Frozen may be an enormously popular film, but several videos of ice-encrusted ships on the US Great Lakes represent a horror show for much of the steel industry.
Up to four-feet thick sections of solid ice have mired huge ships from delivering essential coal and iron ore to steel mills. One video, shot as recently as April 12, showed the lakes had a long way to go before thawing, with the ice still 15-20 inches thick in some spots — enough to stall a big ship. (We were shown that video privately, so can’t link to it. However, a CBS News story that captures a few of the icy images can be seen here.)
Platts’ Pittsburgh reporter Michael Fitzgerald first broke the story on March 31 that ice in the Great Lakes was causing problems after the coldest winter since 1993-94.
The US Coast Guard began ice breaking on December 6 — the earliest on record, according to Glen Nekvasil, vice president of the Lake Carriers’ Association. But the ice was so thick, it stressed the capability of the Coast Guard’s nine ice breakers.
By April 2, US Steel in a letter to its customers, said that it temporarily curtailed blast furnace operations at its Gary Works in Indiana, “due to unforeseen and unprecedented ice conditions on the Great Lakes that is delaying the transportation of critical raw materials.”
Soon after, several other steelmakers independently announced price increases on sheet steel products, anticipating a tight supply of finished steel. The market responded, with hot-rolled coil rising $20/st since April 4 to $670-680/st ex-works Indiana, according to the Platts April 16 daily assessment.
Blog entry continues below…
|Platts steel podcast:
US steel sheet market still aching from harsh winter weather
|Mike Fitzgerald, Platts editor, explains how the transportation of iron ore has been delayed by icy conditions in the Great Lakes region, which in turn has kept steel producers from operating at full capacity without the raw materials they require.|
The opening of the Soo Locks at Sault Ste. Marie, Michigan on March 25 usually signals the start of the Great Lakes’ shipping season – but the locks still had not cleared the first vessel as of April 3, according to the Lake Carriers’ Association.
And it wasn’t until April 4 that the first ships made it through the Soo Locks, as chronicled in this video by Mikel Classen.
(Classen lives in Sault Sainte Marie, Michigan. He works as a writer, photographer and publisher, and posted the video publicly on YouTube.)
Starting the week of April 6, the first vessels of 2014 carrying iron ore to the US Steel Gary sheet mill in Indiana started arriving, but the company said the mill was still operating at limited capacity. A spokeswoman for US Steel said two ships had arrived from Duluth, Minnesota.
ArcelorMittal, with major mills on the Great Lakes, and Severstal’s Dearborn plant, were also said to be encountering delays in iron ore deliveries.
“When does a steel mill ever run out of iron ore?” asked an incredulous steel-buying executive with a big service center late last week. “Never. It’s not supposed to happen.” But he agreed that weather had indeed created a severe supply squeeze and that some integrated steel mills “might not be back in the spot market until the summer.”
Another major steel service center told Platts that General Motors had jump-started its crisis center for procurement, expecting slow sheet steel deliveries and concerned about supply.
A good number of steel-buying sources in the US all concurred — with some acknowledging this is now the tightest sheet steel market since 2004.