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'Unseasonable' weather aids metals sector shipments

Keywords: Tags  Metals distributors, Port of Indiana, reinforcing bar prices, St. Lawrence Seaway, John Ambrosia

With winter winding down, many across the country are left wondering when, if ever, the annual rites of passage of freezing temperatures and snow—or frost and severe storms in the South and on the West Coast—are going to make an appearance.

The lack of a “normal” winter, let alone a severe one, has had an impact on the metals sector, affecting prices and the movement of goods. And while there have been some spots of severe weather in some regions, so far they have been isolated and the effect largely muted.

The continental United States mostly has been spared from Old Man Winter. As a preamble of what was to come, the National Climatic Data Center (NCDC) reported that November was the 25th warmest in its 117 years of recordkeeping, with 13 states in the Northeast and the upper Midwest recording a top-10 warmest November on record and none suffering a top-10 coldest November. Approximately half of the United States had temperatures at least 5 degrees above average during December, the NCDC reported, and January was the third-least snowy on record, according to the Global Snow Lab at Rutgers University. (Records for the amount of ground covered by snow go back to 1967.)

So why was the first half of winter so warm?

It featured the most extreme configuration of the jet stream ever recorded, according to the National Oceanic and Atmospheric Administration. Winter conditions in the upper tier of the United States often are determined by the strengthening of pressure systems around the Arctic. Cold air that is normally trapped flows southward, resulting in extreme winter conditions for the United States. This season, the opposite occurred.

This is all a major change from a year earlier, when large metropolitan areas, including New York City and Chicago, were pummeled with snow and cold temperatures. The weather impeded the flow of scrap across the country, slowed down exports leaving river and port systems, and sometimes brought outdoor work to a complete stop.

This year is different. For example, the Port of Indiana at Burns Harbor welcomed a rare January arrival of a Great Lakes vessel to its docks Jan. 23. The James Kuber carried about 16,000 tons of local corn from Cargill Inc. to an ethanol plant in Sarnia, Ontario.

“This is the first lake vessel that we’ve had call on the port in January since 2006,” said Peter Laman, port director at Burns Harbor. “The mild weather has kept ice from forming on the lakes, which generally limits shipping this time of year. The international shipping season officially closed (in December), but the port is open year-round. Businesses can still ship and receive cargo on river barges or lake vessels, as long as the weather and ice allow them to get through.”

Locks on the St. Lawrence Seaway were closed for the winter on Dec. 30, and the Seaway is scheduled to reopen to ocean vessels in late March. Weather permitting, vessels can continue to run limited routes within the Great Lakes that do not pass through locks.

The mild weather had other repercussions as well. Some metal price increases were announced mid-winter, coming at a time of surprisingly robust demand, sources said, with one distributor saying he was swamped with business in part because the milder-than-expected winter created a little more demand than he had anticipated. Some buyers also might have placed orders ahead of anticipated further increases, he added. “Everybody was waiting, trying not to buy, thinking the price might go down. And then it was, ‘Oh, shoot, it’s not going down. I’ve got to buy right now.’”

Reinforcing bar prices rose, with Tampa, Fla.-based Gerdau Long Steel North America increasing prices for February shipments. A source at another rebar distributor said he wasn’t entirely surprised by the increase announcement, given an earlier hike in published scrap prices, but he questioned claims about improved demand, arguing that any tightness in the market might result instead from mills reducing supply to better match lower construction levels. “Yes, it has been a milder winter. But, of course, you’ve also got a lackluster economy,” he said.

But not all the weather news was good. In mid-January, a snowstorm hit the Pacific Northwest. Seattle-area distributors and metal companies had to work their way out of a two-day barrage of snow and freezing rain that temporarily halted shipments and deliveries, and more than 250,000 homes and businesses in several Washington counties lost electricity. By mid-February, there were still some delays related to other weather.

A severe storm system that moved across central Alabama, Mississippi and Tennessee in late January created more serious problems. In the early hours of Jan. 23, Marmon/Keystone LLC’s branch in Birmingham, Ala., was destroyed by a tornado. “Thank goodness no one was on site, so no one was hurt,” J.T. “Tim” Spatafore, president of the pipe, tube and bar distributor, told AMM. Plans are being made to rebuild the Birmingham plant, Spatafore said.

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