U.S. Steel Corp., the nation's largest steel maker, announced yesterday that it will raise prices 2.2 percent Saturday on all steel products to cover the increased costs of the new nationwide coal contract.

The administration immediately attacked the increase, calling it much more than "can be explained by the higher cost of coal as a result of the recent settlement between the coal industry and the United Mine Workers of America."

The Council on Wage and Price Stability said that, according to its calculations, steel production costs would be raised by $4 a ton by the third year of the new coal pact.

The increase U.S. Steel announced yesterday was $10.50 on every ton of steel it makes.

Coal is a key ingredient in steel making.

The U.S. Steel announcement, which follows a 5.5 percent steel price increase last month, comes at a time when inflation appears to be heating up and the president's advisers are telling him he must act to rein in prices or accept some painful political and economic consequences.

Carter announced a sketchy anti-inflation program last January, relying mainly on voluntary cooperation from business and labor to reduce the rate of inflation by a half percent a year. The president is expected to announce a more detailed program when he returns from his trip to South America and Africa.

Steel is a critical product to the administration's anti-inflation fight because the metal is used so widely, in automobiles, appliances and construc [TEXT OMITTED FROM SOURCE]

The Council on Wages and Price Stability noted that if U.S. Steel plans to abide by the President's standard for slowing the rate of inflation, then the increase announced yesterday is the last one the company can make all year.

The council statement, which was cleared by Charles L. Schultze, chairman of the Council of Economic Advisers, noted that steel prices increased 8.5 percent last year and that by April 1, U.S. Steel's prices will have risen by nearly 8 percent this year.

"Today's announcement by U.S. Steel implies that no further increases would be forthcoming over the remainder of the year if the objectives of deceleration in the rate of steel price inflation is to be achieved," the council said.

Late in the day Wheeling-Pittsburgh Steel Corp. followed U.S. Steel's lead, but the second biggest producer, Bethlehem, and others did not. The council exhorted the remaining firms to consider the implications of such an increase "for their own competitive positions and the nation's inflation problem."

The steel industry has also been the beneficiary of a special government program designed to protect U.S. companies from foreign competition by setting minimum prices for foreign steel.

The steel industry had complained that it was the victim of low-cost imports from countries that were willing to sell steel below the cost of production in order to avoid laying off workers during a recent worldwide down-turn in steel demand.

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.

Because of the import program and a recent increase in steel demand for construction, the nation's steel mills have experienced a big increase in orders.

Officials said yesterday that they were irritated that U.S. Steel made no mention of its imminent price increase when company officials met with Barry Bosworth, director of the Council on Wage and Price Stability, last Monday.

Bosworth's council has had about a half-dozen meetings this week with companies from the steel, automobile and aluminum industries to explore the inflation outlook for the rest of the year. The meetings are the first step toward eliciting business support for a more detailed anti-inflation program.

The price increase announced by U.S. Steel yesterday covers all its steel products, including sheet and strip (used to make cars and appliances), structural steel and alloys. Steel making accounted for about 80 percent of U.S. Steel's $9.7 billion in sales last year. One economist estimated that the $10.50-a-ton increase would add $10 to $15 to the cost of a new car.

Independent coal companies have not announced any coal price increases since miners went back to work Monday. The United Mine Workers estimate that workers will receive a 39 percent wage increase over the three-year contract.

U.S. Steel mines about 70 percent of the coal it uses and buys the rest from independent coal companies. The steel giant is one of the nation's largest coal miners as well.

Most other major steel companies have large coal mining operations, too.

U.S. Steel cited higher costs for both the goal it mines and the coal it buys as justification for the price increase. The company said it expects an "unprofitable" first quarter because of high costs related to the coal strike. The company took steps to stretch out coal supplies by using more expensive alternate fuels in some operations.

Coal is a major ingredient in steel making. After it is transformed into coke in giant ovens, it is combined with limestone and iron ore in a blast furnace to make molten iron. The iron is then purified into steel in a separate process.