A major shift in the industry toward use of more synthetic gypsum has resulted from three factors. Firstly, stricter environmental regulations at coal-fired stations increased output of FGD gypsum. Secondly, the high cost of environmental measures and resistance to accumulation of waste motivated power companies to seek to mitigate these issues by selling their usable waste products. Finally, the financial crisis that caused output and revenues of the plasterboard industry to plummet motivated producers to reduce costs and FGD gypsum was not only cheaper, but tended to be produced adjacent to cities, the main markets for plasterboard and plaster. From now on, increased use of FGD and other suitable waste gypsum materials is assured for manufacture of plasterboard, plaster, cement and other materials.
This supply of high purity FGD gypsum is also attractive to cement companies, as it is generally cheaper to use than natural gypsum. US consumption jumped up sharply to 657,000t in 2007, almost double former levels as cement manufacturers sought to reduce costs in the face of declining markets. Despite declining cement sales in 2008, Roskill estimates that sales of FGD gypsum were maintained at 2007 levels, reflecting competitive pricing and widespread availability.
Plasterboard production to take 2-3 years to regain 2006 peak
The relationship between the state of the economy and the gypsum industry is readily apparent. Overall, world consumption of gypsum dropped 4% between 2006 and 2008, a total reduction of 8Mt. This has not been evenly shared, however, and the details reflect the relative burden of the global financial crisis on individual countries and regions. North American consumption declined 29% with a reduction in apparent consumption of 14.6Mt, of which 13.6Mt was lost in the USA where the crisis was most severe. Western European consumption declined 8% or 3.5Mt during this period. On the other hand, eastern Europe, Africa and the Middle East were each grew by 1Mtpy and Southeast Asian consumption increased 8.4% or almost 7Mt. For the latter regions, these increases over two years would have been greater had the world economy been strong.
Full recovery from the global financial crisis and associated recession will put the demand for plasterboard and plaster back on track to global growth of 6 to 7%py, double GDP expansion rates. This rate of growth would take global consumption of gypsum in plaster and plasterboard from 80Mt in 2008 to between 120 and 130Mt by 2015.
In cement, recovery from the global financial crisis and associated recession, and the broad infrastructure renewal that is part of the economic stimulus packages of the major economies, will see a further surge in cement production in the next two to three years. After that, growth should slow from that of the past decade but should average 4-5%py for the next decade. This would take cement production to around 3,800Mt by 2015, which, at an average gypsum content of 4%, would mean demand for gypsum of approximately 150Mt.
The mature economies endured one of the worst declines in demand for construction materials. The USA in particular recorded a 35% decline in plasterboard output from the peak in 2006 to the end of 2008, and 2009 output declined even further. Recovery in the mature economies is expected to be at slow to moderate rates taking 2 to 3 years to get back to 2006 levels of production.
For the emerging economies, however, demand was slowed by the crisis but still managed about 5-6% annual growth and these countries, particularly China and India, are already experiencing new growth. By 2010, China and India are forecast to achieve growth in plasterboard and plaster production of 8 to 10%py.
Synthetic gypsum price to rise as demand increases
Gypsum prices vary by region and country depending on whether users produce their own or have to import supplies. Mined gypsum prices are at the US$10-15/t level in 2009 in mature economies that produce their own material. Since the 1980s, synthetic gypsum began to make inroads into supply and was initially treated as a waste product - the objective being to avoid having the costs of disposing of it. As a result prices were in the US$3.50-5.00/t range. By 2000, synthetic gypsum began to be regarded as a competitive commodity both in quality and price. Prices for FGD gypsum in the USA were estimated by Roskill at US$8-9.50/t in 2008. Roskill forecast that a growing share of the gypsum market will be taken up by synthetic gypsum and that synthetic gypsum itself will be priced in parallel to inflationary trends (CPI in the USA), but remaining below mined gypsum costs.
