Steel Products Prices North America

Capacity Utilization Dips Below 80 Percent as Mills Tap the Brakes

July 2, 2019

As many predicted, the mill capability utilization rate was bound to dip below 80 percent soon as domestic steelmakers ease back on production to trim supplies in pursuit of higher steel prices. Indeed, average utilization dipped last week for the fifth week in a row, by a full percentage point, to 79.5 percent.

Raw steel production for the week ending June 29 totaled 1,851,000 net tons. Production was down 1.2 percent from the previous week, but was still 2.0 percent higher than the same week last year, reported the American Iron and Steel Institute.

The last time raw production levels were this low was the week ending Oct. 6, 2018, when 1,851,000 tons were produced at a capability utilization rate of 79.0 percent. This week’s figure is the lowest seen in 2019, and we are now at a 38-week low.

Steel production for the first half of the year increased by 5.4 percent over the same period in 2018. Adjusted year-to-date production through June 29 totaled 48,611,000 net tons at an average capability utilization rate of 81.2 percent, up from 76.7 percent last year.

Following is production by district for the June 29 week: North East: 214,000 net tons; Great Lakes, 697,000 net tons; Midwest, 201,000 net tons; South, 672,000 net tons; and West, 67,000 net tons, for a total of 1,851,000 tons. Production was down in all the districts except for a slight increase in the South.

The raw steel production tonnage provided in this report is estimated. The figures are compiled from weekly production tonnage from 50 percent of the domestic producers combined with monthly production data for the remainder. Therefore, this report should be used primarily to assess production trends. The AISI monthly production report provides a more detailed summary of steel production based on data supplied by companies representing 75 percent of U.S. production capacity.

Note: Capability for second-quarter 2019 is approximately 30.3 million tons compared to 30.5 million tons for the same period last year and 29.9 million tons for first-quarter 2019.