Within a matter of weeks, the revitalized U.S. steel industry has gone from record prices and profits to production levels reminiscent of the depths of the last recession.

U.S. steel mills operated at only 67 percent of capacity last week, according to American Iron and Steel Institute. Analysts say the industry group's statistics lag actual conditions, so production levels are probably even lower. Analyst Michelle Applebaum estimates domestic producers are making about 63 percent of the steel they are capable of producing, an operating rate last seen in December 2001.

"There is little business being done by the steelmakers," analyst Charles Bradford told clients this week. "Even a 4 percent decrease in the fourth quarter [gross domestic product] does not equate to the nearly empty order books at some of the steelmakers."

Most steelmakers are expecting production will be off 20 percent to 25 percent next year, said John Anton of IHS Global Insight. He believes that steel prices will be about 70 percent of record 2008 levels.

The sudden, sharp downturn, at home as well as around the globe, caught steelmakers and union officials by surprise. It is the most significant test to date of whether the fruits of the industry's brutal restructuring earlier this decade -- which featured a wave of bankruptcies followed by consolidation, plant closings and union concessions -- will blunt the impact of what some economists say is a recession that will last through next year.

Most producers are tight-lipped about what level of layoffs, if any, have resulted from the slowdown, saying only that they are matching production levels with customer demand.

"It was a very abrupt slowdown, unlike anything we've seen," U.S. Steel Chairman and Chief Executive Officer John P. Surma told analysts last week.

About 20 percent of Allegheny Technologies Allegheny Ludlum unit's work force was temporarily laid off this week because of weak stainless steel demand, said spokesman Dan Greenfield. Mr. Greenfield said staffing levels are adjusted each week.

Yesterday, AK Steel lowered a fourth-quarter forecast it issued just two weeks ago. The West Chester, Ohio, producer, which has major operations in Butler, said shipments will be 14 percent lower. Operating profits will be less than $100 per ton, vs. the steelmaker's third quarter operating profit of $210 per ton.

The gloomier outlook comes the day after General Motors and Ford posted sharply lower sales for October and the Institute of Supply Management said its barometer of manufacturing activity hit a 26-year low last month.

"This is beyond autos, appliances and the housing meltdown," Mr. Anton said.

Steel buyers with sound businesses can't order because they are being denied credit, Mr. Anton said. The same is true of car shoppers, and many consumers who can get a loan are afraid to buy a car because of the darkening economic outlook, he said.

Domestic steel producers generated buckets of red ink during the last recession, but should be in a better position to weather this storm, said Tony Taccone of First River Consulting in Pittsburgh.

"Typically, going into a downturn, the industry didn't have the strength on its balance sheet that it has now," Mr. Taccone said. "These guys have a lot of cash on their balance sheets and not nearly as much debt."

Moreover, most of them are expected to be disciplined when it comes to matching supply with demand, Mr. Anton said. Previous downturns were marked by vicious price cutting as steelmakers vied for business at any cost.

"I don't think people will run at a loss to keep market share," Mr. Anton said. "Selling at a loss to keep market share is how companies go bankrupt."