Company Updates
Gypsum Pricing Trends – Will It Continue to Drive Wallboard Prices Up?
September, 2024
Gypsum, a key ingredient in drywall and wallboards, has seen a large price increase in the last few years, going from a price index of around $287 at the end of 2020 to a peak of around $430 near the end of 2024, with the vast majority of that price rise happening between 2020-2022. The question is, will it continue to climb? And what does the future look like for drywall supply?
Why the rise in cost?
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Before we turn to the future, let’s look at why the prices climbed in the first place.
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Transportation – pandemic-era supply chain issues, increasing transportation costs, and fuel cost inflation have all contributed to the overall price inflation.
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Demand increase – Demand continues to grow worldwide for gypsum products, with an additional 15 million tons (94Mt to 109Mt) projected to be produced annually by 2030.
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Supply – A primary source of gypsum for the wallboard industry, Flue Gas Desulphurization (FGD) Gypsum, made as a byproduct of coal-powered plants has seen a significant decrease in North America, as coal-powered plants are being shut down in favor of greener energy sources. FGD Gypsum is made though scrubbing flue gases to remove sulphur dioxide, which results in cleaner emissions, with the byproduct of this process used to create gypsum. This source is considerably cheaper than mined or recycled gypsum, and is a purer form. This has led many manufacturers to turn to mined gypsum, which costs more both to acquire and to manufacture.
Where does this leave us?
In the short-term, the price has stabilized, with only an approximate 3% increase between Sept 2022 - Sept 2024. The expectation is that fuel prices, inflation, and demand increase will most likely continue to push the price up at a steady pace, similar to what has typically been seen since the 1990’s.
The bigger question is demand. With the reduction in FGD Gypsum, a staple in the North American market, there is a need to fill the gap in supply. To that end, there are several areas where producers are adjusting to meet demand.
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Natural gypsum: Both globally and domestically, there are ample supplies available, and while more expensive, gypsum mining has been ramping up to meet the demand.
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Recycled gypsum: Though it has a smaller market share, recycled gypsum production has been projected by some analysts to triple in the coming years.
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Imports/Exports: FGD and natural gypsum production is increasing in many other countries such as India, Australia, South Africa, and China, leading to an uptick in global trade.
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New technology: Industries, such as the fertilizer industry, which create phosphoric acid from phosphate rock have shown much promise in the future of the industry. While the production process has shown much promise, much of the issue with ramping up production has to do with the removal of impurities. This technology, along with others, have shown much promise in developing future cost-efficient sources.
What might the future look like?
With so much global demand, you can be sure enterprises will be looking for novel ways to compete. Expect to see new ways of gleaning and delivering natural mined and internationally produced FGD gypsum, as well as significant investment into growing new sources like recycled and other synthetic sources. This is why, even with significant changes to the supply line, many analysts expect global supplies to continue to stabilize through 2030.
While no one can predict the future, history has shown that large prices increases are both rare, and are also typically followed by a corresponding decrease, as the supply chain reacts to the disruption.
