Steel Capacity Utilization Rate Hits 74.8% Through March 10

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Ferrous Metals
gui yong nian/Adobe Stock

According to weekly data reported by the American Iron and Steel Institute (AISI), domestic raw steel production for the week ending March 10 hit 1,813,000 net tons.

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The production for that week produced a capacity utilization rate of 77.8%. The numbers for that week were up year over year, compared with 1,716,000 net tons produced in the same week last year (which had a 73.6% capacity utilization rate).

Meanwhile, production for the week ending March 10 was down 1.1% from the previous week, when production was 1,834,000 net tons and the rate of capacity utilization was 78.7%.

Year-to-date production through March 10 was 17,187,000 net tons, good for a capacity utilization rate of 74.8%, which was down 0.2% from the 17,221,000 net tons during the same period last year, when the capacity utilization rate was 74.6%.

According to the data, production by region broke down as such (in thousands of net tons):

  • North East: 214
  • Great Lakes: 681
  • Midwest: 163
  • Southern: 686
  • Western: 69

Late last month, when the Department of Commerce’s Section 232 reports to the president were made public, the administration expressed the the goal of raising the capacity utilization rate for both steel and aluminum up to 80% — “the minimum rate needed for the long-term viability of the industry,” according to the Department of Commerce.

“The U.S. domestic industry is more than capable of producing at a sustained 80% or more capacity utilization rate (the report points to the 2002-2008 period, in which U.S. mills operated at an 87.4% capacity utilization rate),” MetalMiner Executive Editor Lisa Reisman wrote last month.

“When steel factory utilization falls, costs per unit of steel product rises, reducing profit margins and product pricing flexibility,” the department’s analysis stated. “Higher capacity utilization usually results in lower per-unit product costs and higher overall profit.”

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According to the Department of Commerce’s analysis, only two countries produce at the 80% capacity utilization rate: Japan and South Korea. The U.S., on the other hand, between 2011 and 2016 had an average capacity utilization rate of 74%.

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