Blaming increased costs for raw materials and labor, the Sparrows Point steel plant of Bethlehem Steel Corp., is planning to raise the price tag on its wares over the next two months.
Like many of the nation's big steelmakers, Bethlehem Steel has seen demand for its steel products generally lag behind last year's robust levels.
At the same time, as the economy continues to soften, Bethlehem's production costs for raw material and energy have risen.
"We've indicated [to our customers] that the reasons for the increases are our own production prices going up for raw materials, and some increases in labor," said Bethlehem spokesman Henry Von Spreckelsen yesterday.
At Sparrows Point, which manufactures steel and tin plates, as well as strip and sheet varieties of steel, price increases will range from 4 percent to 8 percent, according to Mr. Von Spreckelsen.
That may be the plan, but only time will tell if customers will accept the increases.
In practice, "the marketplace determines the price," explained Mr.Von Spreckelsen. "If the product has strength, it is accepted by the market."
But if customers balk at higher prices and orders begin to fall off, a company may discount prices to reach a middle ground, he said.
Though some industry watchers admit that the steel mills may well deserve a price increase, an ever-present question is whether the industry's customers can pass along the increases to their customers.
The steel products manufactured at Sparrows Point are purchased by industries such as light construction, shipbuilding, auto parts and food and beverage containers.
Bethlehem will not reveal the actual revenues of the Sparrows Point operation, but said it produced a total of 3.5 million to 4 million tons of steel last year and expects to about equal that this year.