More in Sorrow than in Anger

-c-METALS

Back in October 1965, the nation's aluminum industry announced price increases, only to back down when the inflation-wary Johnson Administration threatened to dump Government stockpiles on the open market. Last week, following a wave of price hikes on other basic metals, major aluminum producers decided to try again. This time the Administration reacted through Gardner Ackley, the President's chief economic adviser, who criticized what he called an "ill-timed sequence of price increases."

Ackley apparently spoke more in sorrow than in anger--and this seems to have been the pattern in recent metal price hikes. When the leading U.S. copper companies, which had also been pressured into rolling back price hikes in 1965, announced 2-c--a-lb. increases two weeks ago, Washington merely grumbled. Thus encouraged, nine steelmakers last week followed Jones & Laughlin Steel Corp.'s earlier lead in raising prices on tubular products by averages of 2.5% to 3%. At the same time, the price of molybdenum, an alloy agent used in strengthening steel, was raised 3.7% by two leading producers. In view of all the activity, the aluminum increases -- 1/2-c-10 a Ib. by Alcoa, Alcan, Reynolds, Kaiser Aluminum and Olin Mathieson--seemed almost anticlimactic.

While obviously unhappy about it, the Administration has pretty well exhausted both its stockpiles and its powers of persuasion. Industry, meanwhile, has learned to be more prudent. This time round, a number of the companies consulted with Washington before raising prices, then kept the increases relatively modest. And, as Ackley admitted, the copper, molybdenum and aluminum producers had patiently "held back price increases for periods ranging from six months to more than a year."

The steel industry had shown even more restraint: its price move on tubular products, which comprised 10% of the industry's output, was the first such increase in eight years. Even so, baffled economists pointed out that it came at a time when the construction industry, a major user of steel pipe, is in decline. Moreover, it seemed to ignore the growing competition from foreign steelmakers, who accounted for about 10% of all sales in the U.S. last year. There is a suspicion in Washington that steel, for one, may yet have to rescind its price increases--not so much because of Government threats but to make its way in a highly competitive market.

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