U.S. raw steel production for the week ending Oct 3 inched down 0.5% on a week-on-week basis despite a healthy gain in output from the nation’s biggest steel-producing region – Great Lakes, according to the latest report from the American Iron and Steel Institute ("AISI").

The decline in output follows a 1.7% rise for the week ending Sep 26. Capacity utilization – a key metric in the steel industry – also fell modestly on a weekly comparison basis.

According to data released by AISI – an association of North American steel makers – domestic raw steel production was 1,727,000 net tons for the reported week with a capability utilization rate of 72.2%, marginally down from production of 1,735,000 net tons and capability utilization rate of 72.6% for the week ending Sep 26. The reported weekly production represents a 7.3% slump from the same period a year ago.

By districts, production from Great Lakes went up 5.4% on a weekly basis to 659,000 net tons in the reported week. However, output from the Southern district – the second-largest steel-producing region – slipped 6% to 563,000 net tons. Raw steel production from the North East region also fell 5.3% to 195,000 net tons. Output from the Midwest ticked up 1.4% to 221,000 net tons. The Western region also posted a gain of 2.3% to 89,000 net tons.

Overall year-to-date production still lags behind year-ago levels. Adjusted year-to-date production through Oct 3 was 67,819,000 net tons at a capability utilization rate of 72.5%, down 8% from 73,727,000 net tons recorded in the same period a year ago. Capability utilization rate for the period is also significantly down from 78% recorded last year.

Depressed capacity utilization continues to batter American steel mills. Raw steel capacity utilization remains stubbornly below 80% this year, thereby affecting profits of U.S. steel makers. There is a dire need to raise the capacity utilization rate from the current depressed levels.

In addition, the domestic steel industry remains beset by a torrent of low-cost imports from foreign producers (particularly from China and South Korea), hurting margins of 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). A recovering economy coupled with a stronger dollar has made the U.S. a dumping ground for subsidized steel.

Imports of steel remain a pressing problem faced by the ailing U.S. steel industry. Per AISI, finished steel imports rose 3% year over year in the first nine 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%, still higher than 28% clocked for full-year 2014.

While major American steel producers have taken a series of steps in the recent past to repel the tide of imports, the domestic industry remains under the threat of unfairly-traded, cheaper imports in the wake of a stronger greenback.

Crude steel production plummeted 9.7% year over year to 7 million tons in the U.S. in August, marking the seventh straight month of decline this year, according to a recent World Steel Association (“WSA”) report. Steel market fundamentals are expected to remain challenging in the U.S. through the remainder of 2015.