Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from the line of Garrick Schmoies of Longbow Research.
Garrick Schmoies - Longbow Research
I was wondering if you could talk about wallboard pricing trends during the quarter particularly with respect to the announced increases in February and also if you can shed some light on the increases that were announced in April as well?
Steven Rowley
As you know it really is a very dynamic time in the gypsum wallboard industry. We are going through a really painful structural evolution in the East where numerous large new synthetic gypsum plants are now delivering product into a shrinking market. Of course as is the norm for this industry, competition for market share generally drives pricing down below industry average costs which is where we are today.
Subsequent efforts to cover some of these ever increasing inflationary costs are being met with fierce resistance from builders and contractors whose businesses are also struggling. So in regards to the February and April price increases at best we covered the increased delivery cost associated with the current very high price of diesel. Subsequently if we want it down to a mill net because the delivery cost is subtracted from the gross price to get to our mill net. Currently Eagle’s price is essentially flat with our fourth quarter results.
Garrick Schmoies - Longbow Research
Are you seeing maybe a regional discrepancy with respect to pricing, especially given the capacity that is coming on line on the East coast?
Steven Rowley
Yes. Pricing is always very competitive in this industry in all the markets but yes you can say that pricing has been more difficult in the East associated with the dramatic increase in supply hitting that marketplace.
Garrick Schmoies - Longbow Research
Can you just update us on cement price increases? I think in the press release you mentioned a positive outlook for Texas but can you talk about the Mountain Cement plant and Nevada as well?
Steven Rowley
Where we stand today is essentially the only significant price increase that is holding is the $10 per ton price increase in Houston. All other attempts at price increases at least in our markets really are not holding.
Garrick Schmoies - Longbow Research
On the maintenance at Illinois Cement is it possible to quantify the productivity improvements you hope to generate there?
Steven Rowley
Yes it is. When we put the expansion project in place a year ago we had our assumption as to the fuel [inaudible] versus the kiln a little bit backwards. Therefore we had to change the flow from one coal mill to another. The reason for doing that is to allow us to burn a much lower priced fuel, petroleum coke, and the mill we had to [inaudible] was just too small to grind and very hard petroleum coke products that we wanted to burn in the [inaudible]. So it will be a dramatic reduction in our fuel costs once that coal mill flip flop occurs. So that is what we are achieving now and we do have 100% petroleum coke now on the [inaudible].
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