rolled sheet and strip. l/ Armco Steel, Inland Steel, and
Jones and Laughlin Steel off icially denied making selective
price cuts to meet foreign competition; however, some purchasers said that "Jones and Laughl in salesmen are offering
to meet U.S. Steel's prices which are down to the import
leveL." .ii
Moreover, U.S. Steel began offering some steel distributors
discounts of as much as 20 percent on certain grades of stainless steel sheet. "The discounts are reported concentrated
in the 10 percent to 15 percent range and are in return for
bulk orders of at least 100 tons." ~/
The National Association of Purchasing Management
(N.A.P.M.) has a "Steel Market Committee," composed of some
30 purchasing managers who buy steel. The steel committee
surveys its members, meets from four to six times per year
and issues reports. The July 1968 report states:
3/ "Unlikely Rebel: U.S. Steel Cuts Prices to Fight Import
Boom," Wall Street Journal, May 9, 1968, p. 1.
4/
"Armco Steel, Inland Steel and J&L Say They Won't Follow
Cuts to Meet Import Prices," Wall Street Journal, May 13,
1968, p. 6. See also: "Steel Pricing Shows Some Flexibility,"
Business Week, July 27, 1968.
5/ "U.S. Steel Said to Slash Prices of Some Stainless," Wall Street Journal, June 12, 1968, p. 3. See also Business W~ July 27, 1968, p. 5.
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Though it is doubtful if there are as many
deals going on as there are stories, some
of our members have reported instances in
which ~ills have negotiated prices in order
to meet a competitive situation. While these
instances are not rare they are apparentl~ on
a selective basis and are being restricted to
particular mill products. ~/
When the United Steelworkers' contract was settled in
1968 without a strike, buyers began drawing down accumulated inventories. 2/ This fact, along with import competi-
~ ~
. ~~ . ~y
tion, led to the inability of the industry to make its announced
price increase (on approximately two-thirds of the industry's
products) stick for all products. Some warehousemen were .
said to have received 20 percent discounts. ~/
By early October 1968, many steel companies where slashing prices as much as 20 percent on a number of high volume
items. At that time the price cuts included big steel
customers such as auto and appliance manufacturers but did
not cover all products. 2/
In response to these developments, Bethlehem Steel
Corporation announced a 22 percent reduction in the list price
6/ "The Steel Ma rket," Bullet in of the Na t ional Associat ion
of Purchasing Management, July 17, 1968, p. 5.
7/ "The Steel Market" Bulletin of the National Association of
Purchasing Management, Sept. 18, 1968, p. 8.
'8/ "Steel Prices Weaken Despite Announced Price Increase,"
Wall Street Journal, Sept. 5, 1968, p. 1.
~~
2/
"Bargain Steel," Wall Street Journal, Oct. 7, 1968, p. 1.
- i 76-
of hot rolleà sheet to $88.50 per ton, .to meet domestic
competition.' The move by Bethlehem was an effort to restore
industry pricing discipline. U.S. Steel and most other major
mills followed Bethlehem in initially lowering their list
pr ices of hot rolled sheet to the Bethlehem quote. Significant
price shaving also existed in products such as cold rolled
sheet and galvanized sheet, but the list price cuts did not
extend to these products. However, a $'t!l per ton price cut
in hot rolled carbon strip was announced. 10/
On November 20, 1968, the Steel Market report of the
N.A.P.M. announced:
An add i t ional infl uence on steel pr icing is
the reporting by a significant number of members
that they are able to obtain steel at less than
published domestic mill prices either through
special mill offers or the purchase of imported steel.
By Feoruary 1969, the selected list price cuts were
restored to precut levels. Moreover, the industry exper ienced
a production turnaround that greatly lessened the price
discounting. .!/
The August 1968 to January 1969 per iod represented a
time of deep discounts for steel mill products. Despite this,
10/ .Pr ice Cuts Make Steel Purchasing Picture Uncertain,'
Wall Street Journal, Nov. 11, 1968, p. 2: 'Steel Industry Hit
By Major Price Cut,' Business Week, Nov. 9, 1968, p. 35:
'Revolution in Steel Pricing,. Business Week, Dec. 14, 1968,
p. 41: .Steel Mill Pr ice Cuts Improve Competitive position,'
Iron Age, Nov. 14, 1968, p. 57.
.!/ .Contrary Steei,r Wall Street Journal, April 2, 1969,
p. 1: and see (26, pp. 169) for an account of this episode.
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the BLS data on steel mill products show an increase dur ing
this per iod. BLS recoròed the pr ice decreases in hot rolled
sheet and strip, since these were list price decreases;
However, cold rolled and galvanized sheet prices, which
were also heavily discounted, were reported by the BLS to have
risen. Clearly, the BLS data are inadequate with respect to
the record ing of actual pr ice discounts dur ing this per iod.
The year 1969 represented an intern~fÃonal boom year for
steel and prices firmed throughout the industry. Domestic
customers found foreign steel available only at prices
relatively higher than in 1968