Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
148871
label
Steel Price Increase, 11/76-12/76
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
148871
sourceUrl
contentType
document
title
Steel Price Increase, 11/76-12/76
citationUrl
collections
Records of the Office of the Staff Secretary
1976 Campaign Transition File
subjects
Steel
Industries
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
148871
coverageEndDate
logicalDate
1976-12-01
month
12
year
1976
coverageStartDate
logicalDate
1976-11-01
month
11
year
1976
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
d450ed7a0b850d91
ocrText
Steel Price Increase, 11/76-12/76
Folder Citation: Collection: Office of Staff Secretary; Series: 1976 Campaign Transition File;
Folder: Steel Price Increase, 11/76-12/76; Container 2
To See Complete Finding Aid:
http://www.jimmycarterlibrary.gov/library/findingaids/Staff_Secretary.pdf
UNTC
She
12/2
N
National Steel Corporation
November 24, 1976
MEMORANDUM RE INCREASE IN
PRICE OF SHEET STEEL PRODUCTS
EFFECTIVE DECEMBER 1, 1976
National Steel is today announcing an increase in the price of steel sheets
(hot rolled, cold rolled and galvanized), effective December 1. Attached is a copy of
a letter to the Council on Wage and Price Stability which was delivered today, outlining
the reasons for this action and supporting data. Also attached is a copy of the press
release announcing the action.
It is possible that President-Elect Carter may wish to have the facts with
regard to this increase in connection, particularly, with questions which may be asked
by the media. Hence, these documents are being made available for his possible use
and that of his staff.
While the attached documents set forth what we believe to be the pertinent
data and circumstances, we would like to emphasize several points:
First, the new prices represent a pass-through of only a part of cost
increases which continue to mount up. For example, labor costs were recently
(August 1 and November 1) raised under the terms of the industry's labor agree-
ments; energy costs, particularly for electric power and natural gas, have also
risen steadily. Total cost increases over pertinent periods exceed this price in-
crease.
Second, pricing of sheet products has lagged well behind other steel
products by a wide margin, to such an extent that the profitability of sheet products
has been severely impacted. Needed capital improvements, modernization and ex-
pansion are directly dependent on profit margins, since it is not feasible to finance
these outlays from further heavy borrowings of the type made in the past five years.
Steel industry profitability stands near the bottom end of profits for all manufactur-
ing business in the United States. Further erosion in these low margins can raise
severe problems for National Steel and the steel industry.
Third, any inflationary impact from this increase will be minimized
by these circumstances:
ELECTROSTATIC REPRODUCTION MADE FOR
PRESERVATION PURPOSES
2600 Grant Building. Pittsburgh. Pennsylvania 15219. Phone 412-471-5600
-2-
a. A somewhat similar increase was announced by steel pro-
ducers in August, 1976, to be effective October 1, and was later withdrawn
because of factors in the market place. Many purchasers of sheet steel prod-
ucts have already factored an increase into their costs on the expectation that
a rise in price would occur.
b. Because of the lag in pricing of sheet products (by compari-
son with other steel products), this increase will not necessarily trigger other
steel increases.
c. The business outlook for the steel industry has improved in
the last few weeks, indicating that the "pause" encountered in market condi-
tions has largely arisen from inventory adjustments. Prospects for the first
quarter of 1977 are brighter, thereby ameliorating the impact of these in-
creases.
We will be glad to respond to any questions which President-Elect Carter,
or his staff, may have on this matter.
National Steel Corporation
N
National Steel Corporation
GEORGE A. STINSON
Chairman
November 24, 1976
Mr. William Lilley III
Acting Director
Council on Wage & Price Stability
726 Jackson Place, N.W.
Washington, D.C. 20506
Dear Mr. Lilley:
The purpose of this letter is to inform the Council that National
Steel Corporation will announce today an increase in the price of sheet
steel products, effective December 1, 1976. The increase in prices will
amount to approximately 4-1/2% of our total revenue from all steel mill
products.
We list below the sheet products to be increased and the increase
per ton.
Product
Increase Per Ton
Hot Rolled Bands
$15.00
Hot Rolled Sheet & Strip
$16.00
Cold Rolled Sheet
$20.00
Galvanized Sheet
$20.00
The above price increases will raise prices on our sheet steel
products by approximately 6%.
The last price increase in sheet steel products was on June 14, 1976.
Since that date, our costs have continued to increase. Currently, our steel
division is operating at a loss.
Exhibit "A" attached, sets forth our selling price increases from the
second quarter of 1971 (beginning of Price Control Period) to the third quarter
of 1976. It is apparent from this Exhibit A, that costs have risen substantially
more than selling prices have in this period. Increases in the prices of sheet
2800 Grant Building Pittsburgh, Pennsylvania 15219, Phone 412-471-5600
Mr. Lilley
November 24, 1976
Page 2
steel products have lagged substantially behind price increases in other
steel products causing the profitability of such sheet products to be
severely impacted. This situation is made apparent by Exhibit "B",
which sets out the 1971-76 pricing history of other major steel products.
This Exhibit has been prepared using base list prices, the only steel
industry information available to us on this matter.
From these Exhibits, we believe it is apparent that current prices
do not cover cost increases in sheet steel products and that corrective
action to bring these important products into a more competitive position
with other steel products is badly needed.
The steel producers, who are substantially committed to flat rolled
steel production, such as National Steel with 75% of its capacity in these
product lines, have been seriously handicapped, from a profit and cash flow
standpoint, compared with the producers of heavy steel products, such as;
plates, structural steel and pipe.
Steel industry capital spending needs to modernize and expand
remain high and can only be met if recent exceptionally low profitability
levels are improved.
National Steel recently has expended very large amounts of cash
for capital improvements and replacements. Last year (1975), this amounted
to over $313 million and for 1976 we estimate we will spend approximately
$265 million for new plant and equipment. To meet these heavy capital
expenditure demands, it was necessary for National to borrow a total of
$375 million in the last two years. It is not feasible to support these programs
by further borrowings. Future funds for capital expenditures must come
from cash flow from profits and other internal sources. The price increases
announced today are of vital importance in meeting these needs.
In addition to Exhibit "A" mentioned above, we are also attaching
Exhibit "C" setting forth the cost increases for hot rolled sheets from the
second quarter of 1971 to the third quarter of 1976. Exhibit "D" and "E"
sets forth the same data for cold rolled sheets and galvanized sheets.
We will be pleased to answer any questions which you may have on
these price increases and to supply any additional information you may require.
Very truly yours,
NATIONAL STEEL CORPORATION
A. Stinson, G. Stinson Chairman
George
Enclosures
Exhibit "B"
Price Change History From 6/30/71 (Government Price Freeze Date) Through 6/14/76
113
% Increase As Related To Price on 6/30/71
H.R.
H.R.
C.R.
Galv.
Tin Mill
C.W.
Scamless
Scamless
Base Price On:
Ralls
Structural
Plates
Bands
Sheets
Sheets
Sheets
Products
Pipe
Specialties
O.C,
(1) 6/30/71
$146.00
$148.00
$148.00
$149.50
$159.00
$191.00
$200.00
$207.00
$207.40
$451.35
$355.25
(2) 12/31/73
$167.00
$170.00
$170.00
160.50
171.00
206.00
216.00
229.00
231.40
493.65
408.65
$ Increase
21.00
22.00
22.00
11.00
12.00
15.00
16.00
22.00
24.00
42.30
53.43
% Increase
14%
15%
15%
7%
8%
8%
8%
11%
12%
9%
15%
(3) 4/30/74
$168.66
$196.00
$183.00
$163.00
$173.50
$206.00
$216.00
$239.00
$299.50
$598.80
$526.20
$ Increase
22.66
48.00
35.00
13.50
14.50
15.00
16.00
32.00
92.10
147.45
170.95
% Increase
16%
32%
24%
9%
9%
8%
8%
15%
44%
33%
48%
(4) 8/31/75
$245.00
$226.00
$242.00
$202.00
$220.00
$260.00
$281.00
$321.00
$378.20
$825.35
$679.95
$ Increase
99.00
78.00
94.00
52.50
61.00
69.00
81.00
114.00
170.80
374.00
324.70
% Increase
68%
53%
64%
35%
38%
36%
41%
55%
82%
83%
91%
(5) 10/1/75
$270.00
$251.00
$257.00
$216.00
$234.00
$278.00
$308.00
$321.00
$398.20
$825.35
$704.50
$ Increase
124.00
103.00
109.00
66.50
75.00
87.00
108.00
114.00
190.80
374.00
349.25
% Increase
85%
70%
74%
44%
47%
46%
54%
55%
92%
83%
98%
(6) 2/1/76
$270.00
$251.00
$257.00
$216.00
$234.00
$278.00
$308.00
$352.00
$398.20
$825.35
$704.50
$ Increase
124.00
103.00
109.00
66.50
75.00
87.00
108.00
145.00
190.80
374.00
349.25
% Increase
85%
70%
74%
44%
47%
46%
54%
70%
92%
83%
98%
(7) 5/1/76
$290.00
$251.00
$257.00
$216.00
$234.00
$278.00
$308.00
$352.00
$398.20
$836.94
$734.50
$ Increase
144.00
103.00
109.00
66.50
75.00
87.00
108.00
145.00
190.80
385.59
379.25
% Increase
99%
70%
74%
44%
47%
46%
54%
70%
92%
85%
107%
(8) 6/14/76
$290.00
$251.00
$257.00
$231.00
$249.00
$296.00
$328.00
$352.00
$421.90
$836.94
$734.50
$ Increase
144.00
103.00
109.00
81.50
90.00
105.00
128.00
145.00
214.50
385.59
379.25
% Increase
29%
70%
74%
55%
57%
55%
64%
70%
103%
85%
107%
(9) 7/16/76
$271.00
$282.00
$ Increase
123.00
134.00
% Increase
83%
90%
Note:
(1)
All base prices are those of U.S.S., except C.W. Pipe, Scamless Spec., and O.C.G.
(2)
Note change In relationship between base prices on Flat Rolled Products vs. Platos and Structural since 6/30/71.
CONF IDENTIAL
NATIONAL STEEL CORPORATION
AVERAGE COST DATA - HOT ROLLED SHEETS
Exhibit "C"
COST PER TON
MILL
MILL OVER-
DIRECT
HEAD AND
YEAR
QUARTER
SHIPMENTS
COST
S.G.&A.
DEPRECIATION
INTEREST
TOTAL
1971
2nd
626,444 NT
$112.86
$10.48
$7.35
$2.38
$133.07
1972
1st
417,283
127.39
17.00
6.97
2.99
154.35
2nd
388,618
127.01
16.55
7.53
2.86
153.95
3rd
442,601
131.09
17.82
7.67
2.92
159.50
4th
506,378
131.97
17.19
6.85
2.82
158.83
1973
1st
540,706
132.56
16.28
6.66
2.23
157.73
2nd
558,027
129.55
15.94
5.99
2.24
153.72
3rd
602,673
131.89
16.54
6.13
2.27
156.83
4th
644,679
134.85
16.40
5.71
2.19
159.15
1974
1st
721,090
146.13
15.69
6.28
1.66
169.76
2nd
673,423
166.67
17.69
6.38
1.78
192.52
3rd
685,747
185.57
18.76
6.56
1.72
212.61
4th
645,817
188.22
18.74
5.81
1.95
214.72
1975
1st
620,967
212.48
20.96
9.15
1.96
244.55
2nd
462,092
213.44
26.48
11.83
2.60
254.35
3rd
516,343
219.30
24.37
11.86
2.77
258.30
4th
451,747
222.32
28.36
11.72
2.83
265.23
1976
1st
628,272
220.45
19.78
9.63
2.48
252.34
2nd
711,106
217.33
19.21
8.34
2.32
247.20
3rd
690,937
224.06
20.25
9.19
3.53.
257.03
INCREASE - 2ND QTR., 1971 TO
3RD QTR., 1976
98.5%
93.2%
25.0%
48.3%
93.2%
Adjust 3rd Qtr., 1976 data to include the full pro forma effect of
August 1 and November 1 wage increases and interest on long-term
debt issued August 12:
DETERMINED TO BE AN ADMINISTRATIVE
Cost
$258.92
MARKING BY MDE
DATE 1/12/88
Increase
94.6%
DETERMINED TO BE AN ADMINISTRATIVE
MARKING BY. MDE
DATE 1/12/88
CONFIDENTIAL
NATIONAL STEEL CORPORATION
AVERAGE COST DATA - COLD ROLLED SHEETS
Exhibit "D"
COST PER TON
MILL
MILL OVER-
DIRECT
HEAD AND
YEAR
QUARTER
SHIPMENTS
COST
S.G. & A.
DEPRECIATION
INTEREST
TOTAL
1971
2nd
743,474 NT
$140.88
$13.95
$7.05
$2.38
$164.26
1972
1st
560,150
154.12
17.78
7.44
2.99
182.33
2nd
573,026
153.01
17.90
7.77
2.86
181.54
3rd
520,154
157.54
19.29
8.33
2.92
188.08
4th
570,846
158.87
18.31
7.61
2.82
187.61
1973
1st
711,752
160.01
16.85
7.10
2.23
186.19
2nd
696,882
157.48
16.43
6.61
2.24
182.76
3rd
629,584
162.07
16.95
7.12
2.27
188.41
4th
621,712
163.54
16.47
6.64
2.19
188.84
1974
1st
607,276
175.19
16.32
7.37
1.66
200.54
2nd
553,310
203.02
18.79
8.21
1.78
231.80
3rd
565,213
224.53
20.10
7.73
1.72
254.08
4th
496,443
247.16
21.54
8.80
1.95
279.45
1975
1st
368,266
260.81
22.84
13.89
1.96
299.50
2nd
313,894
268.47
30.07
14.11
2.60
315.25
3rd
400,837
262.40
27.19
14.04
2.77
306.40
4th
355,379
270.86
30.86
14.26
2.83
318.81
1976
1st
535,793
266.35
22.92
11.75
2.48
303.50
2nd
564,992
269.50
22.01
11.05
2.32
304.88
3rd
533,371
274.50
22.91
11.19
3.53
312.13
INCREASE - 2ND QTR., 1971 TO
3RD QTR., 1976
94.8%
64.2%
58.7%
48.3%
90.0%
Adjust 3rd Qtr., 1976 data to include the full pro forma effect of
August I and November 1 wage increases and interest on long-term
debt issued August 12:
Cost
$314.02
Increase
91.2%
CONF IDENTIAL
NATIONAL STEEL CORPORATION
AVERAGE COST DATA - GALVANIZED SHEETS
Exhibit E"
COST PER TON
MILL
MILL OVER-
DIRECT
HEAD AND
YEAR
QUARTER
SHIPMENTS
COST
S.G. & A.
DEPRECIATION
INTEREST
TOTAL
1971
2nd
285,131 NT
$155.30
$18.25
$9.39
$2.38
$185.32
1972
1st
233,357
176.32
16.24
9.09
2.99
204.64
2nd
256,803
178.75
15.39
9.16
2.86
206.16
3rd
260,691
185.64
16.92
10.05
2.92
215.53
4th
239,952
186.51
17.63
9.74
2.82
216.70
1973
1st
293,092
184.28
15.65
8.81
2.23
210.97
2nd
330,492
188.27
14.79
8.36
2.24
213.66
3rd
308,091
195.54
15.91
9.23
2.27
222.95
4th
311,156
200.85
15.05
8.31
2.19
226.40
1974
1st
321,953
219.57
14.98
9.44
1.66
245.65
2nd
296,064
243.96
17.28
9.76
1.78
272.78
3rd
300,382
272.10
18.56
10.02
1.72
302.40
4th
273,229
296.65
21.66
11.32
1.95
331.58
1975
1st
195,762
306.70
25.47
21.15
1.96
355.28
2nd
126,946
325.43
31.17
22.10
2.60
381.30
3rd
181,120
318.43
28.11
19.91
2.77
369.22
4th
162,497
336.72
29.56
18.91
2.83
388.02
1976
1st
239,797
319.61
22.82
16.16
2.48
361.07
2nd
276,215
316.23
22.57
14.74
2.32
355.86
3rd
252,057
332.41
24.84
15.83
3.53
376.61
INCREASE - 2ND QTR., 1971 TO
3RD QTR., 1976
114.0%
36.1%
68.6%
48.3%
103.2%
Adjust 3rd Qtr., 1976 data to include the full pro forma effect of
August 1 and November 1 wage increases and interest on long-term
debt issued August 12:
Cost
$378.50
DETERMINED TO BE AN ADMINISTRATIVE
Increase
104.2%
MARKING BY MIE
DATE
1/12/88