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COM (84) 487 
 
 
 
Vol. 1984/0 198 
  
 
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concernant l'ouverture au public des archives historiques de la Communauté économique 
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
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COMMISSION OF THE EUROPEAN COMMUNITIES
COM(84) 487 final
Brussels, 6 September 1984
INCREASE IN MINIMUM PRICES
(Communication from the Commission to the Consultative Committee and the
Council )
COM (84)  487 final

COMMUNICATION FROM THE COMMISSION  
TO THE CONSULTATIVE COMMITTEE AND THE COUNCIL
Increase in minimum prices.
1. BACKGROUND
The Commission set out price policy objectives in a communi­
cation published in the Official Journal of 14 November 1981  
(1)
In it the Commission drew particular attention to Article 3(c)  
of the ECSC Treaty, which requires the Commission to ensure the  
establishment of the lowest possible prices, although these  
prices must allow the necessary amortization and a normal  
return on invested capital.
In the communication the Commission asked steel undertakings to  
raise steel prices by some 41 ECU at 1 January 1982 in the  
light of its studies of the market and production costs.  
During the remainder of the year in question prices would be  
subsequently increased by 16 ECU.
The policy defined in this communication was successfully  
pursued during the first half of 1982. However, the general  
slump in steel demand in mid-1982 and changes in currency  
parity caused prices to tumble below the Commission's guidance  
prices.
In the wake of this development, at their meeting at Helsingor  
on 18 November 1982, the Ministers of Industry discussed the  
price situation and approved the Commission's plan to introduce  
price stabilizing measures.
(1) OJ NO C 294 of 14 November 1981.

2.
At its meeting on 13 and 14 December 1982 the Council, having  
noted the Commission's planned price objectives, approved the  
guidelines and asked the Commission to monitor the market  
closely.
New guidance prices were published, after consultation of the
Consultative Committee, in the Official Journal of 29 December  
(1 )1982 .  These prices were amended on two occasions :  on 7
(2)April 1983 to restore a better price relationship between
the products in question and on 29 April 1983 following the  
realignment of currencies within the European Monetary System  
on 21 March 1983 which created serious disparities between the  
price lists of producers in different Member States.
The guidance prices given in the communication of 29 April 1984 
still form the Commission's policy objective for steel prices.
A further slump in prices during the second half of 1983
prompted the Commission, after consulting the Consultative  
Committee and the Council, to published minimum prices
expressed as temporary rebates on the guidance prices of 29  
April 1983.
(4)
In a communication of 11 February of this year the
Commission explained that the reasons which had prompted it to
publish guidance prices still held good and,  above all, steel  
undertakings would require adequate income if restructuring of  
the steel industry was to be possible. This objective would  
only be attained if the actual level of prices was in line with  
the guidance prices.
Cl)OJNOL370of29 December 1982.
(2)OJNOr92 ■of7 April 1983
(3)OJNOC116of29 Apri l  1983.
(4)OJNO37 of 11February 1984

3.
The minimum prices fixed in December 1983 were extremely  
conservative - excessively so as events have shown and the  
Commission accordingly adjusted them upwards by 9 ECU from 1  
April this year. The regular market survey carried out by the  
Commission confirms that these minimum prices have been  
successful.
2. INCREASE IN MINIMUM PRICES
In its forward programme for the third quarter of this year the  
Commission noted that economic growth was now more broadly  
based and tat the economic upturn should be sustained in the  
second quarter with a modest increase in growth in most Member  
States.
Steel demand reflects to some extent the general improvement in  
the Community's economy and on the world market. The  
Commission therefore considers the time has come for a small  
increase in the minimum prices.
In the present economic situation an increase in prices should  
be fairly successful without having a detrimental effect on the  
steel-consuming industries.
The Commission has hence undertaken a number of studies of  
production costs and industrial prices in the Community. The  
analysis of production costs points to an increase of 4% in the  
last twelve months, the largest increase being for scrap 40%. 
There were also marked increases for certain alloys (see Table  
1).
If we compare industrial prices with steel prices, we shall see  
the rise in steel prices has been much lower than that in  
industrial prices.
Even if we take 1975, when steel prices fell to a very low  
level, as a basis for comparison, we shall find that there was  
a clear lag in the rise in steel prices compared with  
industrial prices.

4.
The slump in steel prices throughout the Community in the  
second half of 1983 led - despite restructuring efforts - to a  
sharp fall in the earnings of European steel undertakings. 
Together the large integrated steelmakers Lost about 4 billion  
ECU in the last financial year.
II we compare Community prices with those in the United States,  
Japan and the Scandinavian countries, we shall be see that  
American steel prices are much higher than those in the  
Community. Even Japanese prices are at present a little higher  
than Community prices. Those in the Scandinavian countries are  
more or less in line with those in the Community. This is due  
to some extent to the price rules established with these  
countries under free trade area agreements. It should be noted  
that any international price comparison is affected to some  
degree by the ups and downs of exchange rates.
In the light of the foregoing, the Commission is considering a  
small increase in minimum prices to take effect in the fourth  
quarter of this year, with the planned new minimum prices still  
below the guidance prices, as Table 3 shows.
In the present circumstances the Commission does not intend to  
revise these guidance prices although they date back to April  
1983. Its view is that the steel industry should rationalize  
production by restructuring to such an extent that the guidance  
prices for 1983 will be sufficient to cover the financial  
requirements of the European steel industry.

Table n° 1
ESTIMATION OF THE DEVELOPMENT OF CERTAIN COST COMPONENTS IN RESPECT OF THE EUROPEAN STEEL INDUSTRY7
1984
1983 INDEX % IN ECU
Coke 100 95103
Iron ore 100 94102
Scrap iron 100 130140
Aluminium 100 127137
Combustible oil 100 110119
Cost of labour 100- 105,5
Average 1st semester 84 :  1  t= 1,2096 
= 1,1221ECU
] = + 7,8 %
Average 1st semester 83 :  1 Î ECU

Tabte n° 2
TNBEX OF INDUSTRIAL PRODUCTS WHOLESALE PRICES
YEAR D F I NL B-L UK IRL DK GR EUR
1975 100 100 100 100 100 100 100 100 100
1976 103,4 107,4 122,7 106,9 107,1 116,2 119,6 108 109,6
1977 106,3 113,4 142,8 112,7 109,7 137,4 140,1 116 119,1
1978 107,1 113,3 154,4 115,6 107,6 151,0 152,6 121 124,6.
1979 112,7 134,0 178,9 118,7 114,4 167,4 171,2 132 136,9
1980 121,1 145,8 217,1 128,4 121,0 190,8 222,0 156 153,0
1981 130,5 161,8 254,4 140,2 130,9 209,0 220,0 181 169,6
1982 134,7 179,8 290,1 149,5 141,0 225,2 246,8 200 183,9
1983 136,8 199,6 318,7 152,5 148,3 237,4 : 210 •
INDEX OF STEEL PRODUCTS WHOLESALE PRICES
1975 100 100 100 100 100 100 100 100 100
1976 102,1 106,2 119,8 106,6 100,7 122,1 113,4 105 110,4
1977 99,2 112,0 133,3 110,4 97,8 145,0 134,1 108 117,9
1978 98,1 122,2 157,5 113,4 100,8 154,3 148,0 114 126,1
1979 101,1 136,1 189,8 116,7 105,9 168,2 160,7 123 139,0
1980 105,1 144,4 210,5 123,0 110,1 177,9 183,6 138 148,3
.  1981 109,1 146,8 219,7 129,0 111,6 179,4 207,8 151 152,7
1982 120,8 182,3 264,0 137,0 125,9 195,9 232,3 179 176,1
1983 116,6 199,6 270,7 140,0 127,1 196,8 - 185 :

Table n° 3
Steel Prices in ECUS/TONNE
Hot-rolled wide strip (coils)Gu i  dance  
Pr i  ces
380Present
minimum prices  
336Estimated  
minimum price
353
Hot-rolled narrow strip 380 358 367
Narrow strip obtained by slitting  
hot-rolled wide strip 380 340 358
Hot-rolled sheets obtained by cutting  
wide strip 380 340 358
Reversing mill plate 397 340 358
Cold-rolled sheet
!
1459 433 452