Effects Of Katrina - Gypsum, Steel & Cement Board

While the USA is appropriately focused on the human priorities of hurricane Katrina, the complex interdependencies and effects for the building materials segment is just starting to emerge.

It appears that while there may be some short term and/or localized tightness in gypsum and cement board (USG and National Gypsum have wallboard plants in effected area and USG has a major cement board plant in the area), production at these plants could gear back up as utilities come back into service and employees are able to return.

What might develop into a potentially larger issue is the status of Air Products and Chemicals New Orleans hydrogen production facility which is an essential product used in the production and processing of steel. The Air Products hydrogen plant in New Orleans provides as much as 30%-40% of all merchant hydrogen consumed in North America. It is our understanding that Air Products has declared "force majeure" with customers east of the Rocky Mountains with at least one steel company suspending orders until further notice. Air Products is working to supply customers by routing hydrogen from other sources and areas, the company said in a statement. Air Products still does not know the full extent of damage to its New Orleans operations. But it said hurricane damage will limit its ability to supply hydrogen there "for an extended period of time".

In an earlier article posted in the "Industry News" section of GypsumToday they talked about how dealers are now implementing or increasing delivery surchanges. They view these delivery surcharges as fully justifiable and necessary.