U.S. Steel Mills Reach Capacity Rate of 81.1% for the Year Through March 2

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According to the American Iron and Steel Institute’s (AISI) weekly steel production report, U.S. steel mills churned out steel at a capacity utilization rate of 81.1% for the year through March 2.

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Adjusted year-to-date production by U.S. steel mills for the year through March 2 reached 16.4 million tons, up 6.9% from the 15.4 million tons produced during the equivalent period in 2018 (when capacity utilization was 75.7%).

As cited by the Department of Commerce throughout its Section 232 investigation of steel and aluminum imports, a capacity rate of at least 80% is deemed a measure of a healthy industry sector.

For the week ending March 2, production reached 1.9 million net tons, up 5.9% year over and up 1.0% from the previous week. Capacity rate for the week ending March 2 hit 82.8%.

By region, in the week ending March 2, the U.S. produced:

  • Northeast: 212,000 net tons
  • Great Lakes: 716,000 net tons
  • Midwest: 208,000 net tons
  • Southern: 717,000 net tons
  • Western: 74,000 net tons

The United States Trade Representative (USTR) recently submitted its annual Trade Policy Agenda and Annual Report, which noted the impact of Chinese steel overcapacity on the U.S. steel sector.

“The domestic steel industry lost 14,100 American jobs in 2015 and 2016,” the report stated. “Capacity utilization of American steel mills was only 69.4 percent in 2016, a level that inhibited efficient operations and discouraged American steel companies from investing in research and development. Meanwhile, China and other steel-producing nations dramatically increased their production capacity – despite growing evidence of global overcapacity. By 2016, China had enough capacity to produce as much steel as the rest of the world combined.”

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The USTR report also criticized the World Trade Organization for its pushback with respect to the U.S.’s invocation of national security to impose the Section 232 tariffs on steel and aluminum. The report states that multiple WTO members are “urging the WTO to overrule the United States’ determinations concerning its own essential national security interests regarding trade in steel and aluminum under Section 232.”

“Such a decision by the WTO to second guess U.S. national security determinations would threaten serious damage to the multilateral trading system,” the USTR report states. “The United States intends to fight vigorously these efforts to impinge its national sovereignty.”

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