US Raw Steel Output Rises As Capacity Utilization Tops 80%

U.S. raw steel production for the week ending Dec 29 climbed on a year-over-year basis as American steel mills operated above 80% of their capacity, according to the latest weekly report from the American Iron and Steel Institute (“AISI”), an association of North American steel makers.

Per data released by the AISI, domestic raw steel production was 1,899,000 net tons for the reported week, marking a 13.3% rise from production of 1,676,000 net tons for the same period a year ago. Reported weekly production also represents an increase of 1.6% from production of 1,870,000 net tons logged for the week ending Dec 22.

Capacity utilization (a key metric in the steel industry) for the reported week also showed gain on both year-over-year and weekly comparison basis. U.S. steel mills operated at 81% of their capacity last week. Capability utilization rate for the reported week increased from 71.9% a year ago and 79.8% in the previous week, per the AISI.  

By regions, production from Great Lakes, Southern, North East, Midwest and Western were 733,000 net tons, 668,000 net tons, 213,000 net tons, 207,000 net tons and 78,000 net tons for the reported week, respectively.

Overall raw steel production (on an adjusted basis) through Dec 29 was 95,063,000 net tons at a capability utilization rate of 78.3%, up 6.2% from 89,483,000 net tons recorded in the same period a year ago at a capability utilization rate of 74%.

According to the AISI, production capability for fourth-quarter 2018 is roughly 30.8 million tons compared with 30.6 million tons a year ago and 30.8 million tons for the third quarter of 2018.  

Trade Actions Boost Capacity

The 25% tariffs on steel imports, which the Trump administration levied in March 2018, have helped U.S. steel industry capacity break above the important 80% level – the minimum rate required for sustained profitability of the industry. The U.S. Department of Commerce earlier said that the trade actions are aimed at increasing domestic steel production to approximately an operating rate of 80% that reflects a healthy industry.

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