The steel industry continues its slow recovery from the 2008 recession with robust U.S. auto sales and improved construction activity supporting demand. However, the industry faces a challenging operating environment that includes weak apparent consumption, overcapacity and increased competition from imported steel.
Apparent consumption of steel, a measure of domestic demand, contracted 3.7% to 7.9 million tons in June 2013, compared with the previous year. Inventory levels remain low, and buyers are reluctant to purchase due to short lead times and anticipation of price declines.
While U.S. steel mill capacity remains mired in the mid-70% range, recent supply-side disruptions have allowed mills to boost pricing. Domestic producers have increased prices four times since May 2013 as problems or planned maintenance at several large U.S. facilities have reduced supply.