entered an order dismissing the case, Clark vs. National Gypsum, et. al. 'with prejudice', meaning that the plaintiffs are barred from bringing the same claim against the company again.

"This result is yet another confirmation of the quality and safety of our products and another blow to those making baseless claims against our company," said Craig Weisbruch, senior vice president of sales and marketing. "All National Gypsum wallboard has passed the industry's most rigorous testing and certification processes for indoor air quality and has been used by the US Green Building Council in its buildings."

The dismissal of the Alabama lawsuit follows a similar case in April 2011. A federal judge in Arizona dismissed a putative national class action against National Gypsum that had alleged that the company manufactured defective wallboard which emitted high levels of sulphur, damaged property inside homes and caused health symptoms. These problems have typically been associated with allegedly defective Chinese wallboard, not domestic wallboard. The plaintiff did not produce any credible scientific evidence that could substantiate his allegations.

"All credible scientific evidence - including studies by the federal government's leading safety experts - has led to the same conclusion," said Weisbruch. "National Gypsum wallboard does not pose the issues associated with allegedly defective Chinese drywall."

US: Eagle Materials Inc. has reported its fiscal results for the second quarter (ending 30 September 2011) of the 2012 financial year. These show total revenues of USD134.8m and net earnings of USD6m. Revenues increased by 2% from the same period of the prior fiscal year, reflecting improved sales volumes across most of its business lines. Operating earnings were down by 6% due primarily to higher raw material costs in its gypsum wallboard segment.

Eagle Materials' Gypsum Wallboard and Paperboard division's second quarter operating earnings of USD1.5m were down by 71% compared to the same quarter of the 2011 fiscal year. The Gypsum Wallboard and Paperboard sector's revenues for the second fiscal quarter totalled USD72.3m, a 2% increase from the same quarter a year ago. The revenue increase reflects higher wallboard sales volumes and higher paperboard sales prices, offset by lower gypsum wallboard average net sales prices. The average gypsum wallboard net sales price for the quarter was USD92.09/MSF, 4% less than the same quarter of the 2011 fiscal year. The gypsum wallboard sales volume for the quarter of 403MMSF represents a 2% increase.

US: USG has reported a deepening net loss of USD115m for the quarter ending 30 September 2011, compared to a loss of USD100m for the same period in 2010. Revenue rose 4.4% to USD792m, from USD758m in 2010.

A weak economy has been blamed for low levels of demand for the company's products. "Many of our key markets continue to experience recessionary levels of demand that are near record lows," said President and CEO James S. Metcalf.

USG's operating loss for gypsum in North America expanded to USD70m, from USD43m in 2010. It also had a USD17m operating loss for building products, compared to a USD24m loss in 2010. Its Worldwide Ceilings unit had a USD25m operating profit.

US: USG has taken ownership of about 180 acres in northwest Citrus County, Florida, to warehouse synthetic gypsum from the nearby Progress Energy power plant. Company spokesman Mark Joseph said that USG plans to store the gypsum until it is transported to company plants in North America.

USG received a trustee's deed on 14 September 2011 from the City National Bank of Florida, which owns about 400 acres near Power Line Road. According to the deed USG is the sole beneficiary of the trust.

Joseph said that the company's plans do not go further than storage of the material in warehouses at present. He added that the company has no plans at this time to manufacture drywall at the Citrus County site. "We took possession of the land to make it a storage facility," he said.

Joseph finished by saying that economic conditions require nothing more now than someplace to store and ship the material. However, he wouldn't rule out expansion, "We don't know what the future will bring... The Florida market is not the best right now for housing."

US: Beta LaserMike, a leading global provider of precision measurement and control solutions, will be giving a technical paper presentation at the upcoming 11th Global Gypsum Conference & Exhibition, which is being held on 17-18 October 2011 in Las Vegas, Nevada. The paper is entitled 'New non-contact, laser-based gauge for measuring length and speed of gypsum board' and will be given by Stuart Manser, Western District Manager for Beta LaserMike. His presentation will provide a technical overview of non-contact laser measurement and describe the advantages of these over contact-type methods for gypsum board production applications. In addition, Beta LaserMike will be demonstrating the advantages of its LaserSpeed non-contact encoder over contact-type measurement methods for gypsum board processing on exhibition stand 27.

The LaserSpeed system uses advanced, laser-based technology to precisely measure the length and speed of gypsum board during production without making contact with the product. The laser encoder projects a unique pattern on the surface of the product. As the product moves, light is scattered back to LaserSpeed. This information is translated into product speed and pulses are produced to determine the product length. Length and speed measurements are captured with better than +0.05% accuracy and 0.02% repeatability.

USA: USG has announced that its chairman, William C Foote, will retire from the company on 1 December 2011. The USG board of directors has elected James S Metcalf, USG's President and Chief Executive Officer, to the additional post of Chairman of the Board effective upon Foote's retirement.

"It has been an honour and a privilege to lead this great company for the last 15 years," said Foote. "I have great confidence in the company's leadership team and its future. I will sincerely miss the many friendships I have developed throughout the company and the industry over the years. I will always be grateful to our board of directors for their steadfast support and wise counsel."

Foote has served as USG's chairman since 1996, after having been elected chief executive officer in 1995 and president in 1994. Foote has nearly 27 years of service, having joined USG in 1984. The youngest chairman in USG's 109-year history, Foote successfully led the company through periods of rapid growth, severe economic contraction and a Chapter 11 bankruptcy related to legacy legal liabilities.

Under Foote's leadership, USG launched a large-scale modernisation of its manufacturing operations in the late 1990s that added more than 1.5Bnm² of low-cost wallboard manufacturing capacity. Foote also directed the expansion of USG's specialty distribution business, L&W Supply Corporation, which now has more than 150 locations and is the only specialty dealer of building materials with a nationwide presence.

He also helmed the firm through the company's legacy asbestos liabilities and led the company through a Chapter 11 restructuring to protect shareholders from a wave of lawsuits. In a Wall Street Journal article at the time USG emerged from bankruptcy, Warren Buffet called it, "the most successful managerial performance in bankruptcy that I've ever seen." Buffett's investment company, Berkshire Hathaway Inc., owns a 16.2% in USG.

Metcalf, who joined the company in 1980 as a trainee, was elected to the USG Board of Directors in 2008 and became chief executive officer on 1 January 2011. Foote remains chairman of the board of the Federal Reserve Bank of Chicago.

US: International Paper Co. (IP), the world's largest pulp and paper maker, has agreed to acquire Temple-Inland Inc for USD3.7bn. Temple-Inland, which is based in Austin, Texas and has four US wallboard plants, previously rejected a bid made by IP on 6 June 2011 because it was too low.

"The strategic benefits of this combination are clear and we are pleased to be able to move forward on terms that are financially attractive for both sets of shareholders," said International Paper Chief Executive Officer John Faraci in a statement.