US steel production
Domestic steel production is one of the major demand drivers for Cleveland-Cliffs’ (CLF) iron ore pellets. Therefore, in this part, we’ll discuss the progression of US steel production and the outlook.
Steel production is on an uptrend
US steel production has been on a fairly upward trend after President Trump imposed Section 232 tariffs in March. In 2018, the US produced 95 million tons of steel, the highest level since 2007. 2018 production grew 6.2% YoY. The calculations are based on the American Iron and Steel Institute’s weekly steel production data until December 29.
According to the American Iron and Steel Institute (or AISI), the domestic mills produced ~1.9 million tons of steel for the week ended December 29. This production implies a surge of 13.3% compared to the production in the same week last year.
The capacity utilization in the US steel industry (X) is also on an upward trend, mainly due to declining imports. AISI reported that for the week ended December 29, the capacity utilization for steel mills was 81% compared to 71.9% a year ago. Import tariffs have helped the industry break above the level of 80% capacity utilization. However, with higher production and steel demand concerns from consumers, given higher steel prices in the United States (DIA), oversupply concerns have taken hold.
In the next part of this series, we’ll see how tariffs are affecting US steel prices.
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