Despite these discounts, the BLS index for steel mill
products showed no change from August 1971 to December 1971.
While discounting on hot rolled and cold rolled sheet was
reported to be especially prevalent, the BLS indexes on these
items also showed no change from August to December of 1971.
In early January of 1972, Inland Steel privately informed
its users that it would offer quantity discounts on flat rolled
products. U.S. Steel responded by cutting prices by $5 to $8
,..¡¡ .
per ton on sheet, eliminating the quantity discount. U. S.
Steel's move was followed, either publicly or privately, by
the other major steel producers in the U.S. 29/
In addition to the cuts in sheet prices, U.S. Steel also
cut a number of non-flat items: $25 per ton on merchant
quality bar, $25 per ton on bar shapes, $15.50 per ton on
light wall electric weld linepipe, $9 per ton on rebar, and
$15 per ton on structural fabric made of heavy wire or light
rod. Most of these cuts remained in effect until mid-November
1972. They represented an effort by U.S. Steel, with the other
major producers following, to regain some business lost to
imports and minimills. 30/
29/
"Quantity Discounts Stir Steel Industry," Industry Week,
Jan. 17, 1972, p. 11, "Major Steel Concerns Cut Prices Diluting Recently Won Increases," Wall Street Journal, Jan. 6, 1972,
p. 3, "Steel Price Cuts Laid to One Mill's Drive to Lift Market
Share, Not Less Demand," Wall Street Journal, Jan. 10, 1972,
p. 2.
30/ "Uneasy Truce on Pr ices, Buyers Pleased wi th Cuts,"
American Metal Market, Jan. 10, 1972, p. 4, "Ground work Laid
for New Look in Steel lr icing," Metalworking News, Jan. 10,
1972, p. I, "Behind thß Disorder in the Prices of Steel,"
Business Week, Dec. 23, 1972, p. 17.
-185-
Despi te these deep discounts on bars, the BLS index of
hot rolled carbon bars showed no change from August 1971
through December 1972.
On February 23, 1972, U.S. Steel Corporation reduced the
list price of its most popular grade of stainless steel plate
by 20 percent. It ind i cated it was moving to put a floor
under prevailing pr iced iscounting in the marketplace. 31/
.~. _.
In response to rising demand, specialty steelmakers
raised prices in late March 1972 by reducing private discounts
to their distributors by five percent. 32/
On April 13, 1972, Bethlehem Steel Corporation announced
it would not raise prices on virtually its entire line of steel
products before January 1, 1973. The action, which was followed
by most major mills, was an effort to stop discounting by
domestic mills, notably Alan Wood and Phoenix, and to meet
import competition. A spokesman for Phoenix Steel indicated
that if a purchasing agent had a bona fide lower offer, Phoenix
Steel would meet the competition. However, Phoenix thought its
company was sufficiently small so that .we couldn't possibly .
hinder anyone.. 33/
31/ .U. S. Steel Reduces Quote 20 Percent on Some Stainless
Plate,. Wall Street Journal, Feb. 24, 1972, p. 4.
32/ .Steelmakers Cutting Discounts Five Points for Stainless
Sheet,. Wall Street Journal, March 31, 1972, p. 2.
33/ .Bethlehem Plans :No '72 Price Rises on Milled Sheets,. Wall Street Journal, April 14, 1972, p. 3.
-186-
In late November 1972, U. S. Steel announced a round of
price increases, averaging 2.7 percent on items other than
sheet and str ip, to be effective January 1, 1973. The increases
were in anticipation of increased demand. ll/ The Steel
Committee of the N.A.P.M.
commented in February 1973 that:
Some of the other producers announced the same
increases, some different increases and some no
increases at all. This creates the unusual
situation of several different prioe,levels
within some product lines and will require
careful study on the part of buyers. The general
opinion in the Committee seems to be that these
increases were expected and will stick. Tnere
is also a feeling that competitive adJustments
will be made where warranted. . .. Many buyers
are beginning to feel that under the current
arrangement, foreign prices do not, in fact,
hold down domestic pr ices since they are tied
to them. They are also beginning to feel that
what is today's ever smaller spread may be
tomor row's premi um as consumption surpasses
capacity in this country. 35/
Probaoly even the Steel Market Committee did not anticipate tne extent to which their prediction would be verified.
A sustained boom in steel demand prevailed--beginning in
November of 1972 and extending to October 1974.
Spurred by especially strong automotive demand, the boom
first hit the flat rolled market. By April 1973, partly as
i
a result of pr ice controls, a shortage of steel appeared.