U.S. Steel Mills’ Capacity Utilization Rate Reaches 81.8%

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Pavel Ignatov/Adobe Stock

U.S. steel mills have operated at a capacity utilization rate of 81.8% for the year through May 18, according to the American Iron and Steel Institute’s (AISI) weekly steel production report.

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According to the report, adjusted year-to-date production through May 18 reached 37.5 million net tons at a capability utilization rate of 81.8%, which marked a 6.5% increase from the 35.2 million net tons produced during the same period last year. During that period in 2018, the capacity utilization rate reached 76.6%.

In the week ending on May 18, 2019, domestic raw steel production reached 1.9 million net tons at a capacity utilization rate was 81.6%, up 5.1% from 1.8 million net tons produced during the week ending May 18, 2018 (when the capacity utilization rate was 77.1%). 

Production for the week ending May 18, 2019, was down 1.4% from the previous week ending May 11, 2019, according to AISI. Production for the week ending May 11, 2019, reached 1.9 million net tons at a capacity utilization rate of 82.8%.

Production by region for the week ending May 18, 2019, broke down as follows:

  • North East: 197,000 net tons
  • Great Lakes: 738,000 net tons
  • Midwest: 201,000 net tons
  • Southern: 698,000 net tons
  • Western: 66,000 net tons

In policy news, last week President Donald Trump announced the U.S. would remove its Section 232 tariffs with respect to steel and aluminum imports from Canada and Mexico. The tariffs had been in place for the U.S.’s NAFTA partners since June 1, 2018, when initial temporary exemptions for those countries were allowed to expire (the E.U.’s temporary exemption also expired at that point).

The imposition of the Section 232 tariffs saw to a gradual decline in U.S. steel import market share. U.S. imports of steel fell 12% in 2018 compared with 2017, with import market share reaching 23% in 2018.

While much attention is given to China and its steel overcapacity, it is a minor source of steel for the U.S. According to the International Trade Administration, Canada, Mexico and Brazil were the top three sources of steel for the U.S. last year.

Despite the tariffs, Canada was the largest single-country source of steel imports, accounting for 19% of U.S. steel imports last year, followed by Brazil (14%) and Mexico (11%). However, by volume, U.S. imports from Canada fell 1% in 2018 compared with the previous year and increased 9% from Mexico.

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“On the other hand, given that the 25% tariff on steel effectively deterred imports of that metal to the U.S., MetalMiner does expect to see an impact on steel prices as imports of steel increase,” MetalMiner analysts explained Friday on the heels of the news the tariffs would be remove for Canada and Mexico.

“Canada serves as the largest exporter of flat rolled steel products, as well as long products, with Mexico taking the No. 3 position. For tubular products, Canada and Mexico take the No. 2 and 3 positions. For stainless steel, Mexico serves as the fourth-largest exporter to the U.S. and Canada does not export stainless to the U.S. in a major way.”

Canada accounted for 32% of U.S. imports of flat products and 21% of long products last year, in both cases constituting the largest piece of the pie in each steel product category. In addition, 15% of the U.S.’s pipe and tube imports came from Canada last year — behind only South Korea (16%) — while Mexico accounted for 13%.

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