Demand for gypsum products in North America is projected to increase 2.7 percent annually through 2013 to 47.7 million metric tons valued at $5.3 billion. Gypsum board is the largest gypsum product segment by a wide margin, accounting for about 70 percent of demand. Demand for gypsum board is projected to rise 3.2 percent annually to 34.2 million metric tons in 2013, equivalent to 36.3 billion square feet. Gains in demand for gypsum products will derive primarily from the recovery of the U.S. new housing sector, the leading consumer of gypsum.
In the U.S., demand for gypsum and gypsum products declined sharply in 2007 and 2008, as new housing construction collapsed in the wake of upheaval in the banking and credit industries, and with the onset of a general economic recession. Consumption also softened in residential improvement and repair applications. Going forward, the recovery of the U.S. new housing sector from its depressed 2008 levels will lead the industry back to positive growth.
Demand for gypsum and gypsum products in Canada and Mexico will also show growth through 2013. In Mexico, demand will increase 2.1 percent annually through 2013, representing a deceleration from the gains posted in the 1998-2008 time frame, reflecting slowing growth in both residential and nonresidential construction activity. Better prospects will emerge in nonbuilding markets in Mexico due to expanded infrastructure construction. In Canada, demand for gypsum products will increase only marginally, reflecting a contraction in new housing construction and decelerating growth in residential improvement and repair spending, nonresidential construction and nonbuilding construction.
Synthetic gypsum, which accounted for 24 percent of crude gypsum supply in 2008, will continue to gradually increase its share of crude gypsum production. Synthetic gypsum, which is widely available in the United States and Canada, is produced primarily as a byproduct of the flue gas desulfurization process for reducing emissions at coal-fired power plants. The combination of stricter environmental standards and the cost advantages of synthetic gypsum have allowed this material to expand its presence in the market.
Gypsum board is the primary end use for crude gypsum, accounting for 70 percent of total demand in 2008. Growth in gypsum board demand will derive primarily from the recovery of the U.S. new housing market. Products that will benefit the most from the housing turnaround include regular gypsum board, water-resistant board, veneer board and mobile home board, all of which are concentrated in housing construction. Products such as type X board, sheathing and ceiling tiles, on the other hand, are primarily dependent on nonresidential construction, and will thus post less robust gains.
Demand for calcined gypsum products in North America is projected to increase 3.2 percent annually to 35.8 million metric tons in 2013, valued at $5 billion. This represents a considerable improvement over the losses posted in the 2003-08 time frame, reflecting the recovery of the U.S. residential construction market from its very weak 2008 levels.
Gypsum board, or wallboard, is the primary product manufactured from calcined gypsum, accounting for more than 95 percent of overall demand in 2008. Building plasters accounted for three percent of demand, with industrial plasters accounting for the remainder. Gypsum board and building plasters will be the most rapidly growing product segments through 2013, as U.S. residential construction spurs increasing demand. Building practices in the U.S. and Canada heavily favor gypsum board as the primary wall and ceiling material, and so the intensity of use is very high. In Mexico, on the other hand, wallboard use is much less intensive, holding down demand for calcined gypsum products.
The United States is the primary regional consumer of calcined gypsum products, accounting for 86 percent of total consumption in 2008. In Canada and the United States, gypsum wallboard is the primary wall construction material in use and the principal consumer of calcined gypsum. In Mexico, on the other hand, building plasters hold a greater share of demand, reflecting the differences in building practices.
Demand for gypsum board in North America is projected to increase 3.2 percent annually to 36.3 billion square feet in 2013, valued at $4.8 billion. Regular gypsum board and type X board dominate demand, together accounting for nearly 90 percent of the total in 2008. Demand for gypsum board products used primarily in residential building markets, such as regular gypsum board, water-resistant board, veneer board and mobile home board, will record the greatest rates of growth; while products which are dependent on nonresidential markets, such as type X board, sheathing board and gypsum ceiling tiles, will post less dramatic gains.
Regular gypsum board is the most basic gypsum board product. Being the simplest form, it commands the lowest price. This type of board is used widely throughout residential construction and nonresidential applications where building code requirements do not require a fire-rated wall assembly. For fire-rated applications, regular gypsum board is replaced by type X gypsum board, which features specialized additives to enhance fire-resistance. The other type of gypsum board widely used in interior wall construction is water-resistant board, which is designed for use in areas exposed to high ambient moisture, such as bathrooms, kitchens and laundry rooms.
Other gypsum board types are designed for more specialized applications. Mobile home board is used in the production of manufactured homes. Veneer gypsum board is used as an underlayment for gypsum veneer plaster applications. Sheathing gypsum board is used as an underlayment for the exterior walls of buildings; it is the only gypsum board not primarily designed for interior construction. Drop-in gypsum ceiling tiles feature high strength and a vinyl-coated surface for use in a variety of nonresidential ceiling markets.
Average gypsum board pricing is expected to rise through 2013, although the increase will be less sharp than the rise from 2003-08. During 1999 and 2000, demand was in excess of capacity, and the result was a price run-up. North American gypsum board producers engaged in significant capacity expansions from 1999 to 2001, at which point construction activity weakened, leaving the industry in a state of overcapacity, resulting in lower gypsum board prices, which persisted through 2003. Demand for gypsum board remained strong through 2006, supporting higher prices. While demand for gypsum board weakened in 2007 and 2008, high energy prices kept production costs elevated, which limited the ability of producers to reduce prices in order to maintain market share. W&C