This pattern is exhibited to an extreme degree by the
Luxembourg producer s. The data reveal absolutely no pr ice
change on many steel products for a 10-year per iod between
1958 and 1968, after which list prices tended to increase,
never to decl ine.
Although not as marked, the non-decreasing pattern of
list prices is also true of the German and French producers.
During the worldwide recession of 1958, '£he'major' producers
of West Germany anå France raised their list prices for
vir tual ly all products. The next most ser ious recess ion for
the EC was in 1965; again, the major producers of West Germany
anã France held their list prices unchanged.
The years 1961-63
are years of below average growth in apparent steel consumption
for the EC. Yet the West German producers held their list
prices fixed, while the French producers raised their list
prices on Thomas quality steel. Again, in the 1971 recession,
German list prices rose, while the French remained constant.
During the 1975 recession, list prices did not decline. However, most producers listed "temporary rebates" on carbon
steel products.
Unl ike the major producer s of the EC, the smaller Belg ian
steel producers exhibited aggressive list price cuttin~ during
.~ recessions. Stegemann (30l concluded that dur ing the years of
depressed growth in steel demand in the EC--1963, 1965, 1966,
and 1967:
-200-
... aggressive pr ice cutting (by the Belgians)
which reduced the price floor did take place. .
Whereas in the case of the other countr ies the
VDMA data for each product generally reflect the pr icing behavior of one major national
producer or a coherent group of national
producers, the lowest Belgian list prices for
certain products are the result of considerably
ùiverse pricing policies of individual firms or
subg roups.
During the 1963-68 period, the Belgian list prices became
the lowest in the EC for wire rod, merch~rt bars and heavy
plate. 56/
Al though not to the same extent as the Belg ians, the
proäucers of The Netherlands and Italy have also exhibited
some list price flexibility. For example, list prices were
lowered in both Italy and The Nether lands dur ing the 1958
recession.
During the recent recession of 1975, "temporary
rebates" off 1 ist pr ices were granted by both Dutch and Ital ian
producers on products such as hot rolled hoop and str ip,
merchant bars, and concrete reinforcing bars.
However, one must look beyond the monotonic non-decreasing list prices in the Ee to transactions prices if one is to
discern the pattern of EC pricing. Legally, no EC steel firm
may sell steel at a given place for a pr ice lower than the
lowest delivered list price that has been quoted by any firm
for that place. For example, if a French firm has quoted the
56/ The data on Belgian relative list
bY Klaus Stegemann frqm data supplied
Germah Machinery Manfacturers (VDMA). ,
more detail on this subject.
pr ices were calculated
by the Association of
See (30, ch. 3) for
-201-
lowest delivered price for Paris, a German firm may legally
sell at a price below its own published delivered price,
provided it is not below the French firm's quotation.. Such
sales are termed "alignment" sales.
An EC steel firm may sell
below its own quoted price by ali~ning on another EC firm's
quoted price or on the delivered price of a firm from outside
the EC. Selling at prices lower than the lowest quoted
.~ .
delivered price is illegal under the terms of the Treaty of
Paris. 57/
During the 1963 recession in the European Coal and Steel
Community (ECSC), steel producers made significant use of their
alignment rights. The weighted average of the price reductions
for all alignment sales by Community producers in 1963 is
estimated at 30 to 35 percent (25, p. 227).
Since June of 1967, the EC High Authority has been collecting confidential data from steel producers on the modes of
pricing certain important steel products. These data are
compiled into summary statistics and are occasionally released.
Table 4.10 shows data for the first quarter of 1970 (a boom),
the second quarter of 1972 (contraction), and the second quarter
of 1973 (a boom). For the three quarters in the table, sales