U.S. steel companies are slashing production to match a collapse in demand caused by manufacturers idling plants to slow the spread of the coronavirus. The U.S. steel industry has fallen into its most severe downturn since 2008.
U.S. mills are operating at 56 percent of capacity, down from 80 percent in 2019, according to the American Iron and Steel Institute, and steel output across the country has fallen by a third in three weeks. The spot-market price for hot-rolled coiled sheet steel is $485 a ton, off 18 percent from a month ago and down nearly half from a high in July 2018.
Analysts expect production to drop further. Even when plants reopen, distributors will likely draw down stockpiles.
When orders pick up, businesses likely will spend less, and high unemployment will weigh on demand for autos, construction materials and energy equipment. Those industries account for 82 percent of domestic sheet-steel consumption, according to market consultant Metal Strategies Inc.
Source: Wall Street Journal