Barge disruption looms on Mississippi, Illinois rivers in 120-day closure

A 120-day closure of four Illinois dams scheduled for 2023 will disrupt barge shipments and have potentially both negative and positive impacts on scrap and finished steel products from Canada to Texas

Brandon Road, Dresden Island, Marseilles and Starved Rock lock and dams are closing from June 1 to September 30 for necessary maintenance.

The locks connect Lake Michigan with the Mississippi River and will choke off anything that needs to ultimately move between the Illinois and Mississippi Rivers.

“We are already planning for it,” a southern metal recycler said, adding that it will rely on rail shipments during the closures.

The Mississippi River is becoming a perennial challenge. In 2022, river traffic was halted by record low water, with one source indicating 1,600 barges were stuck.

The decision to quit shipping scrap metal and steel products by barge may actually start in May because barge shippers cannot afford to have a barge of metal trapped on the river for four months and it must be well on its way before June 1, the southern recycler said.

A source on the Mississippi River said that it will be even earlier. “Most of the barge lines don’t want their barges going North into Chicago after April and they want all their barges off the Illinois River by the end of May before the river closes.”

Large steel producers are likely to redirect their private fleet of cars to scrap dealers in Chicago and import more primes for its southern mills from places like Mexico to compensate for northern tons being choked off, an Ohio Valley recycling source said.

Shipping by rail, which averages 80 gross tons per car, instead of river barges, which average 1,200-1,500 gross tons per car, will place more stress on rail capacity.

Scrap sellers who do not have rail access may be forced to sell at a discount because they will be landlocked without rail options, according to a Midwest recycler.

In 2022, Brandon Road lock was closed for just 20 days and there was concern that selling opportunities would be diminished, with some scrap trapped and unable to ship out of the region.

In Chicago, the impact of the 2022 closure remains hazy because the prime scrap market — which sends plenty of No1 busheling from Chicago to Arkansas and Alabama — was in a down cycle for most of the year. Fastmarkets’ assessment of the steel scrap No1 busheling, consumer buying price, delivered mill Chicago, fell every month from April through November.

During the pending 2023 closure, some ferrous scrap tons stuck in Chicago, for instance, could face lower selling prices while competition for imported primes from Mexico could raise these prices.

All commodities that rely on the waterways are going to be impacted, according to a finished steel buyer. The steel buyer receives material from Texas into the Midwest by water and will have to begin planning for the disruption, he added.

The reopening of the locks will be just in time for grain season which is known to be a period where barges are in short supply and rental costs are high.

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