The COVID is probably not as good as an example to the war because it was just so far reaching, and we had such concentrated supply chain sourcing. But in the case of the war, as time has gone on, we’ve seen the supply chain begin to adjust and in particular, alloy costs have continued €“ have started to abate and prices have adjusted downward as we found other sourcing options and as the uncertainty is €“ has started to become clear. So inflation is still broadly an issue around the world, but there’s definitely abatement going on due to that initial reaction and then everybody figuring out how to adjust their supply chain. But I’ll let Paul make some further comments.
Paul Lawrence: I think Barbara’s comments really hit the nail on the head as far as what we’re seeing in North America on the cost side. Really, the only comment I would add to our cost generally is on the natural gas side in Europe, the natural gas contracts reset, essentially twice a year in the October and May time frames. And so through until October, we were operating on natural gas prices that were prewar and then they reset. Thankfully, our natural gas is limited to the reheat furnace. And so not a major cost, but the cost increased around 6x what it was previously. And so that’s the one area in which we’ve seen some increase in costs. And it’s really specific to the European operations. With respect to your other question regarding the maintenance outages, we’ve got a couple major outages coming in the back half of this year.
And in fact, starting later this week, our Seguin, Texas facility will be down for a while as it replaces the furnace. There will be a large period of time in which we will not be melting steel. However, we have a lot of billets on the ground, and we’ll continue to roll product, continue to serve customers throughout that period of time. But coming out of the outage, we will have more efficient facility and get some benefits coming out of the new technology that is being put in. So excited about that. It’s a furnace that has produced well in excess of the normal service life, just a testament to the maintenance and ongoing operations that the team does down there. Following that, in the third quarter, we have another outage, and I just named that just simply because it’s in our Alabama mill.
And again, it’s a €“ some new refurbishment to some of our roughing and rolling mill stands, which not only increases the reliability of those, but also provides us to enhance our product mix. And so we get benefits out of that going forward. So those will be significant, but look forward to ensuring the ongoing reliability and provide us opportunities as we move into the future. Reliability of this equipment is critical. We’ve been running hard as we’ve been enjoying these hard period €“ these hard market conditions, these good market conditions. And so we need to ensure that we continue to do the necessary maintenance to continue to ensure that the reliability is there.
Operator: And our next question will come from Timna Tanners with Wolfe Research. Please go ahead.
Timna Tanners: Yes. Hey, good morning, guys, and Happy New Year. Wanted to ask a bit more, if I could, about Slide 9 and the trends that you’re seeing in the downstream side. Just trying to reconcile the decline in bids and backlog with the comments about the upward price trend in downstream products. Is there like a some explanation of why it seems to be rolling over, but also comments about higher prices? I’m just trying to reconcile those comments. Thanks.
