The total tonnage for the week ending October 7th was 1,741 million tons, (Mt) at a capacity utilization rate of 74.7%, 1.5 percentage points higher than the previous week. On a four moving average, (4WMA) basis, the capacity utilization rate was 0.5 percentage point lower at 74.2%.
The 4WMA tonnage was 1,728 Mt, 9.8% greater than the 1,585 Mt produced over the same period last year. Production volume this week, was 65.7% higher than the 800 Mt low point reached Christmas week 2008.
Figure 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 trending higher so far in 2017.
Production year to date, (YTD) was 69,545 Mt, at an average of 1,739 Mt per week with an average capacity utilization of 74.2%. Over the same 40 week period in 2016, the YTD total was 67,499 at an average of 1,687 Mt per week with an average capacity utilization of 72.1%. Summarizing the YTD year over year, (y/y) improvement: +51,150 tons per week, +2.05 Mt total tons, and +2.1 percentage point increase in the capacity utilization rate.
Figure 2 presents a map of the US with the five steel producing zones. The Great Lakes produced the most steel, with 26.70 Mt, YTD, up 3.1% y/y. The Southern region was next with 24.92 Mt YTD up 7.3% y/y. With 8.52 Mt YTD, the Northeast tonnage increased its tonnage by 2.7% YTD y/y. The Midwest and Western zones both produced less steel YTD compared to the same timeframe a year ago. The Midwest produced 6.62 Mt YTD, down 5.6% y/y, while the West produced 3.00 Mt YTD down 4.7% y/y.
Examining the production statistics on a 3 month moving total (3MMT), y/y basis, helps smooth out m/m volatility. Nationally the 3MMT y/y was up 0.9%. The Great Lakes was the only region to record positive growth with +4.4%, 3MMT y/y. The Northeast’s’ 3MMT was off 0.8%. The Southern zone recorded a loss of 1.3%, 3MMT y/y. The Midwest tonnage declined by 1.1% while the Western zone saw its production fall by 2.8%, 3MMT y/y.
Momentum defined as 3MMT minus12MMT was positive for the nation at 1.9%. All regions posted positive momentum except the Southern region with a negative 2.5%. Momentum in the Southern zone has now been negative for four consecutive weeks.
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.