• U.S.

Business: Upturn in Steel

2 minute read
TIME

There were hopeful signs last week that the depressed steel industry has reached bottom. For the fourth straight week, steel production edged upward, to 54.9% of rated capacity, the best pace since January. “April.” said U.S. Steel Chairman Roger M. Blough, “may have represented the low point.”

The remarkable fact is that steel companies have been able to continue making money at such low rates. Only ten years ago, 77-80% of capacity was considered a break-even point for most companies. But since that time the industry has sunk nearly $10 billion into new plants and processes, closed obsolescent mills. Companies are so much more efficient that Republic Steel Chairman Charles M. White could say: “We intend to make money at whatever capacity.”

Since the recession in steel, as elsewhere, is spotty, some companies are doing much better than others. U.S. Steel, the nation’s largest producer, is operating at about 54%. Lukens Steel has managed to stay at 90% of capacity because of the continued demand for shipbuilding plates. Inland Steel is operating at 70%, partly because it had a smaller percentage of auto business than other companies. Says Inland Steel President Joseph L. Block: “I guess we’re just selling harder.” Other companies that have been harder hit are beginning to spring back. Youngstown Sheet & Tube is operating at 50% of capacity after hitting a 1958 low of 45%; ninth-biggest Colorado Fuel & Iron has edged up from 42% to 54%, is operating at 70% in some plants.

For the steel companies, an upturn cannot come too soon. Faced with an automatic rise in steelworkers’ wages on July 1, the industry will be in a better position to raise steel prices if orders are rising and inventories down. Armco Steel President R. L. Gray said flatly last week that Armco will hike prices when wages go up. While steel companies talk of an $11 hike (v. last year’s $6), one steelmaker called such a hike “a lot of nonsense,” said the wage boost can “be well covered in half of that.”

Despite the present pickup, steelmakers expect production will fall off again in summer as customers shut down for vacation and the auto industry begins retooling. By fall, they expect to see production rise again, reach about 75% by the fourth quarter.

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