Post-Katrina steel price outlook – U.S. market

Post-Katrina steel price outlook – U.S. market

Hurricane Katrina has rendered all analyses of the past few weeks virtually irrelevant. As one US-based steel trader aptly put it: all bets are off! Katrina has wreaked havoc on New Orleans, the logistical center of steel and raw material distribution in the US. Ships have been diverted to other ports, which will undoubtedly experience long delays from the added congestion. Barge traffic is in disarray. Reports are surfacing that close to a hundred barges sunk in the storm. Lost cargoes include various steel items and pig iron loads. Furthermore, auto bundles increased by almost $100 per metric ton, a harbinger of significant scrap price increases and, consequently, higher raw material surcharges from US steel mills. Add in the chaotic oil/gasoline situation and you have a very volatile market situation. There are already reports of significantly higher price offers for galvanized sheets, hot rolled coils, and even for some spot offers in long products. Looking forward, the initial days after Katrina could all be a panicked market reaction. But the scrap increase is tangible evidence that the full extent fall of Katrina’s impact may only be beginning.