Higher -- and Scarcer

A movement that sounded like another stiff price boost in steel got started quietly last week. Blaming increases in the cost of processing, Detroit's Great Lakes Steel Corp. raised its "extra charges" (i.e., for size adjustments, heat treating, pickling, etc.) on hot-rolled sheet and strip steel by $3 to $15 a ton. Next day U.S. Steel boosted its prices on alloys, and Allegheny-Ludlum said that it would charge more for "several of our special grades."

Both Big Steel and Allegheny-Ludlum said that the bulk of their production would not be affected. But the boost in sheet and strip, which are used mainly in autos, refrigerators, washing machines and other such items, would certainly be painful to users. One bodymaker estimated that the cost of an auto made from steel bought from Great Lakes (which supplies about one-sixth of the industry's flat-rolled steel) would go up about $10.

Even if he were willing to pay a higher price, the average user could not help but conclude that the chances of getting more steel were more than ever against him. Steel production last week reached 98.5% of capacity, a new peacetime high. But the industry's voluntary allocations program, Secretary of Commerce Charles Sawyer reported, was "grinding to a halt." The reason, said Sawyer, was that Congress failed to extend the allocations law beyond its March 1 deadline, leaving hardly enough time for all the steps involved in making new allocations ("careful study" of every application, followed by public hearings, followed by the usual 60-day notice to steelmakers).

Acting Secretary of the Interior C. Girard Davidson agreed that allocations had just about been done to death--but by a different hand. He had asked the Department of Commerce's Steel Products Advisory Committee (composed of 27 of the industry's top executives) for enough steel to permit all oil line-pipe mills and mine machinery makers to operate at capacity. The committee had turned him down. Last week Davidson accused the committee of "supplying steel for nonessential and even frivolous purposes ... I can draw no conclusion . . . other than that the steel industry has decided to jettison the voluntary allocations program."

Where was the steel going? After investigating the problem for nine months, a subcommittee of the House Committee on Public Works gave part of the answer last week. It reported that 10% to 12% of all sheet and strip steel production was being sold in the grey market at fantastic profits ranging up to nearly 200% and "running into millions." But the committee raised no prospects for steel users--except that the grey market might get greyer. Advising against any Government action, the committee suggested that steelmakers "police themselves" by "conducting impartial investigations" and "making reports."

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