Houston first-half steel imports down sharply amid energy sector freeze

Houston first-half steel imports down sharply amid energy sector freeze

Dockworkers handling breakbulk cargo at a Port Houston public terminal. Photo credit: Port Houston.

Breakbulk steel and pipe tonnage at the Port of Houston plummeted more than 45 percent in the first half of the year as project activity in the oil and gas sector came to a near standstill amid the COVID-19-driven collapse in oil prices.

John Moseley, chief commercial officer with the Port of Houston, told JOC.com Houston is also seeing a dip in tonnage related to petrochemical plants following a multi-year, multi-billion-dollar Gulf Coast buildout underpinned by cheap gas feedstock from the formerly booming shale fields. “The first wave is completed, and we'll see if any more modules or components come up for a second wave,” he said. 

Total tonnage through Houston's public facilities from January through June was 20.8 million US tons (18.9 million metric tons), down about 5 percent from 2019, Moseley said. Of this, about 1.3 million US tons (1.18 million mt) was breakbulk steel and oil country tubular goods (OCTG), or pipe, down almost 50 percent from 2019's 2.4 million US tons (2.2 million mt) during the same period. 

West Texas Intermediate (WTI) oil was at $41 per barrel on August 3, a recovery from April's precipitous slide, but still below the $50/barrel  that Moseley said will trigger an influx of OCTG and related project cargoes such as blowout preventers. 

According to IHS Markit, parent company of JOC.com, that $50 price is not coming anytime soon. IHS Markit's Energy Advisory Service said in an update Thursday that while oil markets have returned to “relatively stable ground” since the early days of the pandemic, benchmark Dated Brent is unlikely to pass the $50/barrel mark until the second half of 2021 — and that recovery is dependent on the course of the pandemic and whether Saudi Arabia and its OPEC+ partners continue to work together to manage supply. 

IHS Markit expects Brent to average $40 to $47/barrel through the first half of 2021, barring a large second wave of the coronavirus disease 2019 (COVID-19) that drives further widespread economic shutdowns. WTI, a benchmark for US oil prices, tends to lag Brent. 

A rising wind 

During the first six months of 2020, Houston handled 40,060 US tons (36,342 mt) of automotive cargo, down 44 percent from the 71,349 US tons (64,727 mt) handled during the first six months of 2019. However, general cargo tonnage — non-steel breakbulk including wind turbines, machinery, and other types of project and breakbulk cargo — rose 1.6 percent for the period, from 384,333 US tons (348,661 mt) in 2019 to 390,664 US tons (354,404 mt) in 2020. Moseley pointed to a bump in wind imports as the bright spot there. 

Cliff Kuhfeldt, Houston-based senior project cargo manager at multipurpose carrier G2 Ocean, told JOC.com that in addition to their typical forest products cargo they, similar to other multipurpose and heavy-lift carriers, are benefiting from demand for wind energy components in the US Gulf. Oil and gas and petrochemical projects are clearly “depressed,” and liquefied natural gas (LNG) projects are being delayed, he said. 

Per Petersen, Houston-based president of BBC Chartering USA, also said that wind energy is “the big driver” in the Gulf, increasing despite the downturn. “That's what keeps us busy here on the coast,” he said. In addition to Houston, the Texas ports of Brownsville, Beaumont, and Corpus Christi are busy with renewables-related cargo, he said. 

BBC has begun a Caribbean liner service and is currently adding those calls to existing liner sailings to the east and west coasts of South America, Petersen said. “We are concentrating on Colombia, Trinidad, Guyana and Suriname,” he said. On the tramp side, bulk cargoes such as grains dominate backhauls out of the Gulf. “Eight out of 10 ships we get away from here are loaded with bulk,” he said. 

Despite the pandemic-driven tonnage decline, “we remind ourselves that we are in it for the long game,” Moseley said. The US House of Representatives just passed a water resources development act that includes funding to take the Houston ship channel from 530 feet wide to 700 feet wide, easing the movement of the largest container carriers and tankers. Senate approval is pending, but it's potentially “a big win for the industry,” Moseley said. 

Contact Janet Nodar at janet.nodar@ihsmarkit.com and follow her on Twitter: @janet_nodar