Optimistic Mood

U.S. steelmen gathered in Manhattan in an optimistic mood last week at the annual meeting of the American Iron and Steel Institute. A decline in the steel index that dropped production from 98% of capacity in January to last week's 87% seemed about over; many steelmakers reported a pickup in orders. The good news came at just the right time. Steelmaker after steelmaker said the U.S. is in for another steel price rise, for the twelfth consecutive year since World War II, to offset an automatic wage rise in July. Some plugged for $10 a ton, claiming that last year's boost of $8.50 was insufficient. Others wondered whether the steel market could absorb another price increase without further slackening demand, suggested a smaller boost. The best guess: July's increase will approximate last year's.

Onetime U.S. Steel Corp. Chairman Benjamin F. Fairless, chairman of the institute, also predicted a rise in steel capacity that may top the 1956 increase of more than 5,000,000 tons. Most steelmen were confident that 1957 will equal or surpass 1956 in production. "I believe we're over the hump," said Armco Steel Corp. President R. L. Gray. "Things look better; incoming orders are picking up; inventories are down to where steel consumers have got to buy."

One of the chief reasons for the industry's drop in index is the disappointing performance of the auto industry, which is still drawing heavily on its steel inventories. Last week, Henry Ford noted that Ford automobile sales were up 14%, and the company will gross a record $3 billion in the first half. He predicted that "industry new-car sales for 1957 should equal or exceed slightly the 5,800,000 sold in 1956"--well below the 6,500,000 figure originally predicted by the industry, and later dropped to 6,000,000. General Motors' President Harlow S. Curtice was even blunter. Sales in 1957 should match 1956, he said, but the year "has not measured up to the industry's expectations. For the second successive year the historical spring rise in sales has failed to materialize."

What hurt more was the fact that the drop in overall sales would virtually all come out of General Motors' share of the market. Last week at G.M.'s annual meeting, a stockholder asked who was responsible for G.M.'s poor "static styling" this year. Answered President Curtice: "The present management."

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