Steel companies were supposed to be entering a turnaround in 2015. The strong dollar and weaker international markets have gotten in the way. Most earnings reports from the U.S.-based international steel and metals giants sounded much the same. Now Moody’s has issued its warning that the outlook for the U.S. steel industry has been lowered to negative from stable.

United States Steel Corp. (NYSE: X) was named in the report as having been affected by lower oil prices affecting its sales of tubular goods into oil patch companies. It may be due to a serious post-payrolls market pop, but U.S. Steel did not get the memo that its shares were supposed to have some concern on Friday’s downgrade. 24/7 Wall St. looked into this further, and we have shown how the recent earnings report and guidance may remain serious concerns ahead.

Perhaps the biggest warning of them all was right up front, and it will hurt for those hoping for great and rapid turnarounds ahead of 2016. Prices have collapsed across all grades of steel and capacity utilization rates remain weak. Capacity utilization rates are below 75% and the U.S. purchasing managers’ index (PMI) is less than 50. Industry outlooks reflect Moody’s expectations for fundamental credit conditions in a given industry over the next 12 to 18 months.

Market and supply-demand issues are expected to weigh on capacity utilization rates through the outlook horizon. Moody’s expects utilization rates to range between 70% and 74% in 2015, while PMI remains in decline despite being above 50.

On the fear of pricing issues, Moody’s signaled that selling prices have fallen rapidly this year, and those prices are now at levels that have a negative impact on profitability for steel makers. Hot rolled coil prices averaged $494 per short ton through April of 2015, versus an average of $657 per ton in 2014. While steel companies recently announced a $20 price hike per ton, Moody’s warned that whether the price hike will stick remains to be seen.

While there are multiple reasons accounting for the steel price decline, the main two cited were a recent drop in oil prices hurting those that sell into the oil country tubular goods, and that import levels remain high (finished steel imports were up 35% year-on-year) and are to continue based on a strong dollar.

The formal quote from Moody’s should indicate how poor the recovery chances are looking. Friday’s report said:

Capacity utilization rates for the US steel industry through the week of 25 April stood at 72.4%, against 77% for the comparable period last year. While severe weather hindered movement of input materials and product in the first four or five months of 2014, the lower utilization rates seen so far in 2015 are indicative of fundamental market and supply/demand issues and will take more time to correct.

While the automotive market remains relatively robust and construction continues to slowly improve, the collapse in the OCTG market and weak demand in equipment markets will dull these brighter spots. We see no catalyst that would lead to material improvement over the next several quarters, and risk remains to the downside.�