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WINNIPEG, Manitoba, April 30 (Reuters) – The biggest ice cover on the Great Lakes in decades is backing up shipments of everything from Canadian grain to U.S. iron and steel in one of North America’s most important economic regions.
The frigid winter and cool spring have hurt companies like Cliffs Natural Resources Inc and United States Steel Corp, and also hampered efforts to clear an unprecedented buildup of grain and oilseeds in Western Canada.
The Great Lakes region accounts for nearly one third of combined Canadian and U.S. output, jobs and exports, according to a report by Bank of Montreal on April 25.
Pittsburgh-based US Steel expects reduced second-quarter income from operations due to limited production and slower shipments of raw materials and finished goods, said Chief Executive Mario Longhi on a conference call on Wednesday about first quarter results.
“Ice conditions in the Great Lakes, and particularly Lake Superior, are the worst we have seen in over 30 years,” Longhi said.
Vessels traveling across Lake Superior require an escort by ice-cutting equipment, limiting the number of ships and extending travel times, he said.
Cliffs Natural Resources, based in Cleveland, Ohio, said that the Great Lakes experienced more than 70 days of -30 degrees F (-34.4 Celsius) temperatures during the winter, making it hard for Cliffs to ship iron ore pellets to North American steel makers. Some steel makers have had to reduce or idle production, Cliffs Chief Executive Gary Halverson said on Friday.
The late ice cover compounds a backlog of Western Canadian grain, which piled up due to the frigid winter and record harvest overwhelming Canadian National Railway Co and Canadian Pacific Railway Ltd, which move crops to port.
At Port of Thunder Bay, Ontario, 20 vessels are waiting to load grain, with about two-thirds of Lake Superior covered in ice, said the port authority’s chief executive Tim Heney.
Heney expects a surge of activity for the next three weeks to clear terminals that are nearly full of grain after the port opened to navigation on its latest date on record. By then, the remaining shipping restrictions on Lake Superior should be lifted, Heney said.
Grain handlers including Cargill Ltd, Richardson International Ltd, Viterra and Parrish & Heimbecker own storage terminals at the port. Some coal shipments are also delayed, Heney said.
Vessels using the St. Lawrence Seaway, which connects the Great Lakes with the Atlantic Ocean, restricted vessels in early April to one-way traffic in certain areas and navigation during daylight only, said Andrew Bogora, spokesman for the St. Lawrence Seaway Management Corp.
The Seaway is now free of ice, but shipping volumes in April are likely to be light, he said. (Editing by David Gregorio)
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