USX Will Boost Sheet Steel Prices After Strike Is Over

In a surprise move, USX Corp. said Thursday it will raise its prices on widely used sheet steel products by more than 3% when its six-month labor dispute ends and its idle mills reopen.

Analysts were caught off guard by the announcement. USX, the nation’s largest steelmaker, had been expected to slash prices to regain the 20% market share it lost when 22,000 members of the United Steelworkers walked off their jobs at USX last Aug. 1. But USX said in a statement that the price hike reconfirmed the company’s “intention to re-enter the market at current market prices.”

Still, the price hike announcement might be a sign that USX, formerly U.S. Steel, doesn’t plan to reopen all of its mills, some analysts said.

With all of USX’s mills in operation, the United States would once again be beset by a huge glut in steelmaking capacity--a glut that was partially relieved by the company’s lengthy labor dispute.

So if USX reopens completely, its price hike won’t stick, said John Jacobson, steel analyst with Chase Econometrics.

Similar price hikes announced in early January by USX’s smaller competitors didn’t take hold because customers were expecting USX to quickly settle its dispute.

But Jacobson, who has been predicting for weeks that USX will announce a string of mill closings in the near future, said that the price hike is “consistent with the idea that they will only bring back selected mills into operation.”

Jacobson said USX is completing a restructuring study and may announce mill closings soon after the Jan. 31 deadline for the completion of rank-and-file voting on USX’s new contract with the USW.