stainless steel producers chose an interesting manner

 Some stainless steel producers chose an interesting
manner to raise prices in April 1969: An official announcement
was made that most discounts on stainless steel sheet would
be eliminated. l1/
On July 30, 1969, a fascinating series of events began.
U. S. Steel announced a list price increase. General Motors'
Fisher Body division, which was using 10.4 percent of total
industry shipments, advised U.S. Steel ~?,~old back on shipments "pending a re-evaluation of the competitive situation
with respect to steel prices." General Motors' move was
considered uncharacteristic and appears to have been an effort
to get bids from other suppliers who would refuse to follow
U.S. Steel's lead. However, the market demand was sufficient
to make the price increases stick:

 the price hike was followed
by other steel prOducers and even Fisher Body had to resume
steel purchases at the new prices. 14/
These events lend further support to the position that
U.S. Steel's price leadership is "barometric" rather than
"dominant" or "collusive." If the price hike had been to a
level at which industry prices were above industry marginal
costs, then faced with the "countervailing power" of General
13/ "Washington Steel Boosts Stainless Price by Ending Most
DIscounts on Sheet Items," Wall Street Journal, April 11, 1969:
"Allegheny Ludlum Steel, Eastern Stainless Follow Discount
Withdrawals," Wall Street Journal, April 17, 1969.
14/ "To U.S. Steel, General Motors Speaks for the Little Man,"
wall Street Journal, Aug. 5, 1969: nG.M. 's Fisher Body Unit
Resumes Buying of Steel After Resisting Prices," Wall Street
Journal, Aug. 7, 1969~ p. 15.
Motors, it is likely other producers would have sought General
Motors' business at the lower quotes. However, General Motors'
effort to halt the price hike failed and additional sùpport
is gained for the view that the pr ice hike was "barometr ic.;
i.e., it merely reflecteõ oasic supply and demand conàitions.
The price àevelopments of 1969 were summarized by the
Steel Market Committee of the N.A.P.M.:

 .-u.. _.
The fact that most of the announced'price increases
stuck is probably not too surpr is ing in v iew of
the world demand for steel dur ing the past year.
. .. It would appear that the law of supply and
demand was at work. 151
The boom in steel demand eased by June 1970. Exports
were at record levels for the first six months of 1970, and
remained strong in the third quarter due to orders placed
dur ing the second quar ter. However, the strong demand for
exports subsided by June 1970. 161 The strong export demand
was partly responsible for the continued firmness of prices
through June 1970. !II
The first steel products on which unannounced pr ice
cutting appeared were stainless steel bar, rod, wire, and
forging billet. These price cuts began in mid-April 1970
151 "The Steel Market,. Bulletin of the National Association
õr Purchasing Management, Jan. 21, 1970, p. 6.
161 "Boom in U.S. Steel Exports Is DiminiShing, Mills Say, and
'Prices are Also Declining," Wall Street Journal, June 29, 1970,
p. 8.
171 "World Actions Dominate Steel Price Movement

," Journal of
Commerce, May 4, 1970,p. 1.
and were in the two to three percent range. They ran counter
to the overall steel pr ice trends. ~/
By mid-June 1970, the general easing of demand led to
selective pr ice shading, most notably in big volume steel
sheet. The industry announced a five percent increase in sheet
steel prices, effective June 1, 1970. Rowever, steel shipments
were running significantly below the 1969 pace, and discounts
~-~ . -.-
to big tonnage sheet users appeared. Widespread price discounts
were not manifest, but the pr ice spiral of the previous 18
months was hal ted. ~/
On September 13, 1970, Bethlehem Steel responded to secret
price shading on some galvanized steel products by eliminating
the extra charges on certain extra smooth or temper-rolled
galvanized steels. Bethlehem said the move "is directly
responsive to a competitive situation in the market place." 20/
The report of the Steel Market Committee of the N.A.P.M.
on November 18, 1970, stated:

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