Roger Blough - The Lawsuit Has Begun

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Geest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Geest »

With the Blough now tied up in a lawsuit I'd imagine she isn't going anywhere until the case is settled. Same thing happened with the St. Clair, once the case was settled between Class, Owners, Insurers and Company and the ink was dry on all the papers and checks she was hauled away, but as part of an ongoing case I doubt any party will be able to dispose of the hulk. GLF likely got a nastygram from Bay Ship demanding the vessel be moved off their property, and are lucky enough to have an unused slip on company property to tuck her away in for the duration.

Much like the St Clair the Blough is a tweener-size boat between the seawaymax and footers, and as a result is not really able to compete in the smaller vessel trades and not as profitable in the footer trades. Its the reason why ASC kept the St Clair on the wall more often than not during the last 10 years of its service life, when there was ample business or new cargoes came available it was nice to have additional capacity to bring on, but by and large the boat cost too much to operate relative to its profits.

With the end of large-scale coal movements imminent, a contraction of operational fleet sizes is inevitable. There will simply be too many ships for the same tonnage of ore. Im sure GLF, Interlake and ASC are all taking a hard look at which boats they want to keep running and which they want at the wall when the end of coal arrives, and in that situation boats like the Blough and St Clair would have been first on the chopping block if fires hadn't done the job first.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Scott wrote: February 12, 2023, 11:16 am I need to chime in here. I've read that a major company (Cliffs?) ordered the modernization of one of its pellet facilities on the Iron Range. My point is, why would they do that unless they were anticipating increased demand? Maybe I'm wrong, but that's my question for all you Great Lakes Shipping Monday morning quarterbacks.
Scott, I think you're referring to the $150 million plant US Steel recently announced they are going to build to produce pellets for the Granite City steel mill, which is being sold to Suncor, who will in turn build a pig iron plant. None of the pellets from the iron range for the new plant will travel by laker, they will instead travel by railroad. And that's one of the problems; the vast majority of Mini-Mills are located in the Southern United States.

In US Steel's case, they have stated they want to be Carbon Neutral by 2040, which seems to me they will move to all EAF's located in the Southern US, while Gary and Granite City will produce the pig iron for the EAFs. Why else would US Steel invest $3 billion in expanding Big River Steel, and not Gary? And they are definitely not investing in the Monongahela steel facilities, as they canceled a $1 billion investment before the pandemic.
JERRY AT DULUTH

Re: Roger Blough - The Lawsuit Has Begun

Unread post by JERRY AT DULUTH »

HERE IS THE ANSWER. CLIFFS UPDATED THEIR EQUIPMENT AT SILVER BAY TO MAKE THE NEW PELLET THEN. THEY DECIDED THAT THE MESABI TRUST WAS CHARGING A ROYALTY FEE THAT WAS T0O HIGH. SE HE CLOSED SILVER BAY WHICH RESULTED IN THE TRUST RECEIVING NO INCOME BECAUSE THERE IS NO ORE BEING MINED. IT IS A HECK OF A GOOD POKER GAME TO WATCH. I WILL PUT MY MONEY CLLIFFS AS HE HAS A BETTER HAND AND I THINK THAT HE IS A BETTER CARD PLAYER THAN THE TRUST IS. HE HAS ALL THE PELLET NEEDED FROM MOUNTAIN IRON PLANT.
JERRY
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Probably to take advantage of cost savings technology and maybe it was just a worn out plant. Remember, much of their sales is overseas, not just domestic use. The leaner they are the better they’ll weather the future of less steel demand. Case in point. Domestic car co. Are much smaller n leaner than 30 or even 20 yrs ago. They have a much smaller % of the total car market but continue to prosper and exist. No one is saying steel is going away but demand will continue to drop.
Scott

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Scott »

I need to chime in here. I've read that a major company (Cliffs?) ordered the modernization of one of its pellet facilities on the Iron Range. My point is, why would they do that unless they were anticipating increased demand? Maybe I'm wrong, but that's my question for all you Great Lakes Shipping Monday morning quarterbacks.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

No matter what the % split is for domestic steel used in automotive,it’s still their bread n butter. It’s the high end product with the highest profit margins. Without auto sales they would shut the doors for good.Old style integrated mills are dying dinosaurs. Nucor is the largest steel producer by volume in the US now with steel dynamics gaining market share. Even if the legacy mills start to compete closer with newer technology they are saddled with higher wages n benefits cost than the mini mills. Last figures I had from steel dynamics before I sold my truck fleet n order book they had a cost advantage of 15/17 % over traditional mills. That’s significant.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Guest wrote: February 11, 2023, 1:15 am It seems everyone is ignoring the fact that if the market turns to completely using EAF's with HBI feedstock that HBI is actually MADE using taconite pellets. We've seen the last few seasons with ships (primarily VanEnkevort) loading taconite on the upper lakes for delivery to Cliff's new HBI mill in Toledo, which uses the pellets to make HBI. Same thing that will be starting in Gary as US Steel is finishing construction on a new pig iron facility that will produce feedstock for EAFs, which also is MADE using taconite pellets. In their press release about the successful testing of the facility they mentioned that the raw materials for their pig iron plant would be taconite pellets brought in by ship. So, this means that shipping on the US side of the lakes is not going anywhere anytime soon, and not as drastically as everyone seems to make it appear.
People are forgetting that scrap metal can also be used as the feedstock for EAF. In fact, both HBI and scrap metal are in price competition with one another, so when the price of one goes up, then an EAF operator can can switch to another. According to the AISI website, over 70 million tons of scrap metal a year are consumed by steel making furnaces and it can be endlessly recycled. So I don't see how HBI can keep demand for iron ore at the current rates we are seeing, or what we saw in the past, as scrap metal is so competitive.

Coal movements for the power generation is nearly dead and will be gone by 2030, so what will those two or three thousand footers that were dedicated to that trade haul then?

In the mid-1980s I wanted to sail on the lakes after high school, and was even accepted at Georgian College's marine engineering program. But when I saw the dramatic decline in the movements of iron ore and even grain at that time, I came to the realization that Information technology was where my career should be.

Reading between the lines of what a couple have written I can sense some bitterness. I get it, my interest in the Great Lakes shipping industry and it's history goes back to the early 1970s - and I know how upsetting it was to see young ships, that should have sailed on for several decades more be prematurely sold for dismantling. Now, where we're coming to another junction where some of the largest vessels on the US side of the lakes may not be safe in the next 10 years - that's very difficult to accept.

The St. Clair and Roger Blough are the first to go, but have their exit opened the door? Only time will tell.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Yes you are correct about the future for HBI n increased pig iron production but the overriding factor is overall steel demand will continue to drop due to alternative materials in autos, construction,etc. household appliances makers are using less steel in washers dryers etc with some Soon switching over to advanced polymer plastics even for framing. Less demand, less ships. The Canadian fleets will fair better as they are newer more efficient and diversified. Kudos to interlake for their innovative new build and modernizing program. The others? Except for van enkenvort, Not a pretty future.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Guest wrote: February 11, 2023, 12:55 pm
Right from Cliffs is the following statement - "We produce flat-rolled carbon, stainless, electrical, plate, tinplate, and long steel products to the manufacturing of downstream complex autoparts and components. Approximately one-third of our steel production is directed toward the automotive sector.
One-third, eh? You know that's a minority, right?
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Guest wrote: February 10, 2023, 7:43 am Yes you are correct the decline in Coal cargos has already led to a decline in the size of the US (and Canadian) Fleet. However I think your theory as to the impact of EVs is a real stretch. Vast majority of engine blocks out there are already cast aluminum and even prior that shift the amount of ore and sand that was moved for that production was a very, VERY small percentage of total cargo moved on the lakes. And I hate to shock everyone here but a very large percentage of the Steel used by the Auto Manufacturers in the region is from Europe. Most steel produced in the lakes region is commodity grade, Chocolate and Vanilla so to speak, and used in construction and infrastructure.
Actually you have it backwards. The Great Lakes mills remain in production because they produce the higher end higher cost steel used in automotive. Imports have captured most of the lower grade and /or really specialized steel which comes in mainly from Europe.
"Cleveland-Cliffs Awarded by General Motors GM’s 2021 Supplier of the Year for Fifth Straight Year"

Right from Cliffs is the following statement - "We produce flat-rolled carbon, stainless, electrical, plate, tinplate, and long steel products to the manufacturing of downstream complex autoparts and components. Approximately one-third of our steel production is directed toward the automotive sector.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

It seems everyone is ignoring the fact that if the market turns to completely using EAF's with HBI feedstock that HBI is actually MADE using taconite pellets. We've seen the last few seasons with ships (primarily VanEnkevort) loading taconite on the upper lakes for delivery to Cliff's new HBI mill in Toledo, which uses the pellets to make HBI. Same thing that will be starting in Gary as US Steel is finishing construction on a new pig iron facility that will produce feedstock for EAFs, which also is MADE using taconite pellets. In their press release about the successful testing of the facility they mentioned that the raw materials for their pig iron plant would be taconite pellets brought in by ship. So, this means that shipping on the US side of the lakes is not going anywhere anytime soon, and not as drastically as everyone seems to make it appear.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Well I guess I was dreaming when I hauled millions of pounds of automotive grade “ flat rolled products” ( processsed steel coils) from all the major steel producers in the country for 40 yrs. to ALL auto mfgs. In the US. Direct to stamping plants, processors etc that became hoods doors fenders etc. it’s true that much auto grade steel is imported but as a % of USA made vs foreign made there’s no comparison. Some of the European suppliers were Sweden, Germany, Holland, Italy, poland , even ukraine. This accelerated as Mittal took over the remnants of ISG, Inland, warren consolidated etc. and also coincided with all major auto mfgs building plants in the US. The Asian co. Would source from Japan, Korea, China but their majority auto steel was bought from US domestic mills. It’s a complicated logistics puzzle depending on who was actually paying for the end use of the product whether it was the mfg. sending it directly to their stamping plants or it was a supplier free to buy on their own to try and maximize their slim profit margins in their parts contracts. Mittall price dumped lots of steel from his mills in Brazil up to his selling out to Cliffs. GM in particular was happy with that pricing structure. Covid changed the supply system and domestic production became more important for awhile. Long term? Traditional blast furnaces will continue to be shut down. Whether or not HBI is a suitable feed stock for those remaining is not in my information realm. If HBI’s future is only electric furnaces the amount of taconite shipped will decline also due to the efficiency of mini mills. Co. Such as Van enkenvort have positioned themselves well to take advantage of the future of Great Lakes shipping.The pie will get smaller and the 60 70 yr old steamers will vanish along with several thousand footers.Economics will dictate their demise. Vehicles will be made out of more plastics,aluminum, carbon fibers etc. for less weight. USS in ecorse was a victim of the f150 move to aluminum. They tried to utilize the capacity by gaining contracts to replace the sales lost but ultimately economics shut down zug island. While you’re correct many auto engines are all aluminum now, heavy duty equipment engines, ie: trucks heavy equipment etc are still iron construction but moving to aluminum and ultimately electric. Changes in construction are already dictating different materials away from traditional cement, steel construction in commercial bldgs. It’s a slow attrition. Until Steel Dynamics started their structural products mills 90% of “ construction grade” steel was imported. Coiled rod, railroad rails,Flat plate, rolled beams, heavy duty pipe etc was abandoned by domestic producers as it was a low value product they couldn’t produce at a profit due to their higher production costs. Mini mills can turn a profit and stepped in to fill a demand. A few less tons of sand shipped, less limestone for flux pellets. Less demand for traditional cement construction etc. will all eat away at orders to haul. I’m not disagreeing with anyone’s input or opinion here. My words are based on having been a part of the steel industry my whole career both as a seaman then a small truck fleet owner. Plus, having family working for two separate steamship cos. In high positions in management for a combined 45 years experience. I probably won’t be around to see it but I stand by my prediction that within 10 years you’ll see an active American fleet of 15, maybe 20 ships total. Hope I’m wrong.
trainman400

Re: Roger Blough - The Lawsuit Has Begun

Unread post by trainman400 »

Okay, that was a good read. So the problem was they replaced the coal fired winter furnace with an oil fired furnace.
In the law suit they are saying the furnace was improperly installed (lots of reasons). So can we say the conversion
from coal to oil cause > $50 million dollars of damage.
Hobieone

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Hobieone »

All interesting observations, deductions, and forecasts. Most of which will come to fruition. So Why the impetus for drop a Billion $ on a new lock at the Soo when deficits and accumulated deficits (national debt) is measured in TRILLIONS ?
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Guest wrote: February 9, 2023, 12:23 pm Many more will go to scrap. Consider the huge decline already in coal cargos with more to come. Has anyone even considered the loss of demand for iron when EVs replace internal combustion engines? Millions of engine blocks, parts , casings,all gone.. foundry’s gone.. less demand for sand.. it will be a huge drop in cargo. I see maybe 15 US ships in operation within 10 years. How is that sustainable for an industry?
Yes you are correct the decline in Coal cargos has already led to a decline in the size of the US (and Canadian) Fleet. However I think your theory as to the impact of EVs is a real stretch. Vast majority of engine blocks out there are already cast aluminum and even prior that shift the amount of ore and sand that was moved for that production was a very, VERY small percentage of total cargo moved on the lakes. And I hate to shock everyone here but a very large percentage of the Steel used by the Auto Manufacturers in the region is from Europe. Most steel produced in the lakes region is commodity grade, Chocolate and Vanilla so to speak, and used in construction and infrastructure.
Scott

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Scott »

Guest wrote: February 9, 2023, 12:23 pm Many more will go to scrap. Consider the huge decline already in coal cargos with more to come. Has anyone even considered the loss of demand for iron when EVs replace internal combustion engines? Millions of engine blocks, parts , casings,all gone.. foundry’s gone.. less demand for sand.. it will be a huge drop in cargo. I see maybe 15 US ships in operation within 10 years. How is that sustainable for an industry?

Purely speculation at this point.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Guest wrote: February 9, 2023, 12:23 pm Many more will go to scrap. Consider the huge decline already in coal cargos with more to come. Has anyone even considered the loss of demand for iron when EVs replace internal combustion engines? Millions of engine blocks, parts , casings,all gone.. foundry’s gone.. less demand for sand.. it will be a huge drop in cargo. I see maybe 15 US ships in operation within 10 years. How is that sustainable for an industry?
I see you as completely wrong about that number.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Many more will go to scrap. Consider the huge decline already in coal cargos with more to come. Has anyone even considered the loss of demand for iron when EVs replace internal combustion engines? Millions of engine blocks, parts , casings,all gone.. foundry’s gone.. less demand for sand.. it will be a huge drop in cargo. I see maybe 15 US ships in operation within 10 years. How is that sustainable for an industry?
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Very good post. IMO though it will be alot sooner than 20 years for the shakeout to really hit. Coal power plants will be completely gone by 2026 or 28 and more blast furnaces are going to be closed this decade because EAF's are so much more efficient.
Secondly any boat that has a runs into a major breakdown not covered by insurance or repair (e.g. bulkheads are most at risk. The costs of all repairs are going through the roof. Sooner or later, the USCG or Class Society will demand a repair that can't be economically justified.
Guest

Re: Roger Blough - The Lawsuit Has Begun

Unread post by Guest »

Jared wrote: February 7, 2023, 1:02 pm This tells me that we have overvalued the Blough for years on monetary worth. I was guessing she was worth in 2018 $100> million. Looks like she was only worth half that if not a third. This tells me the entirety of the American Fleet is not worth a whole heck of a lot. All 13 footers combined are probably under $2 billion.
Unlike real estate which normally gains value over time, ships depreciate in value over time. Their real value is in the revenue they generate by moving cargo and not the actual monetary value they retain. It appears that the Blough was valued at around $30 to $40 million. I do not know what the actual construction cost of the vessel was back in 1972, although I believe this value was inflated by a large degree due to the fire that significantly damaged the aft and destroyed the engines. Regardless, if the ship was built in 1972 at around $35 million then by using just a simple inflation calculation such an expenditure would cost around $245 million today. Keep in mind that this is just a basic calculation and assumes that all costs grew at a uniform (which in many cases is far from the truth). I highly doubt that a shipping company could arrange insurance to cover the replacement of a vessel that is 50 years of age.

I agree with you that the entirety of the US fleet is worth a lot less than most may believe. With one exception, all of the powered vessels in the fleet are now over 40 years of age. Several of these have either passed or are nearing the 70th year of service. Despite the significant upgrades to keep many of these vessels viable, there will come a time at which even those modernized will become obsolete. Unfortunately, this obsolescence will likely affect the majority of the fleet over a relatively short period of time. The question will then become whether or not the current or future demands will support the major investment that will be required. If tonnages had remained strong and increased in relation to the growth of the national economy the majority of the current ships in the US fleet would have likely been replaced by now.

The bottom line to all of this is simply the level of current and future demand for the movement of raw materials on the lakes is not sufficient to keep the entire fleet in service even after being downsized over the past forty years. I believe the Roger Blough would have likely been repaired if there had been sufficient demand to warrant such a large investment. From what has transpired, however, this is clearly not the case in this situation.

For most of us, this is a hobby so we don't really know what information the various shipping firms are analyzing to make their decisions. It must be remembered that ships, by themselves, do not create demand but rather react to market forces. This is not to say the availability of water transportation has not created new shipping methods for some firms just that no shipping company is going to build a ship without having hauling contracts to support the investment. The 20 years should be interesting to see what transpires in the US fleet.
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