The COVID-19 lockdown and the rebound from it had already sent steel prices on a wild ride as the steel industry, like other industries, struggled to second-guess and keep up with the sometimes unpredictable decisions of consumers and businesses. Just before Russia’s invasion of Ukraine, steel prices were falling slightly from their spikes last year.
The Ukraine crisis sent the prices of all commodities, many of them carried by barge, upward again. Russia and Ukraine are both major exporters of steel, wheat, vegetable oil and fertilizer, and Ukraine is also a major corn exporter. The prices and supply of all of these commodities have knock-on price effects across a wide range of goods.
Similarly, the skyrocketing price of steel has slowed new barge construction, according to River Transport News. As contracts are fulfilled that had locked in lower steel prices from months ago, barge-builders and boat-builders will undoubtedly study the steel market before committing to new building decisions.
Future steel prices will also no doubt be kept high by slackening supplies of imported iron, ore, pig iron and nickel, a key component of stainless steel. Trading in nickel on the London Metals Market has been chaotic and was closed down for a week as nickel prices soared. Technical glitches in reporting nickel prices reportedly made the situation worse, and nickel trading was again shut down after attempts to reopen.
Many countries will have to look elsewhere to replace disrupted Russian or Ukrainian commodities, including to the Lower Mississippi River and the port of New Orleans for grains and other barged goods. Demand for southbound barged commodities may increase, while incoming commodities could decrease temporarily, perhaps resulting in a barge traffic imbalance.
While all these commodities issues will no doubt contribute to higher prices and inflation for all of us, barge rates have also gone up. The USDA’s barge figures and charts show a sharp spike in barge rates shortly after the invasion, already rising above last year’s barge rates at the peak of harvest season. Domestically, the flood of spending related to construction projects funded by the Infrastructure Investment and Jobs Act will soon be sending barge loads of aggregate, rock, steel, turbine blades and other materials across our rivers and waterways.
Like shifting buoy markers on a river after a storm, the economic signposts have changed, yet the way ahead is still clear for the barging industry to continue to contribute toward rebuilding our infrastructure and keeping our logistics strong, not only for our benefit but the world’s.