Notes on a Shortage

Shipbuilders, carbuilders, oil-pipeline layers, WPB and countless others are bemoaning the impossibility of getting as much steel as they want when they want it, but:

> Between 5,000,000 and 6,000,000 additional tons could be produced this year by just utilizing the full 91,00,000-ton capacity revealed by last year's Gano Dunn steel report and recognized by both the steel industry and the Government. Production last week was at the rate of 88,200,000 tons, but WPB's Bill Batt is only hopeful that the year's total "may go as high as 85,000,000 tons."

No. 1 reason for this failure to get full production is the shortage of scrap, and No. 1 reason ascribed for the scrap shortage is the low ceiling price. Some engineers say an increase of only $1 a ton would bring in enough added scrap to keep the mills running full blast. The question now is whether it is more important to get the steel or more important to hold down the scrap dealers' profits. If by any chance an added $1 a ton would solve the scrap shortage, then an $80-billion war effort might be held up to save $25 millions, just as a billion-dollar rubber shortage is being made worse to keep the profit motive out of rubber scrap collection.

Nearly 20% of Bessemer steel capacity was idle last week. Bessemer converters use almost no scrap, but they are indirectly affected, since the scrap shortage has put such a load on pig iron that pig iron is now a bottleneck too.

> Despite the pressing need of steel for immediate use, more than 17,000,000 tons have been salted away in inventories, according to estimates in the Journal of Commerce, compared with only 4,000,000 tons in 1939. This 13,000,000-ton hoarding has made the shortage much worse than it needed to be. WPB finally took steps last week to reduce this forward buying by setting up a new "End Use Code," whereby they hope to be able to follow every ton of steel to its ultimate destination. Under the system now being abandoned, the Government admittedly had no way of keeping track of the materials for which it had issued priorities. Some plants are believed to have stockpiled steel they will not need until 1943. Hereafter manufacturers with high priority ratings will no longer have a blank check for as much steel as they can grab.

> Strip mills designed to make sheets 1/8 thick for Detroit have been converted to make 1 1/4-in. plate. This has upped plate capacity by more than half, from 8,400,000 tons to 13,200,000 tons. Plate has been and still is the worst bottleneck in the industry, for nearly 75% of the steel needed for ships is plate. > But many a layman overestimates the amount of steel needed in shipbuilding. A 10,000-ton vessel actually weighs about 4,000 tons--the 10,000-ton figure is its carrying capacity. The 8,000,000 tons of merchant shipping the U.S. hopes to build this year will take up less than 3,500,000 tons of ingot capacity.

> Ingot production of 85,000,000 tons this year will mean only 60,000,000 tons of finished steel. WPB launched a drive last week to narrow the gap by requiring, for example, closer figuring on how big a forging is needed to mill out a desired product.

> Biggest unanticipated increase in consumption this year has been structural steel for building war plants. The Gano Dunn report allowed 8,100,000, but the rush for capacity after Pearl Harbor made 15,000,000 tons a more likely 1942 figure, until after the curtailment of plant expansion announced by WPB April 25. This is by far the biggest single item in current steel demand. If completed, the 10,000,000-ton expansion of the steel industry itself would have used 4,160,000 ingot tons.

> The Gano Dunn report allowed 9.000,000 tons for the auto industry. Some 8,000,000 tons of this is now available for other uses; 15,000 40-ton tanks will account for well under 1,000,000 tons of ingots.

> Plain fact is that the steel shortage is real, but U.S. steel capacity is still tremendous. The 6,000,000-ton capacity now idle is almost the total capacity of Japan, is double that of Italy, almost one-third as big as Russia's or the British Empire's. The 91,100,000 total U.S. capacity dwarfs to insignificance the 2,000,000 tons allowed by the Gano Dunn report for ammunition (since doubtless considerably increased), the 4,700,000 needed for the canning industry, the 5,000,000 tons asked by the railroads, the 125,000 tons needed for the new Texas-to-Illinois oil pipeline.

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