Brutal Winter Weather Disrupts Steel Operations

Freightwaves, the trucking industry information provider, reported Tuesday that portions of many interstates, as well as U.S. and state highways, have been shut down. Truckers can expect delays from Texas and Oklahoma to the Ohio and Tennessee valleys.

The Union Pacific, CSX and BNSF railroads reported that the extreme winter weather and sub-zero temperatures continue to affect rail operations, including personnel and equipment. Customers can expect delays of 48-72 hours on deliveries, they said.

Steelmakers in many part of the country have been tormented by the snow and ice. Operations at some Nucor facilities have been affected, but the company anticipates no significant delays, said a spokeswoman. “The serious weather conditions many parts of the country are experiencing is have some impact on Nucor facilities, particularly as it pertains to transportation,” she said. “Individual Nucor divisions are making determinations about operations and shipping products based on weather conditions in their area in order to ensure the safety of our customers, carrier partners and teammates.”

Texas—not accustomed to such winter weather—is among the hardest-hit states. “I don’t think that anything is moving in Texas right now,” one manufacturer source said. “Our plants in Texas were closed yesterday and again today. And with another round of snow coming tonight and not getting above freezing until Friday, it’s probably going to be next week before anything really gets going again our way.”

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Priefert Manufacturing produces ranching and rodeo equipment at plants in Mount Pleasant and Fort Worth, Texas, and in Benton, Ark.  Snow, ice and temperatures of -4 degrees burst water lines and forced the company to shut down operations to assess the damage to machinery. “And the worst is yet to come, with gas lines freezing, rolling power blackouts and more snow on the way,” said Supply Chain Vice President Chris Shipp. “So much for Texas wind energy. It’s 25% of our grid and half of them are frozen. Our areas won’t be above freezing temperatures until sometime Saturday.”

Added another service center executive: “Texas is bad. We’ve had no power at either of our plants since Sunday evening, and I don’t expect any until Thursday or Friday. Ninety-five percent of our customers are in the exact same boat.” 

Chicago was also hard hit by lake effect snowfall that totaled as much as 18 inches in some spots. Alliance Steel’s service center in Gary, Ind., is just a short distance from Lake Michigan. “Only about 50% of our plant employees were able to make it in today, so we will be stifled trying to run all of our lines,” said Alliance President Andy Gross. “We are hoping that our second shift will bring the normal crews in to run the lines. Deliveries and shipments are another story. Our lots are clear, but I’m not sure what the shipment numbers will look like until tomorrow.”

Even if it turns out that steel production is not significantly impacted, the big snowfalls and ice storms will result in logistical snarls, market participants said.

“Trucking is definitely affected by the weather, but I have not heard of [sheet and plate] production being affected,” an Ohio Valley service center executive said.

Still, some sources said the talk of extreme weather in their areas has proven to be mostly hype—not unlike predictions about steel prices skyrocketing or crashing.

“We were supposed to get 8-13 inches in Youngstown last night and only got 2 inches of ice with no snow. Pittsburgh was expecting 6-8 inches of snow and got rain,” one western Pennsylvania service center exec said. “Meteorologists should predict steel pricing—they’d have about the same accuracy.”