Bouncy, bouncy: Gypsum prices rise again after plunging

The price index for the always-volatile gypsum product group continues to fluctuate wildly. After plunging by 22.3% between 2000 and 2001, the price index for gypsum-based building products, primarily wallboard, rose again this spring. Average prices increased 2.1% during April and 5.3% during May. The May 2002 price index for gypsum products was already 18.1% higher than it had been during May 2001. In response to sustained price increases from 1997 through 1999, manufacturers added a significant amount of new production capacity during 2000 and 2001. Although demand for gypsum products remained strong during this time, the new global supply capacity pushed average product prices lower until recently.

But inflation has returned to this marketplace, even as average prices for most building products have been flat or down. With the likelihood of a slowdown in construction spending growth rates over the remainder of 2002, however, no further increase in gypsum prices is expected.

Wild ride for gypsum prices
(Percent change, annual average basis)