Old Fenders, Old Fenceposts

Shortage of scrap put the screws on the whole U.S. steel industry last week. Bethlehem's President Eugene G. Grace gloomed that the situation was "very, very serious," that Bethlehem had been forced to import some of its scrap from Mexico and Cuba, that it now had only two weeks' supply on hand. A Wheeling Steel Co. plant in Portsmouth, Ohio cut production 1,300 tons a week because of the shortage. Cleveland mills were able to buy only 65% of their requirements, were rapidly exhausting their reserves. At week's end Iron Age made a somber prediction: steel production would drop to 90% of capacity by fall unless more scrap was found.

One reason for the shortage (blamed specifically by Mr. Grace) is that the U.S. shipped 8.222,259 tons of scrap to Japan from 1936 to 1940 (when exports were finally prohibited in October). That scrap is gone forever. Another is the fact that railroads are patching up more old freight cars (ordinarily a big source of scrap), are using many a junk-worthy car for storage of coal. But the chief reason is that the nation's steel mills, breaking one production record after another, are now using scrap at the rate of at least 30,000,000 tons a year, and scrapmen are gathering only 24,000,000 tons a year.

There is plenty of scrap in the U.S.--abandoned automobiles rusting in wrecker graveyards, broken plows rusting in farmers' barns, old bedsprings and buckets lying on dumps at the edge of every small town. The problem is how to sort the scrap, compress it for shipping, move it to market.

One suggestion is to take off Leon Henderson's price ceilings ($20 a ton for No. 1 heavy melting scrap at Pittsburgh), let prices rise to a level where every U.S. junkman would lengthen his route and hours. But this suggestion comes mostly from scrap dealers, finds little support from steelmen such as Eugene Grace.

Already Henderson's price ceiling is honored as much in breach as in observance. By simply "grading up" low-quality scrap, sales are made above the ceiling; the magazine Steel reported last week that only about 60% of scrap was actually sold at OPACS prices. Last week Henderson decided that "monopoly" practices were boosting prices and cutting off the flow of scrap, asked the Justice Department to make an investigation. His charges: about 15 big brokers supply 90% of scrap bought by steel mills.

Another idea for getting more scrap is to put a lot more U.S. citizens into the scrap-gathering business. American Rolling Mill Co. made one start in this direction last week when it began its private drive--modeled after last month's OPM aluminum campaign--for old auto fenders, lawn mowers, fenceposts, garbage cans. The drive began in Middletown, Ohio, where the shortage threatened to curtail Armco operations within two weeks. Within a few days Middletown residents had turned in 400 tons, and the drive was extended to an Armco plant at Ashland, Ky. OPM's Conservation Chief Robert McConnell pondered plans--originally suggested by a scrap-industry advisory committee--for doing the same thing on a nationwide scale. (England and Germany have melted down statues and park fences.) There are some 4,000,000-7,000,000 cars in automobile graveyards, each the potential source of 1,500 Ib. of iron and steel scrap. Most of these "junkers" lie around for years, waiting possible sale of the parts, before being turned into scrap at the rate of about 2,500,000 a year. The scrap industry wants the rate stepped up to 3,500,000 a year. As an experiment, OPM last week extracted a promise from Ohio wreckers to speed their work, will adopt the plan generally over the U.S. if it works.

Bethlehem's Grace suggested that the U.S. curtail shipments to Britain of scrap and unfinished steel (whose processing leaves over a residue of high-grade scrap). Another proposal came from the railroads, who have hundreds of thousands of tons of rails on unprofitable, seldom-used lines which they would like to abandon (see p. 62}. Pulling up the tracks for which railroads already have filed abandonment applications with ICC, it was estimated by the A.A.R., would produce 126,000 tons of scrap.

Only alternate to scrap is pig iron; the nation's steel mills now use about 56% pig iron and 44% scrap as their basic raw material. But the pig-iron situation is even worse than the scrap; there is a shortage of 5,000,000 tons this year. Curtailment of auto production, which used 1,234,000 net tons of iron in engine blocks, etc. in 1939, will relieve part of this shortage.

New pig iron is harder to get than old scrap. OPM last month recommended a Government-financed $175,000,000 expansion to boost pig-iron capacity by 6,508,950 tons to 64,500,000. Last week Federal Loan Administrator Jesse Jones announced the first loan--$32,000,000 for a Carnegie-Illinois plant (about 860,000 net tons capacity) at Braddock, Pa. But it will take one to two years to complete this program. The same day that Jesse Jones announced the Carnegie-Illinois loan, OPM had to put pig iron under full priority control to make sure it went into steel for defense.

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