The Treasury Department hopes to finish calculating its reference prices for foreign steel by the end of the month and is leaning away from its initial notion of deriving hundreds of different reference prices, one for each of the products imported into the United States.
Instead, Treasury economists are looking to a system which would set a minimum number of base prices to which additional charges would be added to take account of the differences between the basic product and the additional ingredients or treatments most buyers want.
Treasury Undersecretary Anthony M.Solomon - who devised the complex, five-part program to help the ailing American steel industry - said the U.S. Customs Service, which must administer the reference price program, feels it could more easily handle a "base price plus extras" approach.
The reference prices are designed to shelter American steel makers from unfair, below-cost sales of foreign steel and not to penalize foreign steel maker who can sell their steel in the United States, pay all the costs of shipping it here, make a profit and still price below U.S. makers.
Japanese steel producers, reportedly the world's most efficient, supplied data on the production costs of the six biggest Japanese producers to American officials most of last week.
The complex task of sifting through Japanese production data and devising a formula to set the reference prices fell to Robert Crandall, deputy director of the Council on Wage and Price Stability, and the assistant director for wages and Prices, Jack Meyer.
Crandall and Meyer said they have had some difficulties trying to insure that the costs of production reported by the Japanese are comparable to the costs reported by American steel makers.
For example , Japanese producers report a much higher "yield" of production than do Americans, meaning that Japanese turn a bigger proportion of the molten raw steel they produce into finished product.
However, Meyer and Crandall noted. American producers claim to turn out more finished products than do the Japanese, who may ship their steel to another mill to perform further procedures. As a result, Japaneses production costs may seem lower than they should relative to U.S. costs because the Japanese do less processing.
Under a base price system, the government would set a reference price for a base type of steel - say hot-rolled strip - and add additional charges to account for the various "extras" the steel has added: such as special alloys, acid baths or if it is delivered in a special shape, Using this procedure, the Customs Service can develop a reference price for every steel product imported into the United States.