As noted last month, the steel industry has had a roller coaster of a year, from steel prices being at record highs then dropping to devastating lows, with production declining along with demand.

The slide in demand has caused a decline in steel prices with the average price hovering at about $690/metric ton recently, dropping from $1,100/metric ton in early 2008, as reported by the Wall Street Journal (subscription required).

So far this quarter, steel has not had a good start, with October's global steel production totaling 100.5 million metric tons, a 6.9 percent drop from September's total and a 12.4 percent drop from the same month last year, according to the World Steel Association (worldsteel) — formerly the International Iron and Steel Institute (IISI). The world crude steel production moving annual total growth rate further slowed to 3 percent in October from 4.7 percent the month prior.

According to worldsteel, Asia produced 56.9 million metric tons of crude steel in October, with 35.9 million metric tons of that coming from China. Despite producing so much of Asia's overall crude steel output, China experienced a 17 percent decline in production in comparison to 2007 and a 9.4 percent drop since September.

France was the only country in worldsteel's crude steel production report to show an increase in production from October 2007 — 16 percent at that — by producing 1.6 million metric tons in October. In contrast, North American crude steel production in October was 12.9 percent below that of the same month last year.

As such, steel shipments from U.S. service centers plummeted in October, The Plain Dealer notes (via Cleveland.com Business Blog). Shipments dropped by 3.6 million tons, or nearly 23 percent, compared with the 4.7 million metric tons shipped in October 2007, The Plain Dealer reports the Metals Service Center Institute as having said.

"Demand is way off," the president of a Cleveland steel company said to The Plain Dealer. "Everyone is trying to reduce inventory and scratching their heads wondering when things are going to get better."

Due to October's dire conditions, ArcelorMittal — the world's largest steel producer based on sales — has had to idle both its blast furnaces in Cleveland that month, The Plain Dealer says.

U.S. Steel Corp, the United States' largest steel producer based on sales (10th in the world), also had to shutter several operations temporarily and lay off thousands of workers. U.S. Steel announced this week that it will idle three facilities to reduce production in response to the drop-off in orders, the Associated Press reports.

The move will affect roughly 3,500 workers, the company said in a statement. More than 13 percent its North American workforce will be laid-off, the Wall Street Journal adds.

According to the Associated Press, U.S. Steel is halting production at Keetac, an iron ore mining and pelletizing facility in Keewatin, Minn.; Great Lakes Works near Detroit, Mich.; and Granite City Works near St. Louis, Mo. Prior to this, U.S. Steel had already laid-off 678 workers in the U.S. and Canada.

"We believe that our difficult decision to temporarily consolidate our production is a necessary response to current market conditions," John Surma, U. S. Steel chairman and CEO, said about his company's latest announcement. According to the Journal, steel plants are unable to make a profit when steel prices dip below $650/metric ton. Prices are currently at $690/metric ton.

The company has not determined how long the temporary idling will last because it is dependent on market conditions, a U.S. Steel spokesperson told the St. Louis Business Journal.

Recent/Earlier

Abrupt Slowdown in Steel Industry

In Face of Weaker Demand, Steelmakers Consider Production Cuts

The Steel Situation: Production, Prices and Shipments

Resources
October 2008 Crude Steel Production
World Steel Association, Nov. 20, 2008

Steel shipments down 23% in October
by Sarah Hollander
The Plain Dealer (via Cleveland.com blog), Nov. 19, 2008

U.S. Steel to Lay Off 3,500 Workers (subscription required)
by Robert Guy Matthews
The Wall Street Journal, Dec. 3, 2008

US Steel Idles 3 Plants, Affecting 3,500 Workers
The Associated Press, Dec. 2, 2008

U.S. Steel to Idle Granite City Mill
by Kelsey Volkmann
St. Louis Business Journal, Dec. 2, 2008

Top Steel Producers 2007
World Steel Association