In the week ending May 2, domestic raw steel production was 1.14 million net tons, while the capability utilization rate was 51.1 percent, according to the American Iron and Steel Institute (AISI), Washington. This marks six weeks of consecutive declines that began at the end of March.
By way of comparison, production was 1.9 million net tons in the week ending May 2, 2019, according to AISI, while the capability utilization then was 81.2 percent. The current week production represents a 39.4 percent decrease from the same period in the previous year.
Production for the week ending May 2 is down 8.5 percent from the previous week ending April 25, when production was 1.25 million net tons and the rate of capability utilization was 55.8 percent, AISI notes.
Adjusted year-to-date production through May 2 of this year was 29.66 million net tons, at a capability utilization rate of 73.2 percent. That is down 11 percent from the 33.34 million net tons produced during the same period last year, when the capability utilization rate was 81.4 percent.
For the week ended May 2, the southern region of the U.S. produced the most steel at 476,000 net tons, according to AISI figures. That South was followed by the Great Lakes region at 401,000 net tons, the Midwest at 121,000 net tons; the Northeast at 109,000 net tons and the West at 37,000 net tons.
The restart of automotive manufacturing in the U.S. could help to boost demand for steel and production at domestic steel mills, however, few automakers have followed through on their initial projections to restart manufacturing in late April or early May.
According to CNN, Ford, General Motors and Fiat Chrysler all shut down their North American operations March 19. Ford initially intended to reopen facilities and restart production March 30. However, that goal was delayed indefinitely March 31, and some of the company’s plants began making personal protective equipment in late March. General Motors also has been manufacturing masks as well as ventilators at some of its plants and has not indicated when it will resume vehicle production. Fiat Chrysler said it would restart May 4, though that has not happened.
CNN reports that Mazda restarted its Mexican operations April 30 after shutting down March 24. Volvo idled its U.S. plants March 26, with initial plans to open in mid-April that it revised to May 4. However, it has not been confirmed that manufacturing has resumed.
Starting March 21, Volkswagen temporarily suspended production at its manufacturing plant in Chattanooga, Tennessee, with plans to restart May 3 announced April 22. That has since been extended, with no new date having been specified, CNN reports.
Toyota shut down its North American plants March 23, with its most recent announcement noting production would resume May 11 because of supply chain issues, while Honda announced the shutdown of its U.S. production March 18, with plants to resume production May 8, the same date Subaru has targeted for its U.S. plant.
Since the COVID-19 outbreak began in the U.S., steelmakers also have been affected by the slowdown in nonresidential construction, which has faced numerous challenges that have led to declines in most categories of private construction spending in March, according to an analysis of government data by the Arlington, Virginia-based Associated General Contractors of America (AGC).
“Unfortunately, these numbers are only the beginning of what seems sure to be a steep decline in construction spending as current projects finish and new work is canceled or postponed indefinitely,” says Ken Simonson, AGC chief economist. “Our latest survey found that projects as far out as June or later were being canceled [in March].”
He says 10 out of 11 private nonresidential construction categories in the Census Bureau’s monthly construction spending release declined from February to March, with the only exception—communication construction—probably reflecting increased demand for structures to accommodate the jump in video conferencing for business, educational and personal use.
“In addition to the downturn in private construction, public categories were mixed,” Simonson says. “For instance, highway and street construction spending increased by 4.6 percent, which probably reflected favorable weather and the ability of highway contractors to work longer hours on nearly deserted roads. But other major public segments, including educational construction and transportation structures such as transit projects, declined. Further declines in public construction are likely as state and local governments struggle to balance their budgets in the face of unbudgeted expenses and steep, unanticipated revenue decreases.”