U.S. raw steel production for the week ending Aug 22 retreated 1.5% on a week-on-week basis as higher production in the Great Lakes district was more than offset by lower output from mills across other steel-producing regions, according to the latest report from the American Iron and Steel Institute ("AISI").
The decline in output follows a measly 0.7% rise for the week ending Aug 15. Capacity utilization - a key metric in the steel industry - also dropped from the previous week.
Per AISI - an association of North American steel makers - domestic raw steel production was 1,742,000 net tons for the reported week with a capability utilization rate of 72.9%, down from production of 1,768,000 net tons and capability utilization rate of 73.9% for the week ending Aug 15. The reported weekly production also skid 9.7% from the same period a year ago.
By regions, Great Lakes nabbed a 2% gain on a weekly basis to 660,000 net tons. But output from the Southern district - the second-largest steel-producing region - went down 4% to 573,000 net tons. Production from North East fell roughly 3% from the previous week to 217,000 net tons. Raw steel production also slipped around 3% across both Midwest and Western regions to 205,000 net tons and 87,000 net tons, respectively.
Overall year-to-date raw steel production still lags behind year-ago levels. Adjusted year-to-date production through Aug 22 clocked 57,513,000 net tons at a capability utilization rate of 72.6%. This represents a 7.8% decline from 62,408,000 net tons recorded in the same period a year ago. Capability utilization rate for the period also slid from 78% recorded last year.
According to AISI, production capacity for the second-quarter 2015 is roughly 30.7 million tons compared with 31.3 million tons a year ago and 30.4 million tons for first-quarter 2015.
American steel mills remain plagued by depressed capacity utilization and a torrent of unfairly-traded imports. The domestic market remains inundated with subsidized imports, in particular, from China and South Korea.
Per a recent AISI report, finished steel imports rose 9% year over year in the first seven months of 2015, based on the Commerce Department's most recent Steel Import Monitoring and Analysis ("SIMA") data. Estimated year-to-date market share of finished steel import is 31%, higher than 28% recorded for full-year 2014. On the other hand, U.S. steel shipments are down 9.8% year over year so far this year.
Adding to the pain is China's move to devaluate its currency. Beijing's earth-shaking move has sent shock waves across the American manufacturing sector as a cheaper yuan will make Chinese exports less expensive in overseas markets. This may trigger accelerated steel exports from the world's second-largest economy.
U.S. steel makers recently took yet another step in their ongoing battle against low-priced imports. Domestic producers including Nucor, U.S. Steel, AK Steel, Steel Dynamics and ArcelorMittal USA - a part of ArcelorMittal, filed anti-dumping and countervailing duty petitions with the U.S. Department of Commerce ("DOC") and the U.S. International Trade Commission ("USITC") against seven countries accused of illegally dumping certain hot-rolled steel flat products. The petitions charge that imports from these countries are causing significant injury to the U.S. steel industry.
Steel market fundamentals are expected to remain challenging in the U.S. through the balance of 2015. Per the World Steel Association ("WSA") - the international trade body for the iron and steel industry - crude steel production tumbled roughly 9% year over year to 7 million tons in the U.S. in July, marking the six straight month of decline this year. While the WSA foresees steel usage to contract 0.4% in the U.S in 2015 (after a solid 11.7% rise in 2014), it is expected to spring back to a 0.7% gain next year.
Source: www.nasdaq.com
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