gui yong nian/Adobe Stock
Continuing the theme of the last few months, the U.S. steel sector continued to make gains in capacity utilization last week.
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Steel capacity utilization rises to 69.7%
Per the American Iron and Steel Institute, U.S. steel mills recorded a capacity utilization rate of 69.7% during the week ending Oct. 24.
Raw steel production during the week totaled 1.54 million net tons. Meanwhile, production during the week ending Oct. 24, 2019, totaled 1.81 million net tons, at a capacity utilization rate of 78.0%.
On a year-over-year basis, last week’s output marked a 14.6% decline.
Meanwhile, production for the week ending Oct. 24, 2020, ticked up 0.5% from the previous week. Production during the week ending Oct. 17, 2020, totaled 1.54 million net tons at a capacity utilization rate of 69.4%.
YTD output down 19.3%
In the year to date through Oct. 24, U.S. mills produced 64 million net tons of steel, down 19.3% year over year.
Output during the same period in 2019 totaled 79.4 million net tons at a capacity utilization rate of 80.1%.
Broken down by region, output during the week ending Oct. 24, 2020, totaled:
- Northeast: 135,000 net tons
- Great Lakes: 563,000 net tons
- Midwest: 171,000 net tons
- Southern: 600,000 net tons
- Western: 73,000 net tons
New EAF output coming online
The operation commenced with its first arc Oct. 20, U.S. Steel reported.
The steelmaker said the facility will have an annual capacity of 1.6 million tons.
Steel prices continue to gain
Even as steel capacity utilization continues to rise, U.S. steel prices have been climbing the ladder since late August.
Gains over the last two months have led some to wonder if the U.S. market has reached peak steel prices. While that remains to be seen, U.S. prices have no showed sign of letting up.
U.S. HRC, for example, is up 13.0% month over month, closing Monday at $652 per short ton.
Meanwhile, U.S. CRC is up 8.74% after closing Monday at $821 per short ton.
U.S. HDG, similarly, is also up. HDG is up 7.6% month over month, closing Monday at $906 per short ton.
Plate price gains, meanwhile, have not been as ascendant. U.S. plate is up 4.77% month over month, closing Monday at $637 per short ton. Relevant to plate, oil prices continue to lag as demand remains depressed. According to the Energy Information Administration’s Oct. 21 petroleum status report, oil inventories, at 488.1 million barrels, are 10% above the five-year average for this time of year.
The WTI crude oil price closed Monday at $38.56 per barrel, down $2.27 per barrel from the previous week.
Not all contracting indexes are created equal. In a steel price spike scenario, finished product indexes can be detrimental to your strategy. Learn when you should use what kind of contracting mechanisms.