Update on Houston Hurricane Impact

The chaos to commerce continues in the Houston area as a result of flooding and damage from Hurricane Harvey. Texas Governor Gregg Abbot estimates damage to the area will be in the range of $150 billion to $180 billion.

A quick survey of steel service centers and distribution centers in the area found that many escaped damage from the high winds and rain and are operational. Those who were not as lucky are dealing with some flooding and minor damage. The full impact of the hurricane is yet to be determined.

Majestic Steel USA in Houston reports no damage from the storm and is open for business. CFO Susan Suvak told SMU, “While several of our associates were impacted, our facility is fully operational.”

Employees at JSW Steel (USA) plate and pipe mill orchestrated a controlled shutdown of machinery and electrical systems, as well as building slag dams to contain water and move it away from the facility. JSW avoided damage thanks to a small team of courageous employees who remained at the mill for six days.

Voestalpine’s direct reduction plant in Corpus Christi experienced only minor damage. The company has pledged a donation of $350,000 in emergency funding to help those affected by the storm.

The governor of Georgia declared a state of emergency on Aug. 30 and suspended federal rules and regulations limiting hours of operation for commercial vehicles in order to facilitate emergency relief efforts in the South. The suspension will last three weeks or until emergency conditions cease to exist.

The Federal Motor Carrier Safety Administration on Sept. 1 declared a regional emergency for 26 states and the District of Columbia for motor carriers and drivers transporting fuel products. FSCMA expects a shortage of fuel products, including gasoline, diesel, aviation fuel, propane and home heating oil “due to refinery delays and interruption of delivery through pipelines as a result of damage from Tropical Storm Harvey.” As a result, hours of service and other regulations are suspended for those carriers transporting fuel products in and out of the region.

A temporary waiver of fuel tax requirements was issued in Texas by the governor to speed up delivery of relief supplies to the state and reduce costs for trucking firms.

ABF Freight is reporting continued service disruptions to and from the Houston area due to flooding. As of Sept. 5, service lane interruptions are reported from Dallas, Houston, Little Rock and San Antonio. Limited service is available from Avritt Express servicing Austin, Corpus Christi and San Antonio, and Baton Rouge.

The Port of Houston had minimal damage and has resumed loading and unloading operations for containers. Breakbulk terminals on the upper Houston Ship Channel remain closed to vessel traffic, but are resuming landside operations, reports JOC.com. A sunken drydock in the upper shipping channel is blocking the main port of Houston City Docks. Salvage operations are under way along with removal of debris in the channel.

The Port of Houston is the primary port for fuel exports from the U.S. and one of the largest receivers of steel imports. Limited barge traffic has resumed to oil refiners in Port Arthur, Texas.

Rail lines in the area continue repair work on flooded tracks in the region and are beginning to restore service. Kansas City Southern Railroad declared a force majeure and embargo on areas impacted by the hurricane on the KSCR network. (Force majeure is a clause found in construction and supply contracts that exempts contracting parties from fulfilling their contractual obligations for causes that are beyond their control.)

Joseph Pickard, chief economist of the Institute for Scrap Recycling Industries, said it is difficult to predict how the many pieces of the economy will react as the Houston area recovers. But steel inventories damaged by water, as well as thousands of homes, commercial buildings and vehicles, should add to the availability of scrap, which will be needed as demand for steel spikes during the reconstruction process. “Heading into September, people were pretty optimistic about where the ferrous scrap market was headed. The expectation is that Harvey will add even more of a bullish character to the ferrous scrap market this month,” he said.