Open-barge supply for scrap tightens, rates seen due for reversal

Nov 01, 2010 | 01:36 PM | Sean Davidson

Barge rates, which increased during the past month due to an early grain harvest, will correct by month's end, barge operators and brokers said.

Northbound barge rates have dropped 20 percent to $16 per ton from $20 at the start of October, and southbound rates should see a similar downward spiral in the next few weeks, sources said.

However, rejuvenated coal exports have captured most of the available open barges, and scrap metal movers will need to rely on covered barges next year, with coal exports also seen steady.

Covered barge prices, typically $6 per ton higher than open barges, surged in September as barge operators chased the more profitable agricultural sector. While most scrap metal companies tie into annual or longer-term contracts to guard against fluctuating harvest tags, those on the spot market were left chasing operators that had any barges for 20- to 30-percent price premiums, companies said.

Adding further to the constraint was the closure of a key Ohio River passage. Repairs on Lock 52 in Kentucky were completed Thursday. The extensive bottleneck, which created up to three-day delays, is expected to clear within the next week and make more barges available.....