Shortage of scrap put the screws on the whole U.S. steel industry last week. Bethlehem's President Eugene G. Grace gloomed that the situation was "very, very serious," that Bethlehem had been forced to import some of its scrap from Mexico and Cuba, that it now had only two weeks' supply on hand. A Wheeling Steel Co. plant in Portsmouth, Ohio cut production 1,300 tons a week because of the shortage. Cleveland mills were able to buy only 65% of their requirements, were rapidly exhausting their reserves. At week's end Iron Age made a somber prediction: steel production would drop to 90% of capacity by fall unless more scrap was found.
One reason for the shortage (blamed specifically by Mr. Grace) is that the U.S. shipped 8.222,259 tons of scrap to Japan from 1936 to 1940 (when exports were finally prohibited in October). That scrap is gone forever. Another is the fact that railroads are patching up more old freight cars (ordinarily a big source of scrap), are using many a junk-worthy car for storage of coal. But the chief reason is that the nation's steel mills, breaking one production record after another, are now using scrap at the rate of at least 30,000,000 tons a year, and scrapmen are gathering only 24,000,000 tons a year.
There is plenty of scrap in the U.S.—abandoned automobiles rusting in wrecker graveyards, broken plows rusting in farmers' barns, old bedsprings and buckets lying on dumps at the edge of every small town. The problem is how to sort the scrap, compress it for shipping, move it to market.
One suggestion is to take off Leon Henderson's price ceilings ($20 a ton for No. 1 heavy melting scrap at Pittsburgh), let prices rise to a level where every U.S. junkman would lengthen his route and hours. But this suggestion comes mostly from scrap dealers, finds little support from steelmen such as Eugene Grace.
Already Henderson's price ceiling is honored as much in breach as in observance. By simply "grading up" low-quality scrap, sales are made above the ceiling; the magazine Steel reported last week that only about 60% of scrap was actually sold at OPACS prices. Last week Henderson decided that "monopoly" practices were boosting prices and cutting off the flow of scrap, asked the Justice Department to make an investigation. His charges: about 15 big brokers supply 90% of scrap bought by steel mills.