The Washington herald., 1922-07-03
STEEL INCREASES
MOMENTUM DNFACE
OF COAL, PROBLEM
Production in First Six
Months Nearly Equals
Entire 1921 Output

PITTSBURGH, July AT the
end Of the half year and at the
threshold Of the almost invariably
dull July-August period. a general
review of the steel markets course
is fitting.
This has been a wonderful half
year. Steel ingot production in
1921 was about 1890. 900 gross tons.
while the rate during December
was scarcely greater, although Oc-
tober and November had seen an
average rate Nof about $4,000, 900
tons.
For three months the rate Of
steel production increased rapidly,
until on April l II was approx
mately s5,oOo,000 tons a year. On
that date the great coal strike be-
gan, and at the time 1t was a COM
mon thought that part of the in
creased production in February and
March had represented the desire
of steel buyers to anticipate re-
quirements. in fear that the coal
strike would curtail production of
steel and interfere with needed de-
llveries.
Trade Ignores Coal Strike.
The coal strike came off as ex-
pected. except that 1t was Of sur
prising extent in the non-union
Connellsville region. This caught
the trade unawares and for two or
three weeks pig iron and steel
production declined. Then, as a re-
suit of various arrangements, there
was a recovery. and soon the in
dustry was making more steel than
on April 1. Before the end Of the
second quarter production Of ingots
had reached a rate of fully $4,000 =
900 tons year.
The increased production Of steel in
the second quarter was. of course.
based on orders. and the orders were
chiefly new orders. not orders held
over from the first quarter The event
proved that any theory that the in
crease in production in the first quar-
ter was due chiefly to anticipa ton
Of he coal strike was largely errone-
Gus. for buyers would not pile up steel
indefinitely against a strike that was
certain to end some time. In passing,
1t may be pointed out that the per-
upon the coal strike producing not a
scarcity but a definite shortage of
coal, he should look for the evidences
elsewhere than in steel mill and blast
furnace operations.
Production of steel ingots during
the half year was approximately 49,
100000 tons. against slightly more
than 19. zoo, 900 tons in the whole Of
1921. 40,SS1.392 tons I'm 1920, and a.
$4,000 tons in 1917. Thus there Is
room for discussion as to whether the
production of the half year was large
or small. Those WHO cannot shake
on the notion that steel making ca
pacity invariably has a current rea =
son for Its existence and must be en-
ployed, or something Is wrong eco
nomically and industrially. would con-
slider the production light, for the
half years output was only about so
per cent of the physical capacity.
Consuming Power Lower.
The comparison of steel produc-
ton with capacity" has. however
been getting into greater and
greater disrepute. In the first
place. the obvious 10 now rec
ognized. that much of the so per
cent increase in capacity" was due
to the war demand. and the war is
over. The less obvious fact is now
claiming recognition, that war con-
ditions and government regulation
made. I possible for the country to
fabricate or work up or put into
use a greater amount of steel than
it could ordinarily, when busy with
other things besides using steel,
while a great deal of the steel made
during the war went out of the
country
This matter of the country's abil-
ity to consume steel has been
brought to the front in recent weeks
by its being observed that nearly
every one is now at work. yet steel
is not being made at capacity"
while 1t is reasonably certain that
not all the steel being made is be-
ing consumed. though undoubtedly
by FAR the greater part is. Labor
scarcity Is reported from many steel
making points and 1t is expected
that when the coal strike ends the
railroads will be offered more traf-
nc than they can handle In other
words, the potential capacity in
steel Is considerably below the
physical capacity, which is esti-
mated by taking the actual produc-
ton in 1910 and adding so per cent
OF the rated capacity of the addi-
tional capacity created.
Demand up Prices Down.
In January and February there
was exemplified a principle often
observed in the stee market before
the war-of prices declining as de-
mand increased. The explanation
Is simple. When demand is very
far below capacity production costs
are high and there is not much for
competition to feed upon, When
demand increases competition is
naturally stimulated, and mills at
the same time become eager to pile
up enough business to give them a
more economical operation and cor
respondingly lower costs. Prices
on the whole declined during Janu-
airy and February. while sales
greatly increased. Early In March
prices began to firm up. chiefly be-
cause they were at less than cost OF
production even with a fair operat-
ing rate.
As time passed prices stifrened
more noticeably and in April 1t ap-
peared to some as II the advancing
tendency might continue indefinite
iy, or until the relation OF demand
and offerings should turn In favor
OF buyers. By this time. however,
1t has been made reasonably clear
to the whole trade that the United
States Steel Corporation is again
carrying out its policy of holding
prices steady. and the prospects are
that there will Re few furthar al