The gypsum demand-supply deficit in India will cumulatively widen to nearly 105 million tonnes from 2017-2031, creating a lucrative market for Omani gypsum, says Ramachandran, Director, Zawawi Gypsum LLC.
The Indian cement industry’s output is expected to touch 400 million tonnes (MT) by 2021, rising to over 600 MT by 2026 and nearly 870 MT by 2031.
In 2015-2016, the industry imported over 4 MT of gypsum, and the imported gypsum demand in India is expected to go over 10 million tonnes per annum (MTPA) by 2021, around 20 MTPA by 2026 and over 33 MTPA by 2031.
The industry’s cumulative imported gypsum demand will be 37 MT during 2017-2021, over 116 MT from 2017-2026 and over 254 MT (2017-2031), driven primarily by strong growth in the cement production segments.Local gypsum availability
Historically, India’s annual supply of cement-grade natural gypsum is only around 3 MT per year due to non-viability of mining of deep seated gypsum reserves in Rajasthan. By and large, the entire production of gypsum is from Rajasthan state (99 per cent), and the state has over 90 per cent of the country’s gypsum reserves.
Gypsum prices are regulated by the Rajasthan government and over 95 per cent of its deep-seated gypsum reserves are not economically viable for mining at current prices. Furthermore, the annual production quantities have started decreasing.
As per IBM, as on 1st April, 2010, Indian gypsum resources were estimated at 1,286 MT of which 39 MT have been placed under ‘mineable reserves’ and 1,247 MT under the ‘resources’ category, which are deep seated and not feasible for mining.
Annual production of phospho-gypsum in India is around 6 MT. Phospho-gypsum supplies will be constrained by issues revolving around rock phosphate availability for DAP (Diammonium Phosphate) production. Hence, phospho-gypsum supply to the cement industry will continue to be around 6-7 MTPA. Marine gypsum supply is of a very negligible quantity. Ergo, local gypsum supply will continue to be below 10 MTPA per year.Will Thailand Cash In?
Asia’s current dominant supplier Thailand is unlikely to capitalise on its gypsum resources due to local supply constraints anticipated in the future.
Thailand’s gypsum exports are controlled by the country’s Department of Primary Industries and Mines (DPIM) through non-issuance of new mining licences, and exports are strictly under a non-marketable quota system. As the part of strategies for maximising the economic and social benefit accrued to the country from the export of gypsum resources, DPIM is setting the gypsum FOB selling price. Presently the FOB price is $18.50 per tonne.
Gypsum exports from Thailand to India could drop to zero in coming years, and most of the existing Asian customers of Thai gypsum are actively scouting for gypsum supply from Oman.
India’s natural gypsum production has started decreasingNatural gypsum supply from Iran
Historically, Iran’s local construction industry consumes around 90 per cent of its total gypsum production (over 14 MTPA) and the balance quantity of around 10 per cent is exported mainly to the UAE, Qatar, Kuwait, and a few other Asian countries.
Local gypsum demand in Iran is expected to double in coming years along with major increase in the local selling price due to massive expansion of infrastructure and housing projects. Considering the increasing local demand, Tehran’s gypsum exports are expected to remain capped at around 10 per cent of total production.
In any event, 80 per cent of Iran’s natural gypsum resources and production is in the country’s Semnan province, situated in the central north of the country, over 1,200 km from the major port on the Gulf of Aden. This, as such, renders the gypsum uneconomical for export. The remaining 20 per cent of the resources and pro-duction is in the south of the country (around the Juyon area), and is partially available for export.
Furthermore, the construction industries in the UAE and Qatar will continue to expand, with investment in infrastructure, commercial, residential and energy projects continuing to drive growth. The FIFA World Cup 2022, World Expo 2020, housing and several infrastructure projects in the UAE and Qatar have started driving cement demand, which could lead to an increase in demand of imported gypsum.
In coming years, Iranian gypsum supply will be largely limited to the UAE, Qatar, and Kuwait and very limited quantities to the Indian west coast.
Gypsum exports from Oman have been growing at a phenomenal paceGypsum exports from Oman
Oman is on track to being crowned as the world’s largest exporter of natural gypsum by 2018 on the back of surging output that underscores the immense potential of the Sultanate’s mining sector to fuel the nation’s long-term economic development.
Exports are projected to surpass 8 MT per annum in 2018, up from 5.85 MT at the end of 2016 – a phenomenal increase that industry experts say will position the Sultanate as a global supplier of minerals in the coming years. Oman’s growing prominence as an exporter of gypsum – a basic raw material for cement and gypsum board manufacturing – comes against a backdrop of soaring demand from several Asian, African and Far Eastern nations. At the same time, major suppliers, notably Thailand, are drastically limiting exports to feed their own domestic industries.
Omani gypsum export volumes have jumped a phenomenal 20-fold over the past five years, from a mere 0.30 MT in 2010 to 5.85 MT last year. This increase has been driven primarily by galloping demand in India, Japan, Taiwan, Indonesia, Vietnam, and Bangladesh. For all the known reasons, Oman has emerged as the single most important source for high-grade natural gypsum for cement and gypsum board manufacturers across Asia and South and East Africa.
In a major development that bodes well for a strong uptick in Omani gypsum exports, top executives of the leading gypsum mining companies have unanimously endorsed new regulations issued by the Public Authority for Mining (PAM) prescribing a minimum FOB export price for gypsum.
The endorsement came at a meeting of company chief executives held earlier this year.
Also at the meeting, the attendees agreed to establish the ‘Oman Gypsum Association (OGA)’, a non-profit pan-industry grouping that advocates for, among other things, best practices in gypsum mining, community support initiatives, and minimum FOB pricing limits that consider
Asian demand and supply, and other measures aimed at supporting the growth of the domestic gypsum industry.
Alarmed by a downtrend in gypsum export prices, attributed to unhealthy undercutting by some players, PAM stepped in last month to fix a minimum export FOB price for raw gypsum at $12.50 per tonne with effect from December 2016.
Consequently, Omani gypsum exporters are barred from exporting raw gypsum below this designated price. Those found in breach of this regulation will be denied export permits, while repeat offenders are liable to have their mining licenses cancelled altogether.
Gypsum exports have the potential to drive GDP growth through enhanced non-oil exports.
During 2010-2013, Omani gypsum used to be traded at the FOB price of above $14.50 per tonne. However, despite the Sultanate’s obvious advantageous geographical position in exporting gypsum to Asian countries, Omani gypsum
was traded at far lower FOB prices during 2014 and beyond.
This peculiar situation was the result of price undercutting by Omani exporters due to lack of coordination between gypsum exporters, to the detriment of the export industry and the wider Omani economy in general.
Asian cement and gypsum board manufacturers, who are the main consumers of imported gypsum, have already started to face supply and pricing challenges – a trend that is likely to continue in the coming years. Identifying and ensuring a consistent supply of gypsum has become im-perative for cement and gypsum board producers.
After factoring in Omani gypsum supplies to the Asian market, there is still a supply deficit, which opens up opportunities for Turkey, Spain, Mexico, etc., all countries that can target the Indian market, but the landed cost of their exports will be far higher compared to Omani gypsum. The tightening demand-supply scenario will be reflected in an upward trend in Omani gypsum FOB prices, going forward. BASE LINE SCENARIO – INDIAN CEMENT PRODUCTION VS GYPSUM DEMAND & SUPPLY FROM 2017 – 2031 (QTY. IN MILLION TONS)

About the author
(The author is Director, Zawawi Gypsum LLC, a JV between ZML USG and Boral. He holds a degree in International Business Administration and has also undergone several professional training courses including Business Building, Corporate Finance and Strategy, Leadership Management and Relationship Management. Ramachandran established Zawawi Minerals LLC in 2009).Quick Bytes

• Local gypsum supply will continue to be below 10 MTPA;
• Asia’s current dominant supplier Thailand is unlikely to capitalise on its remaining gypsum resources due to local supply constraints anticipated in the future
• Supply from Iran will be restricted to the UAE, Qatar, Kuwait, Bahrain, and the west coast of India, among other regions;
• The Sultanate of Oman will become a significant supplier on the back of its rapidly growing gypsum industry.

Thus, even with an aggressive upside supply scenario from Oman, the gypsum demand-supply deficit in India will widen cumulatively to over 5 MT between 2017 to 2021, over 33 MT between 2017-2026, and nearly 105 MT between 2017-2031, crea-ting a lucrative market for Omani gypsum.