The nation's leading steel maker, U.S. Steel Corp., announced a 6 per cent price increase yesterday, virtually assuring a rollback of 1 to 3 percentage points in the increases on steel products set by two smaller companies Friday.
Administration officials, who criticized the 7 to 9 per cent rises set by Republic Steel Corp. and Youngstown Sheet and Tube Co. as inflationary, expressed relief at U.S. Steel's announcement.
"We do not find it out of line," said a spokesman for the Council on Wage and Price Stability.
"We welcome this moderation," said Robert Crandall, the council's acting director. "My guess is that it'll stick. We're pleased" that it was not as large as the other companies' boosts.
U.S. Steel, as the industry leader, generally sets the price level for the smaller firms to follow. It is conceivable - but highly unlikely - that a rate set by U.S. Steel could be rejected across the board by the score of other producers. But industry observers said yesterday's increase is unlikely to be rejected. They noted that the boost falls in line with administration expections and it comes at a time when the steel makers are desperately lobbying the administration for relief from foreign steel imports.
Charles L. Schultze, chairman of the President's Council of Economic Advisers, said he had hoped the increases would be closer to 5 per cent. But he said he hoped that U.S. Steel's increase "is closer to the prices the industry will follow."
In a statement issued yesterday, U.S. Steel said the 6 per cent rise in the price of its flat-rolled, bar, rod and plate products, is to take effect June 19, is "considerably less" than costs justify.
U.S. Steel's base price for flat-rolled steel would be increased to $333 per ton.
Flat-rolled products are used in auto bodies and major appliances and account for nearly half of the industry's shipments. Since about 1.5 tons of steel are used in the average car, a 6 per cent price jump would add about $32 to manufacturer costs, while 7 to 9 per cent increases would tack on $40 to $50, according to economists. The 6 per cent increase will add $3 to $5 to the cost of manufacturing a washing machine or refrigerator, while 7 to 9 per cent boosts would mean $5 to $10 cost increases.
A White House economist said the increases, would probably raise the wholesale price index about .1 per cent or .2 per cent.
Spokesmen for Republic, Youngstown and other major producers, including second-ranked Bethlehem Steel Corp., declined to comment on the U.S. Stee announcement or on their own price policies.
The U.S. Steel statement said its action was taken "as a positive step toward checking inflationary trends," an apparent acknowledgment of the President's anti-inflation program of voluntary restraint by industry rather than price controls.
Company chairman Edgar Speer informed the administration of the impending price boost during a meeting with top economic officials in Washington last week.
President Carter, in a statement released at the economic summit conference in London, termed the price rises by Republic and Youngstown "unwarranted" and "too high." The President called for industry moderation.
Some industry analysts said a more moderate price increase - such as U.S. Steel's - would be in the best interest of an industry pressing for government restrictions on the amount of cheaper foreign steel entering the country. Imported steel sells in the United States for about $50 a ton less than domestic.
U.S. Steel alluded to the industry's concern about imports by noting that it hoped its price increases would stimulate volume productivity and employment which had been affected by imports and "unfair international trade practices."
The latest announcement brings the increase in flat-rolled product prices to 18 per cent over the past 12 months.
Industry analysts and government economics have said that another price increase was inevitable, given the rapidly rising production costs in the steel sector and the disruptive effect the severe winter weather had on production.
Five of the nine leading producers reported losses for the first quarter of 1977, including Republic and Lykes. U.S. Steel's profits dropped $70 million in the first quarter compared with the same period in 1976.
The recently signed agreement with the United Steelworkers Union put additional pressure on the manufacturers. The contract provides for wage increases averaging more than 80 cents an hour over the next three years. The average steel worker made $8.11 an hour under the old contract.