Steel production in this country has also been robust. This level will also be one of the very best years in U.S. history. Even with the weaker order books for the past four months, capacity utilization for the year has averaged 90 percent over eight months, a big improvement over the 79.9 percent for the first eight months of 1999. Over the course of an entire year, a 90 percent operating rate would mean that the domestic mills are producing only about 6 to 10 million tons less than their utmost physical capability. Imports are running well ahead of the 1999 pace, up 18 percent.
Inventories are too high .
We have been attempting to whittle down the inventories to bring them into line with shipping rates. While this is a normal and necessary part of the business cycle, the process of adjustment unfortunately is far from complete. This implies that mill orders from the service center industry as a whole are likely to be lower for some months more. The bottom line seems clear. We are not in the midst of a repetition of the 1998 crisis.