Methodology
In this section the relative steelmaking costs of the
United States and the original six members of the European
Community (EC) are examined. The cost of delivering three
steel products, cold rolled carbon sheet (CRS), hot rolled
carbon sheet (HRS) and wire rod (WR), to the United States
were estimated. HRS and CRS were selected because they are
representative of flat rolled products generally produced by
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major steel mills and because together they account for onethird of net industry shipments. WR was chosen because it is
representative of the non-flat type product which minimills
are capable of producing. The basic methodology used was to
compute
, for each product, the average revenue per ton realized
by United States and EC steel producers in their home areas,
and then to subtract from that a factor reflecting the average
rate of return on sales for each group o~.producers. To the
~_...
value thus obtained for the EC, a figure was added to reflect
the cost of transporting steel to the United States, including
tar iff.
One problem with this method of cost estimation is that
profit rates are not available on a product by product basis
and over all industry rate of return must be used. 11/
Estimates for some products in some years may not be meaningful
due to estimation errors caused by this and other factors. As
with the United States/Japanese comparisons, however, the
figures should accurately reflect long-run trends.