Where's the Shortage?

When Harry Truman seized the steel industry, he gave as one of his reasons the "fact" that steel was so short that a strike would stop the flow of supplies to Korea almost overnight. This week it is plain that, despite the 2,500,000-ton loss from the short-lived strikes, there is still so much steel that some varieties of it are begging for buyers. And while Washington and the steelmakers battle over a price rise, many steel prices are already being slashed by middlemen.

Cleveland's White Motor Co., a big steel user, reported last week that it is able to buy steel sheets 10% below OPS ceiling prices, and bars 5% below. "Steel inventories," said one Cleveland mill executive, "are at a higher level than at any time since World War II." Warehouses in the area are selling 90% or more of their stocks below ceiling prices--sometimes as much as 25% below.

For the first time in years, said a Connecticut warehouseman, "our salesmen are actually out on the road selling steel instead of just taking orders." The reason is that Connecticut Valley manufacturers are stocked up with enough steel to last them up to six months; even when the strike came, no rush for steel developed. Texas oilmen have no trouble finding all the pipe they want; Detroit's auto industry is so well stocked that steel sheets are selling at discounts, and expensive "conversion" steel (i.e., metal produced at one plant and converted into shapes at another) has disappeared.

Turnabout. In Boston and New York, steel from Europe, which recently brought prices as much as 50% over U.S. ceilings, is lying in warehouses waiting for buyers. Customers are becoming more selective. Said a Southern dealer: "Up to a few months ago they would take a substitute bar size, whereas now they will walk away if you don't have the right ones."

So far, only the warehousemen are talking about the turnabout in the market; steelmakers themselves are offering no price concessions. Nevertheless, new patterns are emerging. Birmingham reports that Northern mills are sending agents into the South looking for business as a hedge against expected surpluses. Giant Bethlehem Steel Corp. has sent teams of salesmen to the Chicago area hunting up trade. In Detroit, warehousemen are offering to absorb freight costs to lure buyers in the Gary and Cleveland markets.

Turndown. One reason for the easing of steel supplies is the dwindling demand from makers of appliances and other consumer durables, who are not even taking the metal allotted to them. Another is that the peak has been passed in defense-plant construction. But builders, who would like to use steel for many another project, are still hamstrung by restrictions on nondefense building (see Controls).

Grey marketeers contributed their bit by unloading stocks when they sensed a change in the market. Moreover, the steel industry is now bringing in new capacity at the rate of a million tons a month.

Washington, which cried shortage for so long, is beginning to think that perhaps the situation isn't quite so urgent. Last week applications of five steel companies for a total of $401 million in defense loans for expansion were turned down cold by DPA. Said DPA: no more additional capacity is needed.

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