US steel production averaged 1.734 million (M), tons per week at an average capacity utilization rate of 73.7% year to date (YTD), in 2017. The most recent four week capacity utilization rate edged-up to 74.6% at an average production rate pf 1.740M tons per week.

us-capacity-util-fig1Figure 1 shows production on the left-hand scale and capacity utilization as a percent on the right-hand scale. Production and capacity utilization have been moving steadily higher so far in 2017. Production for the week ending June 17th was 1,739M tons, more than double the low point of 800,000 tons the week of December, 27 2008.

Figure 2us-capacity-util-map presents a map of the US with the five steel producing zones. The Great Lakes produced the most steel, with 15.861 million tons (Mt), up 3.8% y/y. The Southern region produced 14.966 Mt, up 7.5% y/y. With 4.994 Mt, the Northeast tonnage increased by 2.1% y/y. The Midwest and Western zones both produced less steel YTD compared to the same timeframe a year ago. The Midwest made 3.985 Mt off 9.4% y/y, while the West produced 1.818 Mt down 7.6% y/y.

Looking at the data on a more recent 3 month moving total (3MMT), y/y basis, presents a different picture. Nationally the 3MMT y/y was up 0.6%. The Western zone recorded the highest percentage change with 12.5%, 3MMT y/y, followed by the Southern zone, up 3.0%. The Midwest tonnage was stronger by 0.7%, while the Great Lakes (-2.2%) and Northeast (-1.8%) regions posted declines.

Momentum (3MMT minus 12MMT), was positive in all regions except the Great Lakes (-2.8%). Nationwide momentum was 3.7%. The West had the strongest momentum with 20.6%, followed by the Midwest at 15.5%. The South came-in at 4.8% and the Northeast at 2.4%. Overall the latest capacity utilization report was encouraging trend.

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.