International credit rating agency Moody’s has stated in a new report that the outlook for the US steel industry is stable, as improved capacity utilization, price increases and higher demand in certain end markets such as construction and drilling benefit the sector's performance. Since January this year, capacity utilization has held above 70 percent, and was 74.6 percent year-to-date through August 26.
According to the credit rating agency’s statement, steel producers' revenues are expected to grow by 15-20 percent this year, although slower growth is expected in the second half of the current year. This reflects the slowdown in key markets and the likelihood that activity among oil and gas and automakers has peaked. Moreover, steelmakers' operating performance improvement in this year will vary by end-market exposure and operating efficiency.
Moody's could revise the outlook of the US steel industry to positive if capacity utilization is sustained above 80 percent and could change the outlook to negative if the capacity utilization is sustained below 75 percent.