The U.S. steel sector continues to see weekly improvement in manufacturing activity with notable rebounds in capacity utilization from the slump witnessed during the first half of 2020.
Capacity utilization, a key metric in the steel industry, hit nearly 70 percent last week, rising from the previous week’s reading of 67.9 percent, indicating a vast improvement in activity from five months ago. However, it was still well below the key 80 percent threshold— the minimum rate required for sustained profitability of the industry.
Notably, the capacity utilization rate plummeted to 51.1 percent in May, the lowest level in many years, after initially hovering above the 80 percent level in Q1 2020 as the coronavirus (COVID-19) pandemic squeezed demand across major steel-consuming markets. Utilization has since picked up with a rebound in steel demand.
Steel production totaled at 1.53 million net tons last week with U.S. mills operating at an average utilization rate of 69.4 percent. Adjusted year-to-date production through October 17 totaled 62.5 million net tons at an average utilization rate of 66.3 percent. That’s down 19.4 percent from the same period last year when the rate was 80.1 percent.
Meanwhile, a recovery in overall market conditions after the virus-led slump has been a welcome sight for manufacturers. Demand for steel, and subsequently steel prices, has picked up with the resumption of operations across major steel-consuming sectors, following the easing of restrictions.
CSI announced the closure of their flat roll order book for the remaining balance of 2020 on Oct. 2. Though many uncertainties are still in play, specifically with the November presidential election less than two weeks away, improvements in market activity have domestic manufacturers like CSI hopeful for more normalized production levels in 2021.
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