The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1934-09-28

q ! v
against 81 per a. N.
cent in the prev ase..
iouS week. This
is such low
percentage that 80
it has seldom Inwi. Hnney
been equaled. It
is far below the operating rate
that Is required for profits (say
about 40 per cent?. But the rising
trend, which is a little more than
usual for the season, arouSeS
hopes.
The steel makers have increased
production chiefly to meet de-
mand, for there is no considerable
reason to think that their own
stocks of crude steel are abnormal.
ly low for present conditions.
Where is the demand coming
from?
There has been a modest in
crease in miscellaneous buying of
finished steel items, almost en-
tirely spot purchase in small lots.
This represents the general gain
in the light industries" which is
partly seasonal, but is partly
based on the distribution of gov
eminent funds that has helped
retail trade.
There has been some increased
buying Of sheets by a few auto
mobile makers who are working
on new models.
PWA expenditures for bridges
and dams are a factor, although
this is not so much as one would
suppose. eve are apt to forget
that such projects require from
six months to two years, so the
business is spread over long
periods and the requirements are
very irregularD
Some foreign business in ma
chine tools and tin plate de-
veloped during the recent weak
ness in the dollar. when the
dollar is weak, foreign currencies
can buy more here. When we
depreciate our currency we practi-
cally cut prices on our goods for
exportD
= The bare possibility of increased
freight rates may also have led to
little ordering.
But there is practically no
forward buying, and purchases
Of steel by the big consumers con-
tinue notably small. The rail.
ways are buying very little, and
that mostly on Government
credit. Private construction is
almost negligible.
No better illustration of the
generally restricted demand could
be found than appears in the
weakness of steel scrap prices.
These declined little further
last week, showing that steel
manufacturers do not yet anticl-
pate any great need OF raw ma
4 terialS.
One point of interest is the
success of the housing campaign.
Iron Age reports from Chicago,
state that loans to home owners
so far have not stimulated the
movement of nails, roofing, and
galvanized products" And con-
corning reinforcing bars, the re-
port tells of a noticeable drop IN
buying by private interests, which
is said to be disquieting to the
trade.
So I would say that aside
from seasonal automobile work,
the main demand increase has
come from Government spend
ing and debt-highway bridges
pOstOfficeS, and miscellaneous
appliances bought by farmers
and others who get "dOles" In
one form or another.
Iron and steel prices are rela-
lively high. For example, the
Government finds their average
to be 86.6 per cent Of the 1925
level, against an average for all
commodities Of only 76.4 per cent.
Structural steel Is 80 per cent.
mo wonder we still import con-
siderable pig iron mad structural
shapes, despite the TARIFF
What will now happen to steel
prices is uncertain, chiefly be.
cause of price fixing among steel
makers and Government policies.
Ordinarily, I would expect prices
of pig iron and finished steel to
decline soon. Pig iron produc.
ton seems to be too large, and
steel scrap is weak. Steel pro-
duction has recently been below
indicated requirements, but only
for a few weeks. Stocks of steel
are ample, for jobbers' stocks
seem rather large and many con-
sumerS cannot have used up the
excess supplies accumulated be-
tween February and July. The
producers, working at only "a
per cent Of capacity, should be
eager for business on any sign OF
expansion, and would usually re-
duce prices to get it.
But note that when some pro-
ducerS recently cut prices on
wire fencing and steel strip, they
were soon brought back into
line" under the code. And as
long as initiation is in prospect,