Has US Steel Production Changed as a Result of the Tariffs?



US steel production

US steel production is the key variable that drives US steelmakers’ (SLX) (XME) revenues. AK Steel (AKS) and ArcelorMittal (MT) are Cleveland-Cliffs’ (CLF) customers. Investors track production data to get a sense of the direction of overall volumes.

According to data from the World Steel Association, the United States produced 7.3 million tons of steel in July, a 4.5% rise YoY (year-over-year) compared to the 0.8% annual rise in June.

According to AISI (American Iron and Steel Institute) data, in the week that ended on August 25, US steel production came in at 1.86 million tons. Production has risen 3.7% YTD (year-to-date).

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Capacity utilization

The US Department of Commerce intends to improve the domestic steel industry’s capacity utilization rate with the Section 232 tariffs. The recent trend in the data shows that it seems to be accomplishing this goal.

According to the latest AISI data, the YTD capacity utilization of US steel mills increased to 77% compared to 74.6% in the same period last year. With import substitutions due to import duties, capacity utilization seems to be increasing in the United States, which is positive for US steel stocks.

US production outlook is strong

US steel companies have been reporting higher shipments as well as strong sales outlooks. ArcelorMittal’s (MT) second-quarter shipments rose 1.8% sequentially to 21.7 million metric tons. It reported a sequential rise in steel shipments across all its segments except for Europe.

U.S. Steel Corporation (X) reported a 3% increase in shipments in its flat rolled division. Its future shipment guidance is also strong due to its restarting of its Granite City facility. AK Steel’s (AKS) shipments, on the other hand, were lower than its guidance in the second quarter due to operational issues.

Cleveland-Cliffs also expects strong customer pellet sales. In the company’s second-quarter results, it increased its US sales volume guidance from 20.5 million long tons to 21.0 million long tons due to stronger-than-expected demand. This new guidance implies volume growth of 12.5% YoY.


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