Ask Hunker Harry: Good weather news is bad news for US steel

Punxsutawney Phil, the famous groundhog who predicts the longevity of the US winter each year, did  not see his shadow last week, indicating an early spring. This is only the 18th time in 130 years that the groundhog failed to see his shadow. An emcee at the Groundhog Day event in the chilly northwestern Pennsylvania town told those gathered it was OK to remove their coats.

What may be great news for wide swaths of America is likely bad news for the price of ferrous scrap.

Easy collection and a free flow of material unencumbered by freezing temperatures, ice and snow will likely keep scrap supply healthy and prices flat. In the kind of lackluster market US steelmakers have been facing, flat scrap prices mean flat steel prices, or worse.

None other than former Federal Reserve Chairman Alan Greenspan recognized the importance of ferrous scrap as an economic indicator, keeping a close eye on the steel trade press for price movements in the major steelmaking raw material. If scrap prices were on the upswing that was an early signal that steel demand was strong and the economy was strengthening.

Whether it’s for Greenspan or from a groundhog, early market indicators can be golden.  That’s why steelmakers should get to know another conjecturing critter — Hunker Harry, a Norway rat.

Discovered in the 1990s oddly perched on his hind legs atop a scrap heap in Hunker, Pennsylvania, Harry caught the attention of an enterprising steel executive who, distrustful of market reports, chartered a helicopter to fly low over the region’s scrapyards to gauge the supply situation for himself. It was Groundhog Day when he spotted Harry. What followed was the mildest winter on record and Harry became a market indicator.

This week, Harry was nowhere to be found, which means there will be six more weeks of winter, higher scrap prices and higher steel prices.

Maybe you never heard of Hunker Harry, but have you ever heard of a Nova Scotian groundhog named Shubenacadie Sam? Or Staten Island Chuck? Or Georgia’s General Beau Lee? How about New Jersey’s Stonewall Jackson? Or Winnipeg Willow?

All these groundhogs except the last two predicted an early spring on Feb. 2, just like Punxsutawney Phil, and perhaps the only reason the last two did not make the same prediction is because they died, oddly,  just prior to Groundhog Day.

I smell a rat.