Low river levels slowing scrap flow

Aug 21, 2012 | 02:39 PM | Sean Davidson

Tags  ferrous scrap, river levels, transportation, barges, Sean Davidson

NEW YORK — Low water levels on the lower Mississippi, Ohio and Arkansas rivers and related system closures have adversely impacted barge shipments of scrap metal, contributing to swelling costs and fueling concerns of regional scrap shortages.

Drought-like conditions along key transportation waterways have led to an increase in freight costs for scrap as barges are now being loaded with fewer tons, market participants told AMM, and some scrap deliveries to steel mills along affected rivers have been delayed.

"We’re seeing an impact already. We are having to load barges a little bit lighter so that the barges can move," one source said.

Barges traversing some river routes in Tennessee that typically carry a load depth of 10 feet are now loading only to 9 feet, and talks started this week about lowering the load depth further to around 8.5 feet, AMM understands.

"It means you are losing tons that you can load, so that is taking the cost per gross ton upward. So far the barge lines have not really come back with any kind of good ideas. They are not really willing to lower the minimums, so now costs are higher," he said. "When you were first loading 1,400 tons and now have to drop down to 1,250 tons, that’s a price increase of anywhere between 55 cents and $1.40 per ton."....