Steel pipe yards in USA inaccessible due to Houston flooding

Steel pipe businesses in the southern US state of Texas are warning customers that inventory and freight disruptions are likely for at least a week as a result of the historic flooding in the Houston region.

The former Hurricane Harvey continued to drench the area on Tuesday August 29, with forecasters predicting rainfall totals of 35-50in (about 90-125cm) by the time the storm departs.

With trucking operations impossible and homeless employees coping with the problems of finding safe shelter for their families, pipe yards will struggle to operate this week and perhaps next week, managers reported.

Some are not even trying to reach their material due to the perilous, multi-day flooding.

“The enormity of the situation is incomprehensible if you are not here to see it,” one Texas pipe distributor told Metal Bulletin sister title AMM on August 29. “As for pipe, we are unable to access the third-party coaters’ yards that store the bulk of our material. One yard is trying to open tomorrow, but if things continue the way they are now, that is in jeopardy.”

When they ultimately do reach their pipe, it may be in various states of degradation.

One energy tubulars trader said that most pipe on the ground that has been flooded by fresh water will only need to be power-washed and have its threading cleaned.

Other pipe may have endured interior rust and scaling because only the outside received a protective coating, a second Texas distributor said. They suspect that cold rolled coil is most vulnerable to water damage if it has been stored near ground level.

“What would harm the pipe is if the yards got flooded by salt water. That would [require] more than a power-wash. There is a special treatment for salt water,” the second distributor said. “A lot of the pipe yards are located along the bayous and tributaries [of rivers], but I haven’t heard of any pipe yards that got salt water.”

Some of the region’s mills and finishing facilities said on August 28 that they were closing for the week. Recyclers said that the flood disaster will probably result in higher scrap prices.

The port of Houston remained closed on August 29 and the port authority was evaluating whether it could safely reopen on August 30.

In Corpus Christi, Texas, where destruction was wrought more by the hurricane winds, Voestalpine’s direct reduction iron (DRI) plant only had minor damage to buildings, fences and lamp-posts, the company said. Repairs are expected to be complete by the week of September 4.

The Austrian parent company has pledged “hundreds of thousands” of dollars in financial support for affected employees.

Voestalpine said that a gauge on a tower atop the Corpus Christi plant measured a wind speed of 168mph.

The next obstacle for the steel supply chain will be the snags in ground transportation. Only after the floodwaters recede will authorities know the scope of the damage to highways, and how long it might take to reopen main transport arteries.

“With the number of road closures in the Houston area, it really does not matter when [pipe yards] open. You still cannot get anywhere,” the first distributor said.

The second distributor noted that active shale-oil drillers in the Permian and Eagle Ford basins store some pipe near their operations, but a lot of their inventory lies in Houston and will be stuck there for a while.

“What is going to hold up commerce is the inability of trucks to get in and out,” the second distributor said. “That is going to hold up commerce even if the pipe is not damaged.”

The pipe yards also will struggle to regather their workforce. Aside from the commuting challenges, tens of thousands of Houston residents have been forced out of their homes.

Because some New Orleans residents found new homes in Houston after the devastation to their city from Hurricane Katrina in 2005, some Houston residents will end up living in new towns, at least temporarily. Some of those who stay may take new jobs in the clean-up and rebuilding effort.

“Construction is going to be crazy, and that industry tends to rob labour from the pipe yards,” the second distributor said. “The pipe business is up and down, and construction work is more stable and not as back-breaking as the pipe yards. We are going to have a huge shortage of labour for a while.”

Grace Lavigne in New York contributed to this report.

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