Bethlehem Steel to raise prices on sheets again 3rd increase this year follows rivals' moves

August 06, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

Seeking to take advantage of strong demand and lagging industry production, Bethlehem Steel Corp. will raise the prices of sheet steel by about 4 percent.

With price increases that will take effect at the end of September and December, Bethlehem Steel, the nation's No. 2 steelmaker, joins its rivals by announcing the third round of increases this year.

Officials at Bethlehem Steel, which employs more than 5,000 workers in Sparrows Point, were not available yesterday to comment on the increases.

The increases follow Bethlehem Steel's announcement last week that low prices hurt its second-quarter performance. Despite a 2.3 percent steel increase in steel shipments, profit fell 56 percent to $26.6 million.

Bethlehem Chairman and CEO Curtis H. Barnette set the stage last week for the price increase. "Demand for our steel products is strong, inventories at the customer level are relatively low, and we have a good backlog of orders," he said.

Steel sheet, the industry's biggest seller, is used in cars, trucks and major appliances. Sheets and tin mill products accounted for 66 percent of Bethlehem Steel's net sales last year.

In the second quarter, Bethlehem Steel was hurt by low prices negotiated last fall with the automobile industry. The two-stage price increase is aimed at lifting prices in the markets outside those negotiations.

Prices tumbled last year amid weak demand. Bethlehem is raising prices on hot-rolled sheet steel, cold-rolled sheet and coated sheet -- all of which are manufactured at Sparrows Point, whose principal markets include construction and containers.

The company is raising prices on all three by $15 a ton, effective Sept. 29. On Dec. 29, other increases will follow, including $5 on hot-rolled sheet, $10 on cold-rolled sheet and $15 on coated sheet.

Thomas Abrams, a steel industry analyst with CS First Boston, said steel companies are trying to reverse an earnings slump that has persisted despite high shipments.

He said steel companies are able to increase prices not only because demand is high, but because maintenance at some plants has reduced some of the industry's capacity.

"What they're basically saying is that orders remain high and steel mills are operating at high utilization rates," he said.

But he said the companies generally collect only one-fourth to one-third of the price increases because of discounts and prices negotiated through long-term contracts.

Michelle Galanter Applebaum, a Salomon Brothers analyst, recently upgraded her recommendations on five industry stocks, including Bethlehem Steel.

Making the steel stocks attractive: low imports, slower-than-expected additions in steelmaking capacity, stronger prices from automobile makers, she said in a report. But Abrams said the price increases are likely to be short-lived. Next year, the industry faces more capacity, which means higher supplies.

Pub Date: 8/06/96

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