NAS declares force majeure, warns of delays
North American Stainless (NAS) sent a letter to its customers on Thursday July 8 declaring force majeure due to a lack of industrial gasses that are critical for operations.
“Be assured that NAS is working diligently to make alternative arrangements in order to perform its obligations under the agreement as soon as feasible,” according to the letter signed by Chris Lyons, vice president, commercial operations.
The declaration was caused by the failed delivery of industrial gases (such as oxygen) from a supplier, which itself has declared force majeure, according to the company.
NAS subsequently announced “the suspension of all performance obligations and indefinite delay of any and all further deliveries” from its facility in Ghent, Kentucky.
Other factors contributed to the declaration, including outages at air separation units owned by other suppliers and a lack of trucking facilities available to supply industrial gasses in necessary volumes.
The company had not responded to Fastmarkets’ request for comment at the time of publication.
Distributors and consumers who rely on products from NAS were disappointed and dismayed.
“NAS is by far the biggest stainless producer [in North America],” a northern distributor said. “The impact of this is greater because they are so dominant.”
The indefinite delays will complicate a market that was already struggling with extended lead times, delayed deliveries and agreed allocation shortfalls, according to the market participants.
“Lead times are out 12-15 weeks, but actually deliveries average three to four weeks later,” a midwestern service center said. “The NAS force majeure announcement... will impact delivery and allocations specifically over the next two to three months.”
A West Coast distributor described the current stainless market, which is hobbled by inadequate supply, as “chaotic.”
NAS customers may turn to Outokumpu, the second-largest stainless steel producer, the northern distributor said.
According to a July 9 notice to customers, however, Outokumpu’s lead times were listed as “inquire” for the majority of products, while the remaining products that had firm lead times were dated October 4-11.
Many in the market wanted to know more about the implications of the force majeure.
“When you shut a furnace down, at minimum there will be repairs related to the cool down like broken pipes, bricks, et cetera,” according to a southern distributor. “Should they alleviate their [industrial] gas shortage... they will have major rebuilds facing them.”
Fastmarkets’ monthly assessment for stainless steel 304 cold-rolled sheet, fob mill US was $168.25 per hundredweight ($3,365 per short ton) on Thursday June 10, up 5.16% from $160 per cwt on May 10. Fastmarkets will publish its next assessment Monday July 12.
The assessment for stainless steel 304L cold-rolled sheet, fob mill US was at $170.25 ($3,405 per ton) on June 10, up 5.09% from $162 per cwt on May 10, while the price for stainless steel 316L cold-rolled sheet, fob mill US rose to $216.50 per cwt ($4,330 per ton) on June 10, up by 5.35% from $205.50 per cwt previously.