ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)424
Vol.1980/0151

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)424 final
Brussels.17thJuly1980
.\
STEELCRISISMEASURES FORTHESECONDHALFOF1980
i
Sort}JuC■.
(Communication fromtheCommission )
COM(80)424final

STEELCRISISMEASURES FORTHESECONDHALFOF1980
SituationintheEuropeansteelindustry
Theeffectofthesteelindustrycrisismeasureswassloweddownin
thefirsthalfyearof1980byacertainslackeninginhomedemand
intheCommunity andbyasignificant reductioninexportsparticularly
totheUnitedStates,Iranandotherthirdcountries,eitherbecause
demandforsteelinthosecountries was-indeclineorbecauseother
exporters hadsteppeduptheireffortsthere.
Theimpactofthisweakeninginoveralldemandonthelevelofprices
wasexacerbated bythefactthatsomesteelundertakings exceeded
theirdeliveryprogrammes bysignificant quantities .Thisprompted
theCommissiontotakevigorousactionbyintroducing greaterstringency
andeffectiveness inthedra«ing-up andimplementation offorward
programmes .
Thisflaggingtrendinsteelpricesmadeitselffeltinboththe
flatproductsectorandthelongproductsector.
i .
Inadditionthedropinscrappricesandtheincreaseinironore
pricesactedasacombinedforceinonceagainplacingmini-steel
worksatanadvantageattheexpenseofintegratedsteelworks.From
thebeginningoftheyear,theseworksincreasedtheirdeliveriesto
theCommunitymarkettocounterbalance theredactioninth?irexports
totheworldmarket.
Thereductioninsteelpricesisclearlyaffe.:nathefinancial
situationoftheundertakings,whichareinanycasaerpr.,iencinga
significant increaseinproduction costs.

Thisnewdeterioration inthefinancialsituationhasbeenslowed
downbytheeffectsofreorganization measuresundertaken bya
certainnumberofsteelcompanies,particularly inlongproducts.
Salientfeaturesirtthissectorareasignificant capacityreduction
of2.3milliontonnesfromthe1976levelandconcentration inthe
mostmodernplants.
Intheflatproductssector,reorganisation effortshavebeen
concernedmainlywithloweringproductioncostsatthepigironand
steelmakingstages,inparticular byincreaseduseofcontinuous
castingwhichin1980attainedatotalcapacityof66milliontonnes,
comparedwith55milliontonnesin1978.Ontheotherhand,
rationalization hasnotbeenentirelyinphasewiththemarketmovement
attherollingmillstage,whereover-capacities areinevidence.
Thereorganization effortthereforeneedstobesustained.
Theeconomicprospectsforthesecondhalfof1980pointtoacertain
reductioninsteeldemand,particularly inthemotorvehicleand
construction industries.However,demandinthecapitalgoods
industrieswillremainfairlyfirminseveraloftheCommunitycountries.
Consequently,crudesteelproduction,whichwasstillfairlyhigh
duringthefirsthalfof1980,coulddeclineinthesecondhalfof.
theyear.Thelevelfortheyearasawholeshouldbeapproximately
135milliontonnes,somewhatdownon*thelevelof140milliontonnes
for1979.
ί
Implementation ofthecrisismeasures
Theminimumpricesforconcretereinforcing barsandmerchantbars
weresuspendedforhalfayearatthebeginningof1980.Market
pricesarecurrentlyabovethesuspendedminimumpricelevelinsome
areasoftheCommunity.Inotherareas,inthenorthernpartofthe
Community,theyaresubstantially higher.Itmaybenotedthata
considerable proportionoftheintegratedworkshavetakenmeasures
toreorganisewhichwillputtheminabetterpositiontoholdtheir
ownthanin197VandthattheirproductioncostsareLessunfavourable
thanatthattimecomparedwiththoseofelectricsteelworks.

Under these conditions ,theCommission considers that thearrange -*
ments adopted inthefirst half oftheyear forsuspending minimum
prices should bekept inforce unchanged until 31December 1980 .
Italso considers that themarket inconcrete reinforcing bars
.andmerchant bars should bemonitored carefully and will therefore
keep market prices under constant review .
With regard tocoils ,taking into account thesituation analysed in
Section 1ofthis paper andthedistortions which have occurred
inside theCommunity asaresult ofexchange fluctuations (particularly
asfarassterling isconcerned )since theendof1979 between the
minimum price levels expressed inthedifferent national currencies ,
thefollowing proposals are putforward :
tosuspend forthe second half oftheyear theapplication of
minimum prices for coils -inaccordance with aformula similar
tothat already applied forconcrete reinforcing bars andmerchant
bars ,namely :
«
that the Commission Decision 3060 /79/ECSC of27December
1979 ,fixing minimum prices forhot rolled wide strip and
imposing certain obligations onsteel enterprises and steel
«
merchants ceases toapply initsentirety ;
- that acontinuous study ofthemarket price incoils is
simultaneously initiated soastomake itpossible todetermine
atanytime and atshort notice ,whether reintroduction of
minimum prices might become necessary ;
- that consultation ofthe Council and the Consultative Committee
which isofficially required before aminimum price forcoils
canbereintroduced atitsoriginal love I,isconsidered
actually tohave taken place forthe Lecc -.c.'half of1980 .

-u-
IftheDecisiontosuspendisnottaken,theCommission must
necessarily undertake anadjustment oftheminimumpricesinnational
currencies basedonmovementsrecordedinexchangerates,andthis .
canclearlyaffectmarketbehaviour.
Iftheeconomicandsocialsituation sorequires,inotherwords,ifone
orseveralofthefollowingcriteriaarefulfilledbefore31December1980;
marketpricesfallingbelowthecurrentminimumprices,
ratesofutilisation ofcapacityfallingbelowthe1977rates,
imminentriskofmassivejoblossesinavitalpartoftheiron
andsteelindustry,
marketpricesatlevelsendangering theviabilityofenterprises
ofaveragecompetitiveness .
theCommissionwillinformtheCouncilandtheConsultative
Committee and,possibly,decidetoreintroduce oneormoreminimumprices
t
aweeklater.
χ.
«
X X
Inordertotakeintoaccounttrendsincostsatworldlevel,the
Commissionwillproposeareviewofbasicpricesonthebasisofastudy.
111 1 1
theresultsofwhichwillbeavailableat'thebeginningofSeptember.
Withregardtorestructuring ,whichremainstheprimeobjectiveofthe
crisismeasures,theCommissionwillcontinueitseffortstoensurethat
thisproceedsundersatisfactory conditions.Itwillpresenttothe
Council,foritsend-of-yeardiscussions,adetailedreportwhichwill
tieinwiththeimplementation oftheGeneralObjectives.
Finally,inthesocialfield,theCommissionwill,inspiteofthe
difficulties encountered withitsproposalssince1978,continueits
actiontoextendtherangeofassistancetoworkersinthesteelindustry,
inordertosoftenfit-impactonemploymentofrationalization in
productionplant.