In an encouraging sign, the capacity utilization rate has been higher in 7 of the last 10 weeks. During this time, US steel production averaged 1,738,700 tons per week at an average capacity utilization rate of 73.3%. The capacity utilization jumped from 71.0% in the first week of January to 75.6% for the week ending March11th. The most recent four week moving average production was 1,711,800 tons. This was 4.4% higher than the same period in 2016. This was the strongest 4 week average rate since July of last year.
Figure 1 shows production on the left-hand scale and capacity utilization as a percent on the right-hand scale. In an encouraging sign, production and capacity utilization have been steadily ramping-up so far in 2017. Production was higher for both month on month and year on year comparisons for every week thus far in 2017.
Figure 2 presents a map of the US with the five steel producing zones. The Great Lakes is the largest producing region with year to date (YTD) production of 6,700,000 tons. Production was up 4.8% m/m and up 7.6% YTD y/y. The next largest producing region is the Southern zone with a YTD total of 6,217,000 tons. Volume in this region was up 2.1% m/m and 11.5% YTD y/y. The third largest area is the Northeast with 2,101,000 tons so far in 2017. Its production was off 0.9% m/m but up 3.5% YTD y/y. The next largest Steel making zone is the Midwest at 1,653,000 tons. Production in this sector was up 1.2% m/m, but down 11.6% YTD y/y. The Western region is the smallest at 716,000 tons YTD. Its volume was up 11.4% m/m but down 6.0% YTD y/y.
At Gerdau, we track US steel production and capacity utilization to keep an eye on the overall health of the US steel industry. We feel it is important to understand the forces that influence steel demand to include the strength of the US economy and import penetration.