While the snowfall for the 2018-2019 season is still (hopefully) a little ways off, snow removal companies like us are in the process of ordering salt and other supplies so that we are ready to roll when the snow flies. And if you have not heard yet, we are facing a critical salt shortage for this upcoming winter. There are a variety of reasons for this, which we will break down. In any given year, each of these reasons, alone, will have an effect on the price of salt. All of them, in combination, is a perfect storm for the price of salt this season.
Trouble in the Mines
Each year, the average salt usage for a winter snow removal season in our region is about 10 million tons. Some years, less will be used. Some years, more will be used. Still, 10 million is a good baseline number. During the course of the last year, however, three main factors have lead to the shortage:
These last two points are projected to leave us several million tons short this winter.
Filling the Gap
While we are running short in our part of the world, there is plenty if salt in other parts of the world. To address the shortage, salt has to be imported from places like Egypt and Chile. While the price of imported salt may be similar to the price of domestic salt, the cost of transporting it to the Detroit docks raises the acquisition price of that salt to 2-3 times what domestic salt would cost.
The Pecking Order
Once the salt buying process begins, government offices get first dibs. This season many state and local governments are buying 10 to 20% more salt than last year, despite already being aware of a shortage. This is likely because their reserves were depleted last year and/or they are preparing for another long winter this season and don’t want to have to buy again later in the year when the prices will likely be even higher.
After government agencies get their bids in, it moves to large contractors and brokers. At this point, there is more scarcity than before, so the price goes up for the large contractors and brokers.
Finally, smaller contractors/landscapers get a chance to order. By now, you can see where this is going. More scarcity = even higher prices.
The End Result
The compounding effect of the scarcity increases price and necessitates that more salt be imported… and importing salt costs even more. So what do the prices actually look like? In the 2017-2018 season salt prices averaged $62 per ton. This season, the price is at $125 per ton—more than double. Municipalities should be safe, which means it shouldn’t have much effect on their budgets and, by extension, your taxes. It’s consumers, however, who will wind up footing the bill for whatever differences their snow removals contractors are unable to absorb.
To learn more about snow and ice removal, as well as how the current cost of salt could effect your organization, feel free to contact us online or give us a call at (517) 990-0110.