Steelmakers enter 2023 at slower pace

The melt shops of steelmakers in the United States produced less steel in the week ending Dec. 24, 2022, compared with the prior week and with the comparable week in 2021.

In the most recently completed week, steel production in the U.S. was 1.61 million tons, representing an 8.7 percent drop from the 1.77 million tons of output one year ago. The 1.61 million tons figure also is down 0.8 percent from the previous week (ending Dec. 17, 2022), when production was 1.63 million tons.

Year-to-date U.S. output of 87.6 million tons equates to a decline of 5.6 percent compared with the 92.8 million tons produced from Jan. 1 to Dec. 24, 2021.

In terms of mill capability utilization (capacity) rate, the 2022 average figure of 78 percent represents a 3.9 percent decline from the 81.2 percent 2021 average.

Although steelmakers based in the U.S. reported record and near-record profits in much of 2021 and into the first half of 2022, of late they have been warning of reduced expectations for the fourth quarter of 2022 and uncertainty regarding 2023.

The U.S. is not alone in its reduced steel output in 2022 as evidenced by data collected by the Brussels-based World Steel Association (Worldsteel). That association has reported that in the first 11 months of this year, all but two (India and Iran) of the world’s 10 largest steelmaking nations have demonstrated declining steel output in 2022.

The slower domestic steel sector combined with reduced output in the leading U.S. ferrous scrap export market Turkey has helped produce a price for scrap iron and steel that has stayed down in a trough throughout much of this year. The conditions have caused at least one metals recycling firm in the U.S. to warn of a less profitable landscape in late 2022.

In the People’s Republic of China, which currently produces about half of the world’s steel, an overbuilt apartment tower market has likely led to a steel sector due to be scaled back. The Beijing-based China Iron and Steel Association (CISA) has indicated that from Dec. 11-20, 2022,, its steelmakers produced 1.15 percent less steel compared with the first 10 days of the month.

According to India-based website SteelOrbis, that reduction has taken place after the early December period marked a 2.06 percent drop in output compared with the final 10 days of November.

At the same time, according to the CISA as reported by SteelOrbis, finished steel inventories in China rose by more than 4 percent in the Dec. 11-20 timeframe, despite the output reductions.

In addition to its overbuilt housing market, China’s economy has been roiled by inconsistent but sometimes draconian COVID-19-related restrictions. The long-lasting restrictions have been lifted this month, which has led to a COVID-19 infection rate reportedly reaching alarming proportions.