U.S. raw steel production for the week ending Sep 12 went down 2.7% on a week-on-week basis as output shrank across all steel producing areas barring the Western region, according to the latest report from the American Iron and Steel Institute ("AISI").

The decline came after a 2.2% rise in raw steel production in the week ending Sep 5. Capacity utilization – a key metric in the steel industry – also dropped on a weekly comparison basis.

According to data released by AISI – an association of North American steel makers – domestic raw steel production was 1,694,000 net tons for the reported week with a capability utilization rate of 70.9%, down from production of 1,741,000 net tons and capability utilization rate of 72.8% for the week ending Sep 5. The reported weekly production also reflects a 9.8% slump from the same period a year ago.

By regions, output from Great Lakes contracted 1.3% on a weekly basis to 610,000 net tons. Production from the Southern district – the second-largest steel-producing region – also slipped 4% to 573,000 net tons. Output from the North East region skid 9% to 211,000 net tons. Raw steel production ticked down 0.9% to 210,000 net tons in the Midwest. Mills in the Western region produced 90,000 net tons of raw steel, up around 10% from a week ago, making it the only region to witness a production gain.

Overall year-to-date raw steel production continues to lag behind year-ago levels. Adjusted year-to-date production through Sep 12 was 62,651,000 net tons at a capability utilization rate of 72.5%, down 8% from 68,109,000 net tons recorded in the same period a year ago. Capability utilization rate for the period also slid from 78% recorded last year.

U.S. steel mills remain hobbled by depressed capacity utilization and a torrent of unfairly-traded imports. The domestic market remains inundated with cheap imports from overseas producers, especially from China.

Notwithstanding the U.S. steel industry’s low capacity utilization, imports continue to flow into in the domestic market due to foreign producers’ overcapacity. American 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) – have suffered heavily due to high levels of imports, reflected by declined orders, idling of mills and layoffs across the nation.

The U.S. steel industry, which directly or indirectly supports over a million jobs, saw a year over year rise in finished steel imports for the first eight months of 2015. According to AISI, finished steel imports rose 6% year over year during that period.

Estimated year-to-date market share of finished steel import is 30%, higher than 28% recorded for full-year 2014. On the other hand, U.S. steel shipments are down 9.9% year over year so far this year, based on the most recent AISI data.

A significant rise in steel exports from China was witnessed in Aug 2015. The country’s steel exports shoot up around 25% year over year to 9.73 million tons in August, per data released by the General Administration of Customs.

Weakening demand at home amid a flagging economy is forcing China to push up steel exports to attractive overseas markets including the U.S. Low costs of production (leveraging cheap iron ore) in China have enabled the local producers to sell their product at cheaper rates to world markets. The country accounts for roughly half of global steel production.

According to Global Trade Information Services, Chinese steel exports are expected to top 100 million metric tons this year. Fears of accelerated steel exports from the world’s top steel producer in the face of a weaker yuan are haunting the beleaguered American steel industry.