High demand for road salt pushes costs up for state, city

Road salt supplies are down and prices are up as Indiana transportation officials prepare for the upcoming season's snow and ice following one of the harshest winters on record.

Salt prices on regional bids across the state are now an average of 57 percent higher than last year's prices, ranging from about $72 a ton to $105 a ton, according to Indiana Department of Transportation spokesman Will Wingfield. The highway department has 142,000 tons of salt on hand already, and Wingfield said more is on order.

Salt suppliers and state officials blame the price increases on supply and demand.

For the past five years, the department has used an average of 352,000 tons of salt. Last year, which saw heavy snow and bitterly cold temperatures, the state used more than 437,000 tons of salt.

"It's just market dynamics, really," said Nathan Riggs, spokesman for the highway department district that includes Indianapolis. "It will trickle down, and I think that's what we're seeing."

Highway departments across several states, along with salt suppliers themselves, are working to rebuild inventories that were drained by heavy use last winter.

"It was an unprecedented winter across the snow belt last winter," said Mark Klein, a spokesman for Cargill, one of Indiana's two salt suppliers. "Huge amounts of road salt were used everywhere. … There was very little left over after last winter."

The Indianapolis Department of Public Works acquires most of its annual supply of road salt through an ongoing quantity purchase agreement, or QPA, with INDOT through Cargill. The city is committed to buying 30,000 tons under the agreement.

The DPW will pay $79.91 per ton for treated salt this winter season, an 11.5-percent increase over the price of $71.65 per ton it paid last winter.

"The price fluctuates year-to-year, and this increase isn’t outside the range we’re used to seeing," DPW spokeswoman Stephanie Wilson said in an email to IBJ. "Our salt barns will be full before the first snow falls."

The DPW used more than 67,000 tons of salt in the 2013-2014 winter season at a cost of more than $7 million, so 30,000 tons might not be enough.

"We have the flexibility to secure salt through outside vendors when the QPA with Cargill cannot meet our needs, as was the case last winter," Wilson said. "Salt we purchased outside of the QPA was considerably more expensive—especially with the nationwide shortage."

Cargill's Klein said demand for salt is high this year because many expect this to be another rough winter, and states are racing to restock their supplies.

Crews worked all summer, including on Saturdays, at the company's salt mines in Ohio, New York and Louisiana, and the company has even imported salt from Chile to replenish its supply, Klein said.

Cargill won the right to supply Indiana salt with a bid of $20.9 million, along with North American, which was awarded $28.8 million. The state can adjust the amount it pays by increasing or decreasing its order depending on weather conditions.

Weather predictions vary, with the popular Old Farmer's Almanac predicting a rough winter, but the Climate Prediction Center forecasting an average or even mild winter.

Riggs doesn't put much stock in the almanac, saying: "Take it with a grain of salt."

Nationwide, replenishing stockpiles is proving challenging in many states after salt supplies were depleted last winter. And price increases of at least 20 percent have been common in places including Boston and Raleigh, North Carolina.

"Everybody is kind of scrambling around right now, contacting anybody they know who may have some salt available," said Fred Pausch, chief of the County Engineers Association of Ohio.

Some local governments are avoiding the problem thanks to multi-year contracts or secured bids. Chicago, for example, used roughly three times more salt last winter — 436,000 tons — than it did in 2012-2013, but the city has locked-in rates based on a contract negotiated a few years ago.

Other states aren't so lucky.

In Ohio, where more than 1 million tons of salt was used on state roads last year — a nearly 60-percent increase over the average — last year's average price was $35 per ton. This year, 15 counties received bids of more than $100 per ton, and 10 counties received no bids from suppliers.

Most of Ohio's 88 counties have locked in prices between $50 and $80 per ton. To ease the pain for other counties, the state recently secured about 170,000 tons of additional salt.

"The demand for salt is simply outpacing the supply that is available," said Steve Faulkner, spokesman for the Ohio Department of Transportation.

In Michigan, like Ohio, local governments are allowed to join a network for bidding purposes, and the state seeks competitive bids each year from four vendors. But even those efforts couldn't prevent a spike: Michigan has seen prices jump by 46 percent, to $65 per ton.

On a recent weekday outside Detroit, a massive dump truck backed into a domed building and dropped about 50 tons of road salt onto a growing mound at a facility operated by the Washtenaw County Road Commission. The agency is paying $76 a ton for its preseason fill-up compared to about $34 last year, a 120 percent jump.

Part of the problem is that salt mines are being challenged by numerous local governments "trying to replenish their supply at the same time," said Lori Roman, president of the Salt Institute, a trade group based in suburban Washington, D.C.

"It's just a situation where you can't necessarily get all the salt mined and get it where it needs to go as fast as it's demanded," she said, noting that the group doesn't collect information related to prices or production issues.

For road officials, that translates into having to conserve and be creative. In many places, brine is added to salt to boost its effectiveness. Officials also are buying trucks that can, among other things, spread salt in the morning and clean streets later in the day.

North Carolina's capital city, which was left with about 10 percent of its 4,000-ton salt capacity after Raleigh was hit by more winter storms than usual, recently signed a three-year contract for salt costing about $110 per ton annually. That's a 25-percent increase, according to city officials.

Boston is among those breathing a sigh of relief. Interim Public Works Commissioner Mike Dennehy, dubbed Boston's "snow czar," said the city bought about 80 percent of its capacity at last season's cheaper prices of $45 and $49 a ton. The city will be charged this winter's prices, which are about 20 percent higher, for the rest of its supply.

In Ohio, road officials are keeping their fingers crossed.

"We just had the worst winter in Ohio," Faulkner said. "We're preparing for that, but we hope it's like the one we had two winters ago, which was one of the mildest."

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