The Katrina Affect On Steel
By Jim Stavis
By now, the story of Hurricane
Katrina and its unfortunate aftermath
have been widely documented and
detailed. When all is said and done,
this will be the worst natural disaster
to strike in our nation’s history. The
story that will long be remembered
will be the manner in which the
government handled the crisis above
and beyond the actual hurricane
itself. President Bush has been the
unlucky recipient of both 9-11 and
now Katrina. The question here is
what, if any, affect will Katrina have
on the steel industry.
The biggest question is how
quickly the Port of New Orleans will
recover from the Hurricane’s
devastation. Steel related products
are the major commodities handledby New Orleans. Last year imports
of pig iron was 4.95 million tonnes,
iron ore 3.9 million tonnes, coke 2.9
million tonnes and steel 3.33 million
tonnes. An extended closure of the
Mississippi could have severe
consequences for manufacturing in
the Gulf States, as well as create
price increases for basic items.
As to the affect here on the west
coast, it remains to be seen. Since
the Gulf is a significant port of entry
for imports, it may limit the amount
of foreign steel that we see coming
into the country. This will have an
upward affect on steel pricing in
general. In the short-term it may
bring more steel products into the
West Coast markets since the Gulf
ports will be closed off. This would
pertain to any shipments that were
on the water when the disaster
occurred.
The shortage of raw materials
will certainly affect the steel
producers on the east coast and
southwest, as well as the base of
manufacturers. Typically disasters
such as these have a stimulating affect on the economy due to
rebuilding efforts supported by
government aid and insurance.
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For
many reasons, that may not be the
case in New Orleans and
Mississippi. Because of the socioeconomics
of the areas hit, the
rebuilding may take a considerably
greater period to accomplish. And
though there will be a significant
need for steel and building
products to rebuild the
infrastructure, it will be a lengthy
process, one that may take years to
accomplish. Many of those that
were washed out in the hurricane
will never return to New Orleans
which will have a negative impact
on the recovery.
I have been to New Orleans on
just two occasions. It truly was one
of the most unique cities not only in
our country, but in the world. It is
sad to think that a great American
city died in one devastating day.
And yet they always knew that this
day might come. The way the city
was engineered with its complex
water levy system and being below
sea level, the danger for disaster
always existed. But is it any
different from the earthquakepotential for disaster that we Californians have learned to live with? Only
time will tell.
I can be e-mailed at jstavis@paragonsteel.com. |
