US Weekly Steel Output Ends 2008 near Depression Levels

  • Wednesday, January 7, 2009
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  • Keywords:steel
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The early 1980s were not good years for the US steel sector, and most recently, raw steel production in the US in the final week of 2008 dropped to levels not seen in the past 26 years, according to data reported Monday by the Washington DC-based American Iron and Steel Institute (AISI).
 
Steel production in the US for the week ended December 27 was 800,000 short tons, down 22% from 1.02 million short tons in the previous week ended December 20, and down 61% from 2.04 million st produced in the final week of 2007.
 
Steel producers operated at only 33.5% of industry capability in the final week of 2008. In December 1982, the domestic industry's capacity utilization rate was 34%. In other words, nearly two-thirds of steel mill capacity was idle both then and most recently, reminding some observers of market conditions during the Rust Belt years when US steel mills were failing and shutting down across the country.
 
Dan DiMicco, chairman and CEO of steelmaker Nucor said it is "the worst economic slowdown in our lifetime," and told the New York Times recently that the government’s forthcoming economic stimulus program should contain buy-American provisions.
 
Production rates improved in the week ended January 3, but still remained at depression-era levels. Industry output inched up to 866,000 st from 800,000st. That represented a capacity rate of 36.3%, according to the AISI.
 
The lowest capacity utilization rates on record were posted during the Great Depression. Averaged for the year, 1931 clocked in at 38% capacity utilization; 1932 marked the bottom at 20%; 1933 checked in at 34% and 1934 saw 37% capacity utilization. During the Fourth of July holiday week of 1932, steel production dropped to 12% capacity utilization from 15% the week before. The summer of 1932 also saw construction projects down 62% from 1931. Carmaking declined 50% compared to the year before, and railroad car loadings were down 30%, according to Survey of Current Business archives.
 
South and Midwest mills carry load
The majority of steel mills in the South and the Midwest reported slightly higher output following the Christmas and New Year holidays.
 
The South produced 226,000 st (+5.1%), the Indiana/Chicago area produced
257,000 st (+7.9%), and the remainder of the Midwest produced 106,000 st (+8.2%). Pittsburgh/Youngstown produced 98,000 st (+22.5%); the Northeast was 91,000 (+1.1%), Detroit was 28,000 st (no change), the West was 42,000 st (+20%), and Lake Erie was 18,000 st (+12.5%).
 
AISI's weekly figures are based on estimated raw steel production from a sampling of steel producers representing about 50% of US steel manufacturing capacity. –Platts
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