11 Apr 2016

Future Asian gypsum demand and supply trends

Cement manufacturing accounted for roughly 61% of the 252Mt of gypsum produced globally in 2015, with the gypsum wallboard sector consuming 33% of the total. Global gypsum demand is projected to increase by an average compound annual growth rate of 10% to reach 870Mt by 2026. Middle Eastern countries, India, China and countries in the Association of South East Asian Nations (ASEAN) will represent a major part of this increase in gypsum consumption.

Although gypsum accounts for just 2 – 3% of the total cost of manufacturing cement, the sheer size of the global cement sector represents a difficult situation for the global wallboard sector. There is presently no substitute for gypsum in the production of gypsum wallboard, and cement and wallboard producers have to compete for raw gypsum material with a considerably larger and rapidly growing industry.

The race is on to secure new sources of natural gypsum, especially in regions of the world that have growing demand for gypsum, such as the Middle East, India, China and the ASEAN nations. Asian gypsum wallboard manufacturers are likely to face issues regarding its availability and cost in the near future. Identifying and ensuring a consistent supply of gypsum has become a challenge.

The current situation with respect to the overall flow of materials can be seen in Tables 1 and 2, which show the most significant gypsum importers and exporters in 2015. Aside from Mexico, the countries involved are overwhelmingly in the Middle East and Asia, rapidly growing markets for gypsum, wallboard products and cement.

Importer Volume (Mt)
India 4.35
Indonesia 2.32
Japan 2.2
Vietnam 2.13
Malaysia 1.47
Bangladesh & Sri Lanka 0.95
Philippines 0.54
UAE, Qatar, Kuwait & Bahrain 2.02
South / East Africa 0.47
TOTAL 16.45

Above – Table 1: Major gypsum importers in 2015.

Exporter Volume (Mt)
Thailand 7.65
Oman 5.85
Iran 1.74
Mexico 0.52
Pakistan 0.69
TOTAL 16.45

Above – Table 2: Major gypsum exporters in 2015.

Looking ahead

Zawawi Minerals LLC has conducted research into the possible future gypsum demand from both industries to see how changing demands will affect the flow of gypsum across the region in the period between 2016 and 2030.

Tables 3 and 4 show the cumulative totals for each importing and exporting country for the 15 year period. Figure 1 shows how overall gypsum trade between the major importers and exporters will grow over the same timeframe. The data for import demand (Table 3 and Figure 1) has been calculated using compound growth estimates for each importing country from a number of sources. The export data is based on a range of factors applicable to each of the exporting countries. Selected key findings are summarised below.

Importer Volume (Mt)
India 282
Indonesia 44
Japan 40
Vietnam 49
Malaysia 30
Bangladesh & Sri Lanka 19
Philippines 13
UAE, Qatar, Kuwait & Bahrain 46
South / East Africa 9

Above – Table 3: Cumulative imports for major gypsum importers for the period 2016 – 2030.

Exporter Volume (Mt)
Thailand 15
Iran 80
Oman 250
Pakistan 15
Estimated shortfall 174

Above – Table 4: Cumulative exports for major gypsum exporters for the period 2016 – 2030. Estimated shortfall will be accommodated via new supplies from Turkey, Spain, Mexico and others, but these countries will have a high landed cost compared to gypsum coming from Oman.

India is the largest importer… by far

Indian cement and gypsum wallboard industries will require more than 280Mt of gypsum in the 15 year period to 2030 due to the country’s limited domestic supplies. This has been calculated using year-on-year growth rate of 8%.

India has total recoverable cement and gypsum board grade natural gypsum reserves of just 39Mt and produced a peak of 4.2Mt/yr in 2012. There are large but non-viable natural reserves in Rajasthan. India also makes around 6Mt/yr of byproduct phosphogypsum as a result of fertiliser production. However this will not increase greatly due to issues surrounding the supply of diammonium phosphate. Marine gypsum supplies are negligible, meaning that local gypsum sources can supply a maximum of 10Mt/yr.

Thailand unlikely to capitalise on resources

Classic consumers of Thai gypsum (mainly ASEAN countries, Japan and Bangladesh) are expected to import over 193Mt of gypsum during the period to 2030. However, these countries will find themselves having to look elsewhere in future due to rising Thai demand. On top of this, viable domestic natural gypsum resources are down to around 30Mt.

Gypsum export has been limited by the Department of Primary Industries and Mines through the non-issuance of new mining licenses and exports are under a strict quota system. Indeed, having reached a peak of 8.81Mt in 2014, exports fell by 13% in 2015 to 7.65Mt. Exports fell by another 20% in 2016 compared to 2015, falling to 6.26Mt.

Another policy to maximise the economic and social benefit accrued to the country from the export of gypsum resources is the setting of the gypsum free on board (FOB) export price. This was set at US$16.00/t in 2010, US$17.00/t and US$18.50/t in 2015, at which it has since remained. The average price realised in 2016 was US$18.92/t. In 2004 the price had been as low as US$11.50/t.

As a result of all of these factors, gypsum export from Thailand to Asia could be very negligible or nil quantities in the coming decades. Most existing consumers are already looking elsewhere, primarily to Oman (See ‘Oman sitting pretty’).

Iranian gypsum is in the right/wrong place

Historically, Iran has exported around 10% of its total annual gypsum production, with the balance consumed by local cement, gypsum and construction industries. The gypsum production cost plays a major role in the Iranian gypsum industry and the profitability of gypsum production in Iran has decreased in recent years due to low FOB selling prices.

However, given that the domestic construction sector was worth US$90bn prior to the relaxation of sanctions, the potential for future domestic use is very high. Powered by over US$200bn in new projects, massive construction projects are underway around energy, infrastructure and housing. Iran’s robust housing sector boasts an estimated annual growth rate of 12% due to a severe shortage of housing stock. Billions of dollars’ worth of tender contracts have been already awarded in different fields of construction. In the above circumstances, the local gypsum demand in Iran is expected to double in coming years along with a major increase in the local selling price. This means that Iranian gypsum exports are expected to be capped between 3-4Mt/yr.

In any event 80% of Iran’s natural gypsum is located in Semnan Province in the central north of the country to the south of the Caspian Sea. This is over 1200km from major ports on the Gulf of Aden and as such renders the material uneconomical for export. The remaining reserves in the south of the country around Juyom are available for export due to their proximity to ports.

Great demand from the Middle East

The 3-4Mt/yr of gypsum that is exported from Iran primarily heads to local customers such as the UAE, Qatar, Kuwait and Bahrain. This will increasingly be the case in future. These four countries would consume 2.8Mt of gypsum in their cement sectors alone if these were to operate at 100% capacity. While this is not technically possible, higher cement usage in these oil-based economies is very likely given the ongoing and forthcoming heavy investment by the UAE government, which will spend US$700bn on infrastructure ahead of Dubai Expo 2020 and UAE National Vision 2021 event, and the US$200bn to be spent by Qatar ahead of the FIFA World Cup 2022 and Qatar National Vision event 2030. In all, the UAE, Qatar, Kuwait and Bahrain will import 46Mt of gypsum over the 2016 – 2030 timeframe.

Oman sitting pretty

Oman will emerge as the single most important source for high grade natural gypsum for cement and gypsum board manufacturers across Asia and South and East Africa by 2020. The country has estimated gypsum resources of over 1000Mt but the potential for domestic value-addition of gypsum is extremely limited. With higher production and little significant change in domestic consumption, Oman will continue to export the majority of its gypsum. It is forecast to export an incredible 250Mt of gypsum between 2016 and 2030 alone.

Oman’s gypsum export volumes through Port of Salalah have already grown at a phenomenal pace, with volumes rising from 0.3Mt in 2010 to 5.85Mt in 2015, a 20-fold increase in just five years. The increase was mainly due to the rising demand in India, Japan, Indonesia, Malaysia, Vietnam and Bangladesh.

Figure 3 shows this transformation as well as how it will continue in the timeframe to 2020. It also shows the anticipated fall in Thai exports over the same period. This represents the single most significant change for Asian gypsum trading in the next 15 years.

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