The year started with cautious optimism in the domestic steel industry and raw steel 2 production continued to exceed that for 1970 during the first few months. By July it was evident that production had been buoyed up by stockpile buying against a possible strike on expiration of the labor contract July 31. Agreement was reached August 1 on a new 3-year pact, leaving stocks to be worked off. This, combined with record imports of 18.9 million short tons, resulted in diminishing orders for mill products, from which the market did not fully recover by yearend. Domestic raw steel production totaled 120.4 million tons, down 8.4 percent from that of 1970. However, apparent consumption of steel products, adjusted for imports and exports, was up 5.6 percent.

A general steel recession in the free world was evident as total world production decreased approximately 2 percent from that of 1970. Hardest hit of major producers was the United Kingdom, down 14.6 percent, followed by West Germany

with a reduction of 10.5 percent, and Japan with 5.1 percent. The U.S.S.R. increased its production by 4.4 percent, and for the first time exceeded U.S. production, by a margin of 10.7 percent.

Prices continued to advance in most countries, as pollution control and currency adjustments became increasingly important factors to be dealt with. Capital spending by U.S. steelmakers was slightly over $1.6 billion for 1971. Environmental quality control facilities added in 1971 totaled $162 million, or approximately 10 percent of capital investments.

One merger of importance occurred as National Steel Corp. acquired Granite City Steel Co., effective August 16. Increasing interest was shown by a number of steel companies in the housing market, either through subsidiaries or company divisions.

1 Physical scientist, Division of Ferrous Metals. 2 The term raw steel, as used by the American Iron and Steel Institute, includes ingots, steel castings, and continuously cast steel. It corresponds to the term crude steel as used by the United Nations.

2 Data not comparable for all years.

Domestic production of pig iron totaled 81.4 million tons in 1971, a decrease of 9.9 million tons, or 10.9 percent less than that produced in 1970. Average production of pig iron per blast-furnace-day increased to 1,654.3 tons, compared with 1,641.6 tons in 1970, and 1,609.0 tons in 1969, according to the American Iron and Steel Institute (AISI). A total of 152 blast furnaces were in blast at the beginning of the year, including two producing ferroalloys. At yearend the total number in blast had decreased to 126, with three producing ferroalloys. There were 219 producing furnaces at the beginning of the year, and 216 at yearend, of which eight were being relined.

Shipments of pig iron approximated total production for 1971. Yearend stocks at consumer and supplier plants were down 303,000 tons, 14.6 percent under those of 1970.

Metalliferous Materials Consumed in Blast Furnaces.-For each ton of pig iron produced in 1971, an average of 1.632 tons of metalliferous materials was consumed in the blast furnaces. Total net iron ore con

sumed in blast furnaces including agglomerates, was 125 million short tons. The total tonnage of iron ore including manganiferous ore, consumed by agglomerating plants at or near the blast furnaces in producing 37.8 million tons of agglomerates was 29.7 million tons. The remainder consisted of mill scale, coke, limestone, dolomite, and small amounts of other materials. Domestic pellets charged to the blast furnaces totaled 52.9 million tons, and sinter charged was 39.2 million tons. Pellets and other agglomerates from foreign sources added an additional 10.5 million tons.

Blast furnace oxygen consumption totaled 13.3 billion cubic feet according to the AISI, compared with 13.5 billion in 1970, and 9.1 billion cubic feet in 1969.

Data reported to the Bureau of Mines by the iron and steel industry showed that blast furnaces, through tuyere injection, consumed 22.6 billion cubic feet of natural gas, 8.1 billion cubic feet of coke oven gas, 110.8 million gallons of oil, and 39.2 million gallons of tar, pitch, and miscellaneous fuel in 1971.

Domestic production of raw steel for the first 6 months, 71.8 million tons, exceeded that for the same period in 1970 by 5.7 percent, with a monthly high of 12.9 million tons being poured in May. A sharp decline began in the second half which reached a low monthly output of 5.8 million tons in August. Production then trended upward for the remainder of the year but not enough to keep the total annual production, 120.4 million tons, from being the lowest since 1963.

The 1971 steel index, based on production in 1967 as 100, was 94.7, compared with 103.4 for 1970, and 111.0 for 1969. Production in 1971 was proportioned between the basic oxygen process (BOP), 53.1 percent, the open-hearth furnace, 29.5 percent, and the electric furnace, 17.4 percent. Domestic BOP production, which exceeded the 50 percent mark for the first time in the last half of 1970, gradually increased its lead during 1971 as more openhearth furnaces were taken out of service.

Shipments of steel products for the year

declined by 4.1 percent, from 90.8 million tons in 1970 to 87.0 million tons in 1971. First-half shipments were up 9.8 percent from the like period in 1970, indicating the degree of hedge buying in anticipation of the steel strike threatened for August. Continued high imports and the general steel recession throughout the free world contributed to lowered domestic steel output during the second half of the year.

On a percentage basis, domestic shipments followed essentially the same grade pattern as for 1970, the only significant change being a 2-percent rise in sheet and strip shipments. Recovery of the automotive industry was indicated with 20.1 percent of net shipments made directly to this market, compared with 15.9 percent in 1970 and 19.5 percent in 1969.

Materials Use in Steelmaking.-Metallics charged to domestic steel furnaces in 1971 per ton of steel produced averaged 1,269 pounds of pig iron, 1,051 pounds of scrap, and 35 pounds of iron ore including agglomerates. In 1970 comparable amounts

Prices throughout the steel industry trended upward during the year, except for a 90-day freeze period. Iron and steel were included in the President's general executive order to stabilize prices, rents, wages, and salaries from mid-August to mid-November.

In January, increases of up to 12.5 percent on some construction steel products were announced by the two leading domestic steelmakers. These were later revised downward by about 25 percent and the lower increases were followed by most steelmakers. Additional increases were posted in March on certain semifinished steels, wire, pipe, and bar mill products; the increases were to become effective at announced future dates. The pattern of increasing prices according to type of product appeared to be established and was followed by most of the major producers.

In April, the board chairman of Jones & Laughlin Steel Corp. reported that steel price increases of $21 per ton over the preceding 2-year period failed to cover the added increases in the cost of producing steel by $10. In May, blast furnace operators boosted the price of merchant pig iron by $5 per long ton or the equivalent of $4.46 per short ton. Major stainless steel producers announced base price increases averaging approximately 6.5 percent during the month. These increases were offset somewhat by widespread discounting practices. Boosts on sheet and strip products, averaging slightly over 6 percent, were quoted by the larger mills to become effective by July 1. Increases on selected items continued into August, with prices moving

upward on a large number of products. A major producer announced price raises averaging 8 percent on most mill products to go into effect in August, October, or December, depending on the type of product. Some stainless steel producers cut price discounts which had been in effect, and prices of specialty steels were increased by others.

In mid-August, the President issued a 90-day wage-price freeze order which was to terminate November 12. Except for exports, which were not included, iron and steel prices remained fixed for this period. Actual prices charged during the period of July 16, 1971, to August 14, 1971, could be used if a price reduction resulted and the seller wished. A Federal Price Commission set up to control wages and prices after the freeze order expired granted both general price increases, as well as increases on a number of mill products. These raises were based on individual company decisions and specific cases, and continued to be granted throughout the remainder of the year.

In December, one stainless steel producer rolled back strip, sheet and plate base prices that were in effect as of May 25, 1970, as allowed by the Presidential freeze order. At the same time, discounts previously granted distributors were cut, with the idea of creating a more stable pricing level. Iron Age's composite price for No. 304 stainless sheet in December was 4 cents per pound over that for January.

The composite price of pig iron, according to Iron Age, increased from $65.71 per short ton at the beginning of the year to

$70.18 at yearend, and the composite price of finished steel went from $156.76 per ton for January to $175.54 for December. Comparable January and December prices, at Pittsburgh, for hot-rolled sheets were $150 and $159 per ton, and for cold-rolled sheets $179 and $191 per ton.

Other principal free-world producers had boosted or indicated intentions to raise prices of iron and steel by mid-year, owing to inflation and general increases in costs. The nationalized steel industry of the United Kingdom was restricted by Govern

ment order to about one-half its requested price increase, and finished the year with a deficit.

World currency realignments near the close of 1971 resulted in mixed pricing effect, with shifts in the competitive pattern of various countries. Major steel producers in Japan announced increases on exports to the United States of from $10 to $16 per ton on all contracts signed from September 1971; deliveries were to start in 1972.

The 3-year voluntary steel import quota agreements with steelmakers of Japan and the European Economic Community (EEC) countries expired at the end of 1971. Negotiations between U.S. officials and spokesmen for these countries resulted in renewal of the voluntary pacts for an additional 3-year period. A major change was a reduction in the annual rate of growth of steel mill product exports from 5 percent to 2.5 percent; also the addition of the United Kingdom to the pact. Interest among domestic steelmakers for import quota legislation remained high in 1971 and, prior to the voluntary agreements, bills were introduced in the House and Senate to set limits.

Data compiled by AISI showed that exports of total steel products decreased to 3.2 million tons in 1971, from 7.5 million in 1970, and 5.6 million in 1969. Imports of total steel products reached a record

high of 18.9 million tons, compared with 13.4 million in 1970, and 14.0 million in 1969. A major increase in imports over 1970 of 2.5 million tons of sheet and strip mill products occurred, which was thought to be due largely to increased overseas orders placed by the automobile industry in anticipation of a possible steel strike.

Exports of iron products totaled 304,300 tons in 1971, 527,500 in 1970, and 236,900 in 1969. Imports of iron products, largely pig iron, totaled 304,300 tons in 1971, 327,400 in 1970, and 495,000 in 1969.

Increasing movement of Japanese steel into the West European marketplace was slowed by a 3-year voluntary agreement with the Japan Iron and Steel Federation. Under a quota system, 1972 exports would be 1.25 million metric tons to the Common Market countries, including Great Britain.

The International Iron and Steel Institute (IISI) held its fifth annual meeting in Toronto, Canada, in October. Strengthening the steel industries of the member countries remained a primary objective. Finding practical solutions to the environmental problems and energy needs of the industry were subjects of discussion among the steelmakers. Delegates from 24 free world countries attended, representing about 100 steel companies.

The 11th Latin American Iron and Steel Congress was held in Mexico City in October also, by the Instituto Latino Americano del Fierro y el Acero (ILAFA). Planned increases in raw steel production

discussed by one speaker, would make 1977 production almost twice that of 1970.3 Every member country was expected to add at least 50 percent to its steelmaking capacity. Mexico's new Las Truchas steel complex plans, and the future of direct reduction in Latin America were subjects of considerable interest at the meeting.

Argentina.-The expansion program by Sociedad Mixta Siderúrgia Argentina (SOMISA) at its San Nicolas steel plant continued. Approximately $300 million was authorized in 1968 to raise the Govern

Journal of Metals. ILAFA-Steelmakers Look at a Bright Future. V. 23, No. 12, December 1971, pp. 16-17.