U.S. raw steel production for the week ending Sep 5 nudged up 2.2% on a week-on-week basis on higher capacity utilization, according to the latest report from the American Iron and Steel Institute ("AISI"). Lower output from the Great Lakes region was more than offset by healthy gains in production from steel mills across North East and Southern regions.

The gain came after four consecutive weeks of declines in raw steel production including a 2.2% fall for the week ending Aug 29. Capacity utilization – a key metric in the steel industry – rose on a weekly comparison basis.

According to data released by AISI – an association of North American steel makers – domestic raw steel production was 1,741,000 net tons for the reported week with a capability utilization rate of 72.8%, up from production of 1,703,000 net tons and capability utilization rate of 71.2% for the week ending Aug 29. But the reported weekly production represents an 8% fall from the same period a year ago.

By regions, output from Great Lakes retreated 3.9% on a weekly basis to 618,000 net tons. But production from the Southern district – the second-largest steel-producing region – shot up 4.7% to 597,000 net tons. The North East region saw solid gain with output jumping 20.2% to 232,000 net tons. Raw steel production ticked up 1.4% to 212,000 net tons in Midwest while the Western region saw a 6.8% slump in output to 82,000 net tons.

Overall year-to-date production still trails from the year-ago level. Adjusted year-to-date production through Sep 5 was 60,957,000 net tons at a capability utilization rate of 72.6%, down 8% from 66,231,000 net tons recorded in the same period a year ago. Capability utilization rate for the period also slumped from 78% recorded last year.

Depressed capacity utilization continues to hurt American steel mills. Moreover, U.S. steel makers including Nucor (NUE - Analyst Report), U.S. Steel (X - Analyst Report), AK Steel (AKS - Analyst Report), Steel Dynamics (STLD - Snapshot Report) and ArcelorMittal USA – a part of ArcelorMittal (MT - Analyst Report) – are struggling to cope with a barrage of subsidized imports, mostly from China and South Korea. U.S. producers have suffered heavily due to high levels of imports, reflected by declined orders, idling of mills and layoffs across the country.

Per AISI, finished steel imports rose 6% year over year in the first eight months of 2015, based on the Commerce Department’s most recent Steel Import Monitoring and Analysis (“SIMA”) data. Estimated year-to-date market share of finished steel import is 30%, higher than 28% recorded for full-year 2014.

Fears of accelerated steel exports from China in the wake of a weaker yuan are haunting the American steel industry. Slowing demand at home due to a fragile economy has forced the country to step up steel exports (driven by massive overcapacity) to attractive overseas markets with the U.S. being a prime target market.

Chinese steel exports surged 26.5% year over year during the first eight months of 2015 to 71.87 million tons, per data released by the General Administration of Customs. The country’s steel exports jumped around 25% year over year to 9.73 million tons in August.

According to Global Trade Information Services, Chinese steel exports are expected to top 100 million metric tons in 2015. China accounts for around half of global steel output.

Although the American steel industry still remains under the threat of cheaper imports, strength in the automotive market and an upswing in construction activity augur well for the industry.