Commentary | Economic Growth

Steel industry hit hard

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Rob Scott writes in ManufactureThis:  Steel is widely used in manufacturing and construction, and it is one of the hardest hit industries in the current downturn. At the same time, domestic steel producers are also being squeezed by imports from China, which more than doubled in 2008. (imports from a few other countries have also surged in 2008). The future of U.S. steel production depends on the passage of a strong and effective stimulus package, and on strict enforcement of U.S. fair trade laws.
U.S. steel production fell 37.2% between January and November 2008, according to the U.S. Federal Reserve Board’s industrial production index. The bottom fell out of steel production between August and December, as the financial crisis and collapse of auto production hit the industry especially hard. According to the American Iron and Steel Institute’s (AISI) most recent data, raw steel production during the week ending January 3 fell to 866,000 net tons, a 59.3% decline from the same period last year. Capacity utilization stood at 36.4 percent.
Major steel using sectors, some in very serious trouble, have not been hit as hard by the current downturn. Sales of domestic light vehicles were off 36.7% in December. Other major steel using industries have also been hard-hit by the recession. According to the Federal Reserve, industrial production in November was down (relative to a year earlier) by 8.0% in fabricated metal products, 8.8% in machinery, 12.1% in aerospace products and parts and 18.8% in furniture. Declining output in these major steel using industries explain part, but by no means all, of the domestic steel industry’s problems. Read the full post with charts here.


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