U.S. Steel Corp., the nation's largest steel maker, yesterday announced price increases averaging 32 percent on most steel products, including those used in consumer goods. It is the fourth time this year the company has raised its prices.
"Our costs are going up, they have gone up," said a company spokesman explaining the increase.
The move brought no quarrel from the government's anti-inflation fighters, John Campbell, a spokesman for the Council on Wage and Price Stability, said U.S. Steel executive had met with administration officials earlier in the week to discuss the price hike.
"They described their planned increase, and based on the information provided to us, we find it is consistent with the price standards," Campbell said.
The price guidelines, which were set by President Carter last month, seek to hold annual price increases to half a percentage point below the average annual increases of 1976 and 1977.
But the guidelines did not go into effect until Oct. 1 of this year. This means that the 55 percent increase in steel prices last February, the 11 percent boost in April and the 3 percent hike in July have not been counted by the administration in its judgment of complaince.
"We've had to ignore them," Campbell said."The reason we excluded the first eight months and go back to 1976-77 as a base for all companies is so as not to penalize those companies that have tried to be responsive to the President's exbortations to hold prices down."
Steel is a critical product in the administration's anti-inflation fight because the metal is used so widely. An increase in the price of steel often leads to a ripple effect of price hikes elsewhere in the economy.
Among those products affected by yesterday's increase are hot and cold rolled sheets, used largely in such consumer goods as autos and appliances. Prices also will go up on hot rolled bars, structural steel, plate rails and galvanized sheet. In all, U.S. Steel will raise prices on three-quarters of its products. The hikes becomes effective Jan. 1, 1979.
Industry observershad been predicting new price boosts early in [WORD ILLEGIBLE] and is likely other steel company will fall into line with U.S. Steel price leader by virtue of its [WORD ILLEGIBLE] in the industry. Officials at the Bethelehem Steel Corp. and National Steel Corp., the second and the ranked producers, were on vacation yesterday. A spokesman at foreign ranked Republic Steel said the company was studying the move.
Steel orders have been stacking at a brisk rate since the spring, a welcome boom to an industry that the year reported disastrous earnings due to strikes, cold wather and an [WORD ILLEGIBLE] of imports. The recent increases in the mestic steel business has been attributed to a decrease in foreign [WORD ILLEGIBLE] either because foreign products are less available or higher priced.
Helping to tilt sales in favor of the mestic producers has been the government's steel trigger price program to signed to protect U.S. companies from foreign competition by setting minimum prices for foreign steel. In instituting the program, government officials hinted they expected the steel companies, in turn, to cooperate with the voluntary wage and price package.
Government officials have warned steel makers that if they increase prices too much, the minimum import prices - based on the cost of production of the Japanese steel industry - will not afford as much protection from foreign competition as they do now.
But trigger prices are going up 7 percent as of Jan. 1, effectively giving the green light to a domestic steel hike of at least that much next year.
Under the terms of the wage and price program, increases in steel prices are limited to an average 8.3 percent during 1979. Further, companies have been asked to take no more than half of their annual price increase in the first six months, which means that U.S. Steel was facing a ceiling for an increase of about 4.1 percent.
Still, some buyers had been looking for increases high as 5 percent, reasoning that steel companies would try to get as much of the total price boost in as early as possible to hedge against possible weakening demand next year. Viewed in that light, U.S. Steel's 3.2 percent increase - coupled with an increase in the price of tin plate Oct. 1 that effectively raises the average price hike for the company's total product line to 3.9 percent since then - is likely to be considered moderate and a boost to the administration's fight against inflation.