The U.S. steel industry is up to its ears in steel, but that steel is not entirely of its own creation.

Some new domestic capacity for sheet steel production isn't helping matters any, but most of the supply glut constraining the business of domestic steelmakers is originating overseas. With its third-quarter earnings released this week, Nucor (NYSE:NUE) revealed a 9% decline in net sales from the prior-year period and a 2% decline in steel mill shipments. Net earnings came in at a comparatively lean $110.3 million, and outspoken and charismatic CEO Dan DiMicco has a pretty good idea as to why operating profits at his company's mills are under such pressure.

It's certainly no secret that imports of Chinese steel have made their presence known on the domestic front in recent years, and the impacts are clear to see on the trailing charts for U.S. Steel (NYSE:X) and others depicted on the year-to-date chart below. But I was shocked to learn just how severe the problem had become. During Nucor's post-earnings conference call Thursday, DiMicco revealed that steel import volumes are on pace to record a 21% increase to reach 27.7 million short tons. More alarmingly, that figure would represent a 43% increase over imports for 2010! For domestic steelmakers struggling through an already impaired demand environment, the resulting pressures are formidable.

Steel

Nucor data provided by YCharts.

Tempering the company's bleak forecast that "slowing economic growth both domestically and globally is expected to be a negative factor through the end of the year," Nucor highlighted the end-market for manufactured goods as a noteworthy bright spot. Sporting positive indications for iconic industrial brands from Ford (NYSE:F) to Terex (NYSE:TEX), the steelmaker added that "the strongest end markets" include "automotive, energy, and heavy equipment." Reflecting that position of relative strength within the industrial sector, as of Thursday's close shares of heavy equipment manufacturer Terex had surged by 45% since I initiated a bullish CAPScall on the stock back in May. I closed that CAPS position a bit too early, but presently I don't perceive much near-term upside remaining in that stock.

The steelmakers, meanwhile, remain steeped in persistent malaise. Nucor remains the strongest of the group in this Fool's view, but as much as I admire the company I would not wish to be holding the shares at this time. The moment I see critical public investment in U.S. infrastructure begin to take shape, however, my outlook could turn bullish in a heartbeat following Nucor's brilliant Skyline acquisition.

Fool contributor Christopher Barker has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and Nucor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.