A labour strike involving 360 Canadian employees of St. Lawrence Seaway Management Corp. is beginning to disrupt a variety of steel shipments into interior North America, Kallanish hears from market participants in the region.

Now effectively shut down in Canada, the seaway’s network of locks, canals and shipping channels is normally a vital conduit for the ferrous supply chain in both directions, facilitating domestic and global trade. The strike, which started last weekend, is halting vessels containing iron ore and scrap for export, imported steel and some shipments within the US/Canadian market. The goods on the bi-national artery also include breakbulk or containerised slab, bar, rod and manufactured foundry and steel products.

Because the strike by the Unifor labour union covers only the Canadian marine infrastructure, iron ore movement from Minnesota intended for US domestic mills is not directly threatened at the moment, according to Cleveland-Cliffs. The company operates both mines and mills in the Great Lakes region, upstream from Ontario’s Welland Canal and the St. Lawrence River.

“Cleveland-Cliffs’ transportation is all intra-lakes and no seaway exposure,” the Ohio-based company explains in a note to Kallanish. “Only companies that export pellets are being affected, and that’s not Cliffs’ case. Also, we should expect to notice the absence of imported steel reaching the deep lake ports like Cleveland, Detroit, Duluth. No seaway, no imported steel.”

The labour dispute does have the potential to disrupt US domestic iron ore transport eventually, says James Weakley, president of the Lake Carriers’ Association (LCA). Most of the LCA’s members operate bulk vessels that ply the domestic routes on the lakes, carrying ore, limestone, coal and other raw materials. The system handles a five-year average of 44.5 million net tons of iron ore annually.

Long recognized as a choke point in need of expansion, the Soo Locks connecting Lake Superior with its sister lakes could become extremely busy at the conclusion of a strike, delaying the ore boats. The US Army Corps of Engineers operates that segment of the broader Great Lakes St. Lawrence Seaway System. Looming on the horizon is the seaway’s annual winter closure, when waterways are unnavigable due to ice cover.

“Our biggest concern is that traffic will back up at the US corps locks at the Soo once the strike settles and there is more of a mad dash for cargo by the impacted vessels,” Weakley tells Kallanish.

Talks between the Canadian seaway management and the labour union are scheduled to resume Friday. There is pressure on Canada's government to intervene because farmers rely on the seaway to export grain at this time of year. The seaway also is important to the automotive supply chain on both sides of the border.

“While we don’t take sides in the dispute, we do demand that the government of Canada demonstrate greater urgency in bringing this to an end,” the American Great Lakes Ports Association says in a statement. “A 2020 economic analysis determined that a two-week closure of the seaway would result in the loss of more than 19,000 jobs in the United States and Canada. With a week now wasted, and many days of negotiations still pending, these job losses are certain.”

The port association says the steel import volumes carried via the seaway are mostly semi-finished goods including slabs, plates, bars and coils from Europe or South America. Some steel market participants speculate that a prolonged closure could modify those trade flows and, therefore, have an impact on pricing.

“The effect for US/Canadian importers and distributors relates to arriving cargoes of finished steel through the Welland Canal,” explains a Great Lakes service-centre operator. “That would be both product from the Toronto/Montreal area and all imports from the Atlantic into the Great Lakes.”

If Canadian customers “are starved for raw materials then ultimately exports of finished products would suffer,” that distributor explains. “The key is how long the back-up is now, and how long the seaway is closed. The scheduled seasonal closing is usually in the first half of January. There are important cargoes meant to hold buyers with inventory until the seaway reopens that are frequently scheduled for the end of the year.”