Steel Products Prices North America

Boomerang Cuts 150 Jobs on High Steel Prices, Covid Cases

January 7, 2021

Boomerang Tube has laid off 150 people at its mill in Liberty, Texas, because of a “rapid spike” in steel prices as well as in COVID-19 infections, according to documents filed with state labor officials.

The layoffs were effective on Dec. 23, 2020, and affected approximately 50 salaried and 135 hourly employees, according to Worker Adjustment and Retraining Notification (WARN) information filed with the Texas Workforce Commission.

The reason for the layoffs: “There has been an unforeseeable and rapid spike in the price of steel, the primary component of Boomerang products. There has been no corresponding increase in our finished good prices. This makes it impossible to operate at full capacity,” Boomerang Human Resources Director Tim Clark wrote in a letter to the Texas Workforce Commission. “In addition, the recent spike in COVID cases in our area has led us to believe that it would be safer to operate with a smaller staff.”

The company does not yet know whether the layoffs will exceed six months.

Boomerang makes oil country tubular goods (OCTG), which are used to extract oil and natural gas from underground wells. It makes both welded and seamless OCTG. Welded product is a major end-use market for hot-rolled coil.

Flat-rolled steel demand has surged as the manufacturing economy, and notably the automotive sector, have rebounded following the outbreak of the COVID-19 pandemic last spring–an event that forced many automotive assembly plants to halt operations for approximately 10 weeks.

As a result, prices for hot-rolled coil, the substrate necessary to make welded tubular products, now average $1,010 per ton, their highest point since the fall of 2008, more than 12 years ago. That figure represents an increase of $205 per ton from an average price of $805 per ton in early December and an increase of $570 per ton from a 2020 low of $440 per ton reached in August.

But the recovery in the energy sector has been more subdued. The U.S. rig count, a key indicator of oil and gas drilling activity, stood at 351 for the week ended Dec. 30, 2020, according to data from oilfield service firm Baker Hughes. That’s up three rigs from the prior week but down a staggering 445 rigs from roughly the same period last year.

And the U.S. remains in the throes of the most severe COVID-19 outbreak in the world, with more than 21.4 million infections and more than 360,000 deaths, according to figures from the Johns Hopkins University & Medicine Coronavirus Resource Center.

By Michael Cowden, michael@steelmarketupdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He has since 2014 specialized in flat-rolled steel but has previously reported on steel long products, steel pipe and tube as well as aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago - where he was involved in launching AMM's daily hot-rolled coil index, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.