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.