Another Squeeze

The tight steel supply was given another squeeze last week. Secretary of Commerce Charles Sawyer ordered 102,500 tons a month set aside for military orders under the voluntary allocation program. That made a total of 10% of U.S. steel production now allocated for priority industries.

Moreover, the order contained a new provision that would intensify the shortage. Companies with military orders can henceforth be allocated steel to fill those orders even though they may already have enough steel on hand. The House Small Business Committee insisted on this provision, so that little companies would not have to use up their slim inventories on military orders. But they would probably get less steel for consumer goods anyway; in the scramble for the shrinking supply of non-allocated steel, mills were apt to serve their biggest customers first.

No matter what they did, producers could not satisfy the increased demand for almost all types of steel. Even alloy steels, relatively plentiful a few months ago, are again scarce. With current allocations calling for 6.2 million tons (out of 66 million tons annual production) the pinch will become painful about November. How much tighter would it get? Some estimates, including ECA needs and other export requirements, put the total set aside at 16 million tons. If so, production of such consumer goods as autos and refrigerators would probably have to be cut.

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