EPA 230/1-74-034A
FEBRUARY, 1976
ECONOMIC ANALYSIS OF PROPOSED
AND INTERIM FINAL EFFLUENT GUIDELINES
THE SPECIALTY STEEL
INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of planning and Evaluation
Washington, D.C. 20460
\
UJ
O
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This document is available in limited copies through
the Environmental Protection Agency, Effluent Guidelines
Division, Washington, D.C. 20460, Attention: Distribution
Officer, WH 552.
This document will subsequently be available through the
National Technical Information Service, Springfield,
Virginia 22151.
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EPA - 230/1-74-034A
ECONOMIC ANALYSIS
OF
PROPOSED AND INTERIM FINAL
EFFLUENT GUIDELINES
THE SPECIALTY STEEL INDUSTRY
FEBRUARY, 1976
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
WASHINGTON, D.C. 20460
CONTRACT NO. 68-01-1545
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PREFACE
The attached document is a contractor's study prepared for
the Office of Planning and Evaluation of the Environmental Pro-
tection Agency ("EPA"). The purpose of the study is to analyze
the economic impact which could result from the application of
alternative effluent limitation guidelines and standards of per-
formance to be established under sections 304(b) and 306 of the
Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development
Document") supporting the issuance of proposed regulations under
sections 304(b) and 306. The Development Document surveys ex-
isting and potential waste treatment control methods and tech-
nology within particular industrial source categories and sup-
ports proposal of certain effluent limitation guidelines and
standards of performance based upon an analysis of the feasi-
bility of these guidelines and standards in accordance with the
requirements of sections 304(b) and 306 of the Act. Presented
in the Development Document are the investment and operating
costs associated with various alternative control and treatment
technologies. The attached document supplements this analysis
by estimating the broader economic effects which might result
from the required application of various control methods and
technologies. This study investigates the effect of alterna-
tive approaches in terms of product price increases, effects
upon employment and the continued viability of affected plants,
effects upon foreign trade and other competitive effects.
The study has been prepared with the supervision and review
of the Office of Planning and Evaluation of EPA. This report
was submitted in fulfillment of Contract No. 68-01-1545, Task
Order No. 4, by A. T. Kearney, Inc. Work was completed as
of February, 1976.
This report is being released and circulated at approximate-
ly the same time as publication in the Federal Register of a no-
tice of proposed and interim final rule making under sections
304(b) and 306 of the Act for the subject point source category.
The study is not an official EPA publication. It will be con-
sidered along with the information contained in the Development
Document and any comments received by EPA on either document
before or during rule making proceedings necessary to establish
final regulations. Prior to final promulgation of regulations,
the accompanying study shall have standing in any EPA proceeding
or court proceeding only to the extent that it represents the
views of the contractor who studied the subject industry. It can-
not be cited, referenced, or represented in any respect in any
such proceeding as a statement of EPA's views regarding the sub-
ject industry.
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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
ECONOMIC ANALYSIS OP PROPOSED
AND INTERIM FINAL EFFLUENT GUIDELINES
THE SPECIALTY STEEL INDUSTRY
TABLE OF CONTENTS
Section Title p ., Page
EXECUTIVE SUMMARY
Introduction 1
Economic Impact Aanalyis 3
Limits of the Analysis 13
Summary of Economic Impact 15
I SPECIALTY STEEL INDUSTRY CHARACTERISTICS
I-A Introduction
Statement of the Problem 1-1
Scope of Industry Coverage 1-2
Study Cost Data 1-5
Method of Approach 1-6
Report Organization 1-9
I-B Segmentation of the Industry
Specialty Steel Product Definitions 1-11
Definition of Specialty Steel
Industry Establishments 1-14
Industry Structure 1-15
I-C Specialty Steel Market and Industry
Characteristics
Introduction 1-19
Market Demand 1-19
Market Segmentation 1-24
Principal Markets 1-25
Channels of Distribution 1-30
Industry Size 1-31
Product Line Offering 1-34
Employment 1-35
Foreign Trade 1-38
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TABLE OF CONTENTS (Cont'd)
Section Title Page
II FINANCIAL CHARACTERISTICS OF THE FIRMS IN
THE INDUSTRY
General Financial Characteristics II-2
Profitability II-4
Balance Sheet Items II-8
Financing Additional Capital Requirements 11-11
HI PRICING ANALYSIS
Market Structure III-l
Pricing Techniques III-3
Cost and Supply Determinants III-4
Market Price Influences III-ll
Market Prices 111-12
IV IMPACT FRAMEWORK
Introduction IV-1
Approach to Assessment IV-1
Assumptions IV-2
Dynamics of Adjustment IV-3
Impact Framework IV-4
V TECHNICAL AND COSTS DATA BASE
V-A Specialty Steel Manufacturing Processes V-l
V-B Specialty Steel Water Pollution Abatement
Costs
Introduction V-2
Process Costs V 3
Model Plants V-6
Model Plant Costing V-8
Industry Costs V-9
VI IMPACT ANALYSIS
VI-A Baseline Industry Forecast
Market Conditions VI-1
Baseline Forecast VI-8
Market Assumptions VI-13
Price Determination VI-14
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TABLE OF CONTENTS (Cont'd)
Section Title gage
VI-B Economic Impact
Market Price Adjustment to BPT
Guidelines VI-15
Estimated BPT Cost Factors and Market
Price Increases VI-19
BAT Cost Factors and Market Price
Increases VI-23
Elasticity of Demand VI-29
Volume Impact VI-32
Capital Investment and Financing VI-37
Micro Impacts and Closure Analysis VI-42
Impact on Customers and Suppliers VI-46
Other Impacts VI-47
Total Annual Cost VI-48
Appendix Specialty Steel Production Processes
Integrated Producers 1
Firms Which Purchase and Convert
Specialty Steel 4
Present Sources of Water Pollution
and Control Technology 9
Wire Coating and Pickling 16
Cold Rolling - Recirculation 17
LIST OF TABLES
Table Title Page
1-1 Major Steel Companies Participating in
the Specialty Steel Industry 1-16
1-2 Kslimated Market Distribution of Net Total
Domestic Shipments of Stainless Steel
Producers 1-26
1-3 Estimated Composite End-Use Distribution of
Stainless Steel Products by Markets,
1969-1970 1-28
1-4 Estimated Market Distribution of Total
Shipments of Tool Steel Producers, 1970,
1972, and 1974 1-29
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LIST OF TABLES (Cont'd)
Table Title Page
1-5 Shipments of Specialty Steel by Grade in
Relation to Total Steel Industry
Shipments 1964-1975 1-32
1-6 Number of Specialty Steel Establishments by
Major Type 1-33
1-7 Number of Integrated Specialty Steel
Establishments by Categories of Specialty
Steel Produced 1-35
1-8 Specialty Steel Imports and Apparent
Domestic Consumption, 1970-1975 1-43
1-9 Specialty Steel Trade Balance, 1972-1974 1-45
1-10 Imports of Selected Processed Stainless
Steel Items as a Percent of Domestic
Producers' Shipments 1-46
II-l Specialty Steel Industry Statistics, 1974 II-2
II-2 Stainless and Tool Steel Profits as a
Percent of Sales, 1969-1975 II-5
II-3 Profits as a Percent of Sales in Selected
Specialty Steel Product Lines II-7
II-4 Sales and Profits as a Percent of Long-Term
Capital Invested for Specialty Steel
Producing Firms by Industry Segment II-9
II-5 Current Ratios for Reporting Specialty Steel
Producers and Processors (1973) 11-11
III-1 Composite Prices of Stainless and Tool
Steels 111-13
V-l Industry Segmentation for Purposes of Model
Plant Development and the Number of
Establishments in Each V-7
V-2 BPT and BAT Industry Investment Costs V-10
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LIST OF TABLES (Cont'd)
Table Title Page
V-3 Incremental SIC Total Annual Costs per
Ship Ton as a Function of Capacity V-12
Utilization
VI-1 Projected Long-Term Growth of Industries
Which Are End-Users of Stainless Steel -
1972-1985 VI-2
VI-2 Forecast of Net Specialty Steel Shipments -
1976-1983 VI-9
VI-3 Projected Number of Establishments Where
Specialty Steel Accounts for Over 50% of
Total Plant Output - 1977 and 1983 VI-12
VI-4 Forecast Employment in Establishments Where
Specialty Steel Accounts for Over 50% of
Plant Output - 1977 and 1983 VI-13
VI-5 Estimated BPT Costs by Establishment Size
and Industry Segment - 1975 Prices VI-21
VI-6 Forecast Percentage Price Increases for
Specialty Steel Products Attributable to
1977 BPT Guidelines VI-22
VI-7 Estimated BAT Costs by Establishment Size
and Industry Segment - 1975 Prices VI-23
VI-8 Estimated Overall Addition to 1983 Unit
Costs Arising from BPT and BAT Guidelines
by Specialty Steel Establishment Size and
Industry Segment - 1975 Prices VI-26
VI~9 Projected Overall Percentage Price Increases
for Specialty Steel Products Due to
BPT/BAT Guidelines - 1976-1983 VI-28
VI-10 Estimated BPT and BAT Costs in Relation to
1974 Pre-Tax Profits for Reporting Firms
in the Specialty Steel Industry, by Firm
SIC VI-40
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LIST OF TABLES (Cont'd)
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Table
71-11
VI-12
Title
Major Producers' Historical Capital
Expenditures Compared with BPT/BAT
Requirements
Incremental SIC Total Annual Cost as a
Function of Capacity Utilization
Page
VI-41
VI-49
LIST OF FIGURES
Figure
1-1
Title
1-2
1-3
Cyclical Trends in Man-Hours Worked by
Production and Related Workers -
Stainless Steel, Tool Steel, and All
Manufacturing Industries
Stainless Steel Imports
Tool Steel Imports
Page
1-37
1-40
1-41
LIST OF EXHIBITS
Exhibit
1-1
1-2
1-3
Title
1-4
1-5
Sources of Published Data
Industrial and Commercial Contacts
Summary of Specialty Steel Categories and
Product Form Types Manufactured by
Establishments Engaged in Specialty Steel
Production
Summary by Category and Product Form Type
of the Number of Establishments Engaged
in Specialty Steel Manufacturing
Classification of Integrated Producer
Establishments Primarily Engaged in the
Production of Specialty Steels by Size
and Major Product Line
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LIST OF EXHIBITS (Cont'd)
Exhibit Title
1-6 Nonintegrated Processing Establishments
Primarily Engaged in the Processing of
Specialty Steels
1-7 Stainless Steel Shipments by Market and
Product Form Type - 1970 through 1974
1-8 Tool Steel Shipments by Market during the
Years 1970 through 1974
1-9 High Alloy Steel Shipments by Product Form
Type - 1971-1973
1-10 Stainless Steel Production, Consumption,
Imports and Exports - 1964-1975
1-11 Tool Steel Production, Consumption, Imports
and Exports - 1964-1975
II-l Financial Data of Specialty Steel Integrated
Producers - 1974
II-2 Current Ratio of Selected Integrated Specialty
Steel Producers (SIC 3312)
II-3 Capital Expenditures for Major Specialty Steel
Producers
II-4 Measuring the Ability to Finance Expenditures
through Cash Flow for Major Specialty Steel
Producers (Within SIC 3312)
III-l Selected Specialty Steel Industry Selling
Prices - 1969-1975
IV-1 Examples of Measures of Future Impact
V-l Categories Used for Development of Pro-
duction Process Unit Costs
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LIST_ OF EXHIBITS (Cont'd)
Exhibit Title
V-2 BPT Incremental Waste Water Treatment
Investment and Operating Costs by Category
V-3 BAT Incremental Waste Water Treatment
Investment and Operating Costs by Category
V-4 Specialty Sceel Industry Segments: Model
Plan: Configurations, Processes and
Annual Input Product Ton Capacities
V-5 BPT Model Plant Costs (SIC 3312) and BPT/BAT
Model plant Costs (SIC's 3315-17}
V-6 BAT Model Plant Costs (SIC 3312)
V-7 Model Plant Shipment Product Mix
V-8 Process Yield? A3 Used to Determine Model
Plant Total Annual Ship Capacities
V-9 Incremental BPT Total Investment Costs and
Total Annual Costs per Ship Ton for SIC
3312
V-10 Incremental BAT Total Investment Costs and
Total Annual Costs per Ship Ton for SIC
3312
VI-1 Forecast Stainless Steel Production, Con-
sumption, Imports, and Exports - 1976-1983
VI-2 Forecast Tool Steel Production, Consumption
Imports, and Exports - 1976-1983
VI-3 Incremental BPT and BAT Investment Costs
Compared with Profits for Reporting
Specialty Steel Firms
VI-4 Incremental BPT Total Annual Costs
VI-5 Incremental BAT Total Annual Costs for
SIC 3312
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LIST OF EXHIBITS (Cont'd)
Exhibit Title
Appendix Stainless Steel - Bar Product Production
Exhibit 1 Flow Diagram
Appendix Stainless Steel - Sheet and Strip Production
Exhibit 2 Flow Diagram
Ap;andix Stainless Steel - Slab and Plate Production
Exhibit 3 Flow Diagram
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ENVIJRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF THE PROPOSED AND INTERIM FINAL
EFFLUENT GUIDELINES ON THE SPECIALTY STEEL INDUSTRY
EXECUTIVE SUMMARY
INTRODUCTION
(a) Scope of the
Industry
The objective of this study is to determine the impact
of the costs of water pollution abatement on the specialty steel
industry. This industry is defined to include the manufacture
and processing of stainless, tool, and high alloy (5% or more
alloy content) steels, and falls within the following four digit
SIC industries defined by the Bureau of the Census:
- SIC 3312 - Integrated Steel Producers
- SIC 3315 - Steel Wire Processors
- SIC 3316 - Cold Rolled Steel Sheet, Strip,
and Bar Processors
SIC 3317 - Steel Pipe and Tube Processors
Specialty steels are produced by about 160 establishments.
Industry employment in recent years of efficient capacity utili-
zation (such as 1973 and 1974) has been estimated at 65,000.
Industry net tonnage shipments accounted for about 1.4% of over-
all U.S. steel shipments, and included 1,345,000 tons of stain-
less steel, 113,000 tons of tool steel, and an estimated 73,000
tons of high alloy steel. The value of these shipments was
about $2.2 billion for stainless steel, $300 million for tool
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steel, and an estimated $500 million for high alloy steel.
The establishments which are the subject of this study are
those where specialty steel products account for 50% or more
or total plant output tonnage. There are 87 such establishments
included in the study, of which 25 are integrated producers,
14 are wire processors, six are cold rolled sheet, strip and
bar processors, and 42 are pipe and tube processors. Total
employment at these establishments in 1974 is estimated to have
been 47/000.
(b) Scope of the
Analysis
The scope of this study was limited to estimating the costs
of water pollution abatement. Assessment of health and welfare
benefits associated with the proposed guidelines was not included
Assessment of the cumulative impact of other governmental health,
energy, trade, and environmental regulations was also outside
the scope of this analysis, which is concerned only with the
incremental impact of the proposed guidelines in relation to es-
timated baseline conditions. These other factors are accounted
for only in a general way through the assumptions underlying
the baseline industry forecast. Estimates of the technology
required to achieve compliance with the guidelines, and of the
costs associated with this technology, were provided to Kearney
by EPA through its technical contractors, Datagraphics, Inc. and
Cyrus William Rice.
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(c) Compliance
Dates
The Federal Water Pollution Control Act specified July, 1977
as the date by which firms were to comply with regulations re-
quiring application of the "Best Practicable Technology Current-
ly Available" (BPT), and July, 1983 was the specified date for
compliance with the more restrictive "Best Available Control
Technology Economically Achievable" (BAT) regulations. However,
in view of the time frame for promulgation of these regulations
and the existence of outstanding direct discharge permits, it
appears that compliance with the BPT regulations will occur
during the period between 1979 and 1981. It also appears that
compliance with the BAT regulations will occur in 1983 or some
time thereafter .
ECONOMIC IMPACT
ANALYSIS
The economic effects of the proposed regulations depend
critically upon the estimates and assumptions made in the base-
line forecast, particularly those relating to developments in
foreign specialty steel markets and in U.S. trade policy. Im-
ports represented about 13% of domestic consumption of both
stainless and tool steels in 1974. These proportions are believed
to have risen to as much as 21% for stainless steel and 29% for
tool steel in the worldwide recession of 1975. In June of that
year the major domestic producers petitioned the U.S. International
Trade Commission for relief from import competition which, they
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contended, was inflicting major injury upon them and on their
employees.
Additional unit costs to domestic producers arising from
compliance with the proposed effluent guidelines are estimated
to be, in general, a very small fraction of present industry
prices and average costs. In the absence of strong competitive
pressure from imports, resulting in an unhealthy market environ-
ment for domestic producers, these costs will be passed through
to customers or absorbed by the industry with limited adverse
impact. In the unlikely event that the baseline competitive
position of U.S. versus foreign producers remains as it was
in 1975, or deteriorates from that point, profitability condi-
tions in the industry will be such as to make absorption of
the incremental effluent controls costs difficult, if not infeas-
ible, for domestic producers.
(a) Estimated Cost
Increases
Total incremental unit costs associated with both BPT and
BAT compliance, assuming only 75% capacity utilization, are es-
timated to average about 1% of the 1975 composite industry sell-
ing prices, and are estimated at less than 2% of recent prices
for all industry segments other than small wire processing estab-
lishments .
The estimated total annual incremental costs per ship ton,
at 75% operating rates, are summarized for the four major in-
dustry process segments in the following table:
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Estimated Incremental Unit Costs Associated with
BAT and BPT Guidelines by Specialty Steel Industry
Segment at 75% Operating Rate
Number of
Industry Segment(SIC) Establishments
Integrated Producers
(3312) 25
Wire Processors (3315) 14
Cold Rolled Sheet, Strip
and Bar Processors
(3316) 6
Pipe and Tube Pro-
cessors (3317) 42
Direct Cost
/Ship Ton
BPT
BAT
$12.22 $5.06
29.59
6.90
7.16
Overall
Additional
Cost/Ship
Ton
$17.28
42.09
19.40
19.66
These costs are based upon 1971 systems and engineering
cost estimates adjusted to 1975 levels by appropriate construc-
tion, labor and material cost indexes. A 10% cost of capital
figure was employed, and the overall additional costs to pro-
cessing firms included an indirect cost of $12.50 per ton appli-
cable to the case where semifinished product cost increases
are passed-through to processors.
Accurate price data for this industry is difficult to ob-
tain because of widespread discounting from published book
prices, the substantial proportion (about one-third by tonnage)
of individually-priced "made-to-order" products, and apparent
inconsistencies between alternative data sources from which
composite actual selling prices may be developed. Utilizing
Department of Commerce statistics for the value and tonnage of
intercompany shipments, composite 1974 selling prices are
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estimated at $1,630 per ton of stainless steel, and $2,660 per
ton of tool steel. Midyear 1975 prices are estimated to have
been about 15% above these levels, or $1,870 per ton of stain-
less steel, and $3,060 per ton of tool steel. Thus, the over-
all additional costs of water pollution control, by themselves,
are not substantial relative to prices, and are less than typical
year-to-year fluctuations in prices, even after adjustment for
general inflation.
(b) Foreign Trade
Influences
Prevailing thought among observers of the industry holds
that, on average over the next several years, specialty steel
production costs will rise more rapidly abroad than in the U.S.,
resuming a trend displayed between 1971 and 1974. Both energy
and available local labor are rapidly becoming continually more
scarce in tne industrial nations of Western Europe and Japan,
and these are major inputs to specialty steel production. It is
also believed likely that growth in foreign demand for these
steels, over the longer-term, will more than keep pace with
foreign capacity increases. This will allow generally profitable
price levels for producers and limit the supply available for
export to the U.S. under normal pricing conditions. This general
scenario has been incorporated into the study's baseline forecast
for the longer term, though it is recognized that during weak
periods of the business cycle import competition will intensify
and exert .'significant temporary downward pressures on U.S. prices,
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It is also generally believed that foreign specialty steel
producers will eventually face pollution control costs similar
to those estimated for domestic producers, leaving them with
no decisive long-term cost advantage from this source. U.S.
producers should therefore, over the long-run, be able to pass
through to customers their own added costs resulting from the
effluent guidelines. In the shorter term, domestic producers
may incur some cost absorption due to import competition, how-
ever even this possibility has been sharply reduced by the
strong likelihood that import quotas will be in effect for the
next five or more years. The lead time that is likely to pass
before compliance occurs will further mitigate any adverse short-
term effects on domestic producers, as will the probability
that many of the establishments involved are operating under
permits which have several years to run.
The anticipated increase in foreign production costs rela-
tive to those in the U.S., and the expected resumption of strong
growth in world steel demand during the next several years, should
leave the domestic industry in a considerably improved profit
position, and permit a rising level of capital expenditures.
Domestic producers' shipments are projected to expand at a long-
term average rate of 4% to 4-1/2% per year. Under these con-
ditions, the incremental costs of effluent abatement would be
manageable, even if foreign producers incurred substantially
lower than baseline pollution control costs. In this case, do-
mestic producers would experience somewhat lower volume expansion
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and somewhat reduced profitability gains, but would nevertheless
tind the industry's prospects sufficiently attractive to make
the required investments because improved industry baseline con-
ditions would offset the adverse impacts of the regulations.
Significant adverse impact could occur, however, in the
unlikely case of compound negative developments in world mar-
kets. A low-profit baseline situation could arise if chronically
deficient foreign demand and a reversal of favorable trends in
relative production costs were combined with the absence of any
trade protection for U.S. producers. During the first two or
three years of the 1970's, industry profits wene quite low—after
tax margins averaged well under 3%. Net capital investment was
also very low, even in terms of dollar book value, and may in
fact have been negative after the effects of inflation on plant
and equipment replacement costs are considered. If the domes-
tic industry were once again to suffer from a weak profitability
outlook, and, in addition, is required to absorb effluent abate-
ment costs due to weaker pollution control requirements overseas,
several establishments might experience difficulty in attract-
ing the capital necessary to achieve compliance. In this case,
a 1% reduction in selling prices due to cost absorption could
amount to as much as a 40% to 50% decline in earnings. Closure
would become a distinct possibility for several establishments.
However, this negative scenario is made unlikely by the
recent recommendation of the U.S. International Trade Commission
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that the industry be granted relief from import competition. It
appears highly likely that if the domestic industry faces con-
tinued duress due to an adverse competitive position with respect
to foreign producers, some form of import quota system or "volun-
tary" import restrictions will eventually be adopted on a long-
term basis. Although such quotas would alleviate the impact of
environment regulations on the industry under a pessimistic
scenario, such quotas are not considered to be caused by the
effluent guidelines regulations. The likelihood of such quotas
is incorporated into the baseline conditions of the study.
(c) Price and Volume
Impacts
Assuming no decisive long-terra cost advantages to foreign
producers due to differential effluent abatement requirements,
or if a system of import quotas is adopted, domestically special-
ty steel prices are projected to rise about 1% as a result of the
combined costs of the BPT and BAT regulations. Semi-finished
product prices are projected to rise less than 1%, prices of
processed products other than wire are forecast to increase
between 1% to 1.5%, and processed wire prices are forecast to
rise between 2% and 3%. These price increases are expected
to result in volume reductions for domestic producers averaging
less than 1%, since the end-use demand for specialty steels is
believed to be inelastic.
It is likely that foreign producers will obtain some tem-
porary cost advantages when the BPT guidelines are initially
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put into effect. If imports are unrestricted at this time, the
forecast short-term price increases will be lower - probably less
than 0.5% for "standard specification" items. The volume reduc-
tion experienced by U.S. producers should be higher, reflecting
the increased market share of' imports, and is projected to be
of the order of 1.5% to 2%.
Price increases for customized "made-to-order" products
are forecast to be somewhat higher than those cited above. It
is felt that competitive pressures in these product markets are
somewhat weaker, which might enable the producers and processors
experiencing the greatest unit cost increases to recover some of
the costs they may be required to absorb in their "standard
specification" product lines.
(d) Micro-
Impacts
Only in two industry segments were potentially important
adverse impacts identified due to higher unit abatement costs
than other domestic producers or processors. These were the
small flat-rolled integrated producing establishments, and the
small wire processing plants. The impact on the small flat-rolled
integrated producers is expected to be manageable because of
existing strong profits and/or specialized product lines. No
closures are anticipated.
The potential adverse impact on the small wire processing
firms is much greater. U.S. wire processing operations were
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characterized by particularly low or negative profitability for
several years prior to the boom of 1973-74, imports gained a very
high percentage of the domestic market, and several integrated
producers were reported to be considering termination of wire-
processing operations. This industry segment will incur unit
pollution abatement costs averaging above 3% of current selling
prices, and the potential for closures must be judged to be
significant. However, employment effects of potential closures
would be minor—affecting well under 1,000 employees in total.
Moreover, the likelihood of relief from import competition, the
relatively small dollar amounts of investment capital required,
and the orientation of many of these firms towards customized
products all tend to reduce the likelihood of closure.
(e) Capital Investment
and Financing
Capital costs of compliance will be substantial for the
integrated producers in relation to present levels of capital
expenditures, amounting to somewhat less than two years' gross
investment. It appears likely that an adjustment period will
occur during which these producers will have to allocate avail-
able investment funds primarily to pollution control. The in-
vestment costs, however, are not unmanageably high in relation
to recent parent company profits in reasonably good years like
1973 and 1974. Moreover, there is likely to be a few years'
lead time before compliance occurs during which cyclical condi-
tions are widely expected to be favorable, and investment may
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therefore be stretched out over a period of years. These inte-
grated producers generally have access to conventional debt
finance, and in many cases will be able to issue pollution
ontrol revenue bonds.
The absolute dollar amounts of financing required by the
smaller processing firms are quite low—about $60,000 for small
pipe and lube processors and about $200,000 for small wire pro-
cessors. Many of these firms appear to qualify for Small Business
Administration assistance. Obtaining the necessary capital does
not appear to be a major problem for these firms, provided they
view long-term profitability conditions in their industry segment
as being favorable.
(f) Other
Impacts
The overall impact of the regulations on the specialty steel
industry itself is expected to be minor. Impacts on customers,
suppliers, and local and regional economies is expected to be
negligible.
Balance of trade impacts should also be minor in the more
probable longer term cases where foreign producers obtain no
significant cost advantages as a result of the regulations, or
where import quotas are in effect. In the absence of import
quotas, foreign producers are likely to obtain some initial
short-term cost advantages, and net imports are projected to
rise significantly relative to baseline levels. However, the
10% to 15% increase in net imports projected to occur in this
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case would result, at most, in a $35 to $40 million negative
impact on the U.S. balance of trade at 1975 stainless steel
prices. This dollar amount is inconsequential in comparison to
the overall U.S. trade deficits or surpluses of the 1970s, and
in relation to the overall steel industry trade deficit in 1974.
LIMITS OF THE
ANALYSIS
Economic impact assessments generally rest on estimates and
assumptions subject to wide margins of errors. This is particu-
larly the case with respect to the specialty steel industry be-
cause of the limited availability of data pertaining specifically
to specialty steel operations, the extreme sensitivity of the
industry to general business cycle movements which are diffi-
cult to forecast more than one or two years in advance, the
key role played by foreign market developments about which data
is difficult to obtain, and the importance of governmental policy
decisions which can be predicted only at low confidence levels.
The scope of this study is limited to measuring the impact
of the proposed guidelines against a baseline forecast. Changes
in the assumptions underlying this baseline forecast have a
direct bearing on the conclusions of the study. Datagraphics,
Inc. and Cyrus Wm. Rice were retained by EPA to provide technical
and cost data for the proposed effluent guidelines. Insofar as
the cost and technical data furnished by EPA through its technical
contractors is modified or inapplicable, the economic impact
assessment will correspondingly require modification.
-------
- 14 -
Economic parameters used in financial and economic analyti-
cal models have been estimated based on the information available,
They are believed to be correct and reasonable by Kearney. How-
ever, insofar as they are significantly different from actual
market conditions, the impact assessment would have to be modi-
fied accordingly.
-------
ENVIRONMENT PROTECTION AGENCY
ECONOMIC ANALYSIS OF THE PROPOSED AND INTERIM FINAL
EFFLUENT GUIDELINES ON THE SPECIALTY STEEL INDUSTRY
SUMMARY OF ECONOMIC IMPACTS
- 15 -
Number of Plants in Segment-1975
Number of Plants in 1983 Baseline
Costa of Pollution Abatement
BPT Capital Cost ($ Millions)
BAT Capital Cost ($ Millions)
Total Capital Cost ($ Millions)
Direct Annual Cost/Ship Ton at
75% Capacity Utilization
BPT (Dollars/Ton)
BAT (Dollars/Ton)
Total (Dollars/Ton)
Direct Annual Cost/Ship Ton at
Full Capacity Utilization
BPT (Dollars/Ton)
BAT (Dollars/Ton)
Total (Dollars/Ton)
Overall Additional Costs/Ship Ton
at 757. Capacity Utilization(l)
Expected Price Increase Due to
Pollution Control-Standard
Specification Items (Percent)
BPT-Import Alternative "A"(Z)
BPT-Import Alternative "B"(2)
BPT plus BAT
Plant Closures Anticipated (Number)
Percent Reduction in Segment
Capacity Due to Closures
Employment
Es tlmate"d Employment in Segment-
1975
Projected Employment in Segment-
1983
Employees Affected by Closures
Community Effects
Balance of Trade Effects
3312
25
25
123.8
59.3
182.1
$12.22
5.06
Indus try
3315
14
14
5.7
-0-
5.7
$29.59
.0-
Sezments
3316
6
6
7.3
^-0^
7.3
$ 6.90
-0-
(SIC Coda)
3317
42
46
4.4
-0-
4.4
$ 7.16
-0-
Total
87
91
141.2
59_._3_
200.5
N.A.
N.A.
$ 9.96
3.97
$23.17
-Q-
$23.17
0.3-0.5^1.5-2.5
0.2-0.4«<0.5-1.S
0.5-0.8
-------
I - SPECIALTY STEEL
INDUSTRY CHARACTERISTICS
A - INTRODUCTION
STATEMENT OF
THE PROBLEM
The 1972 amendments to the Federal Water Pollution Control
Act have required the Environmental Protection Agency (EPA) to
establish effluent limitations for most major industries which
are sources of water pollution. Studies are now under way to
establish these limitations. These effluent limitations will
apply to existing and new plants. At successive future dates,
progressively more restrictive limitations will be imposed.
The Federal Water Pollution Control Act specified July
1977 as the date by which firms were to comply with effluent
regulations requiring application of the "Best Practicable
Control Technology Currently Available" BPCTCA (or BPT). July
1983 was the date specified for compliance with a more restric-
tive set of regulations requiring the application of the "Best
Available Control Technology Economically Achieveable," BACTEA
(or BAT). However, in view of the later-than-anticipated promul-
gation of these regulations, it appears that compliance with the
BPT regulations will occur during the period between 1979 and
1981. Compliance with the BAT regulations will occur some time
thereafter.
In support of the staff studies being conducted to comply
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1-2
with the requirements of the 1972 amendments to the Federal Water
Pollution Control Act, EPA requested A. T. Kearney, Inc. to con-
duct a study of the economic impact associated with the adoption
of proposed water effluent guidelines in selected segments of the
steel industry.
SCOPE OF INDUSTRY
COVERAGE
(a) Relationships to
Other Studies
The steel industry was segmented by EPA into three major
groupings for purposes of effluent limitations and economic analy-
sis. The three groups consisted of:
1. Primary operations of integrated carbon steel pro-
ducers .
2. Intermediate and finishing operations of carbon
steel processors.
3. Primary, intermediate, and finishing operations
associated with specialty steel producers and processors.
Operations associated with carbon steel products are
covered under separate studies. Establishments covered in
these studies are not included in the present study in order
to eliminate duplication of impact.
(b) Scope of
This Study
The scope of industry coverage in the body of this report
includes stainless steel, tool steel and high alloy steel.
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1-3
These industry segments are included in four 4-digit Standard
Industrial Classification (SIC) industries defined by the Bureau
of the Census as:
SIC 3312 - Blast Furnaces (Including Coke Ovens),
Steel Works, and Rolling Mills
SIC 3315 - Steel Wire Drawing and Steel Nails and
Spikes
SIC 3316 - Cold Rolled Steel Sheet, Strip
and Bars
SIC 3317 - Steel Pipe and Tubes.
Though they were originally considered in the study scope
this report does not include independent forgers of specialty
steel.
(c) Study Results
Previously Reported
Four additional SIC codes were included in the scope of the
study. These are:
SIC 2819 - Industrial Inorganic Chemicals, Not
Elsewhere Classified
SIC 3313 - Electrometallurgical Products
SIC 3324 - Steel Investment Foundries
SIC 3325 - Steel Foundries, Not Elsewhere
Classified.
These codes cover such industries as are engaged in the
manufacture of calcium carbide (SIC Code 2819), specialty ferro-
alloys (SIC Code 3313), and high alloy steel foundry products
(SIC Codes 3324 and 3325). These industries are essentially dif-
ferent from the specialty steels industry as defined above.
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1-4
They possess different production processes and effluent problems
Therefore, these industries have been reported separately.
Reports have been submitted to EPA as follows:
High Alloy Steel Foundry Industry was re-
ported in "Study of Economic Impact of
Costs of Water Pollution Abatement on
Ferroalloy Manufacturing," Task Order
No. 4 under BOA 68-01-1545 Phase II
Report, dated March 1974.
Specialty Ferroalloy and Calcium Carbide
Industry reported in EPA 230/1-74-034
Phase II, December 1974. "Economic
Analysis of Effluent Guidelines on the
Electrolytically Produced Chromium,
Manganese and Synthetic Manganese Dioxide
Industries; and on the Calcium Carbide
Industry."
(d) Product versus
Industry Coverage
In all cases the establishments which produce the products
covered in this study make up only a small portion of the estab-
lishments which fall into an individual SIC code. The breakdown
in SIC Code 3312, the dominant segment in terms of shipments
and employment, is typical. Of the 370 establishments included
in this segment in the 1972 Census of Manufacturing, only 51
produce stainless, tool or high alloy steel, and only 25 produce
one or more of these specialty steel categories as their primary
operation.
(e) Scope
Limitations
The scope of Kearney's impact study was further defined as
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1-5
follows:
1. Only "costs" to society were included in the study,
Assessment of the health and welfare benefits associated with
proposed water effluent guidelines was not included.
2. The technology required to achieve the proposed
water effluent guidelines and the costs associated with this
technology were provided to EPA by its technical contractors,
Datagraphics, Inc. and Cyrus Wm. Rice. Evaluation of the valid-
ity and reliability of this technology and associated costs was
not within the scope of this study and, therefore, was not per-
formed by Kearney.
3. The study was concerned with an assessment during
an impact period when the regulation would most likely become
effective (the period until 1985). Impact considerations and
long-run economic effects beyond this time frame, such as the
introduction of dramatic new technologies, are not in the scope
of this study.
4. Assessment of the cumulative impact of other
environmental, health, energy, and economic regulatory programs
of the federal, state and local governments was not included
in the scope of this study. These factors are broadly accounted
for in a baseline forecast. This study analyzes only the in-
cremental impact of the proposed water effluent guidelines.
STUDY COST
DATA
This study is based on assessing the economic impact,
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1-6
utilizing cost data provided by EPA through its contracts with
D tagraphics, Inc. and Cyrus Wm. Rice. Plants not yet meeting
proposed EPA effluent requirements were surveyed by these con-
t actors. The costs used by Kearney in the impact analyses are
those provided by EPA and are based solely on the Datagraphics,
Inc. and Cyrus Wm. Rice studies.
METHOD OF
APPROACH
The investigations reported herein began in late 1973. A
report, based on cost data provided by EPA in December 1973, was
written in March 1974. The original cost data underwent exten-
sive modification. Final cost data necessary to assess economic
impact were not available until December 1975. Significant
data required for analysis have been updated since the original
study effort.
The study was conducted in two parts. The first part de-
scribes the overall industry in terms of operating characteris-
tics, markets, financial factors and geographic location. Major
industry segments are defined in terms of size and production
processes. Financial statistics of firms in the industry are
organized to form company profiles. These profiles are designed
to assist in determining whether plants can remain viable and
profitable, and to aid in assessing the financial impact of com-
pliance with the proposed effluent guidelines. Finally, a meth-
odology for assessing economic impact is developed for use
in the second part of the study.
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1-7
The steps taken to complete the first part included:
1. Published data and information from previous
studies, trade journals, government documents and Kearney files
were collected and analyzed.
2. Representatives of the following agencies and
organizations were interviewed for purposes of developing addi-
tional industry information:
(a) Environmental Protection Agency.
(b) Datagraphics, Inc.
(c) Cyrus Wm. Rice.
(d) American Iron and Steel Institute.
(e) Wire Association.
(f) Welded Steel Tube Institute.
(g) Ferroalloys Association.
(h) Steel Founders' Society of America.
(i) Steel Service Center Institute.
(j) Federal Trade Commission.
3. Additional information was furnished by selected
specialty steel industry executives.
4. Specialty steel establishments were visited and
new data collected to supplement the initial data base and gain
a broad understanding of operating characteristics of the various
specialty steel production processes. This understanding facil-
itated the assessment of the effects of water control on individ-
ual establishments and on the industry as a whole.
5. A financial data base was established. Dun and
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1-8
Bradstreet reports were used and were supplemented with other
data, including the Securities and Exchange Commission Schedule
10K reports, annual reports and plant interviews.
6. Representatives of EPA and Kearney met to discuss
a draft report of the first part of this study and the costs
used in the impact analysis.
The second part of the study develops a methodology for
economic impact analysis. The methodology is then used to deter-
mine the potential effects on the industry of compliance with
the proposed effluent guidelines. Alternative scenarios were
developed and used to project potential price and volume changes
expected to result from compliance. From this analysis, produc-
tion curtailment, employment effects and secondary effects
are determined where applicable.
The steps taken to complete this second part of the study
were as follows:
1. Various sources of industry financial information
were reviewed to determine the industry's ability to support
large capital expenditures and to absorb higher operating
costs.
2. Cost data for pollution abatement were obtained
from EPA and the information was evaluated to determine its
applicability to the segments established in the first part of
the study.
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1-9
3. The proposed guidelines were applied to assess
differences in the magnitude of impact on industry segments.
4. Financial institutions, insurance companies, and
brokerage houses were contacted for information concerning the
financing of capital equipment for pollution abatement. Where
pertinent, this information was used in the financial analysis.
5. Based on the data collected, impact assessments
were developed by size of establishments in the impacted seg-
ments .
6. This report was prepared to cover the findings in
both parts of the study.
Sources of data used in this study are presented in Exhibit
1-1.* A list of contacts for other information utilized in
this study is shown in Exhibit 1-2.
REPORT ORGANIZATION
The structures and characteristics of the stainless steel,
tool steel, and high alloy steel markets are such that they may
be grouped together into one industry segment, referred to in this
report as the "Specialty Steel Industry." Industry structure,
market characteristics, cost data and economic impact are
* All exhibits appear at the end of the chapter in which they
are referenced.
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I - 10
classified within this segment by specialty steel industry
category, establishment size, product form type and, where
appropriate, plant SIC code.
As indicated previously, the high alloy steel foundry, spe-
cialty ferroalloy and calcium carbide industries are essentially
different industries and relatively minor in terms of tonnage,
value of shipments, number of plants and employment.
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I - 11
B - SEGMENTATION OF THE INDUSTRY
The specialty steel industry is segmented along several
different lines which are applicable to the assessment of eco-
nomic impact developed in this study. The following distinc-
tions are of particular importance in classifying specialty
steel products and processes:
Specialty Steel Product Definitions
Definition of Specialty Steel Industry Establishments
Industry Structure.
SPECIALTY STEEL
PRODUCT DEFINITIONS
For present purposes, specialty steel products are classified
as follows:
1. Stainless Steel. The term "stainless" is applied
to any steel grade that is alloyed with sufficient chromium or
chromium-nickel to significantly resist corrosion or oxidation.
The addition of these materials to alloys of iron and carbon reduces
susceptibility to such conditions as rust when exposed to mois-
ture. The dividing line between "stainless" and "low alloy"
steel is generally taken to be 4% chromium.
The American Iron and Steel Institute (AISI) classifi-
cations distinguish between stainless and heat resisting steels,
since stainless steels are not necessarily high temperature re-
sistant. In this study heat resisting steels are included
in the stainless steel classification. The inclusion of these
steels has no significant effect on the analysis of economic
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1-12
impact because the shipment tonnages of heat resisting steel are
minor relative to those for stainless steels. Heat resisting
steels accounted for less than 2% of the combined stainless and
heat resisting tonnage shipped during the 1971-1974 period, and
in 1973 amounted to less than 1% of this total.
2. Tool Steel. Tool steels are generally defined as
any steel used to cut, form or otherwise change the shape of
materials to adapt them to a definite use. They may be class-
ified as follows:
(a) High speed steels-
(b) Hot work steels.
(c) Shock resisting steels.
(d) Cold work steels.
(e) Special purpose tool steel.
3. High Alloy Steel (including the super-alloys). High
alloy steel is defined in this study as any steel which contains
alloying additions in excess of 5% of total content. Because
they are frequently produced by the same facilities used to pro-
duce high alloy steel, super-alloys have been included in the
high alloy steel statistics in this report. However, many of the
vuper-alloys contain little, if any, iron, and therefore are not
properly classified as "steel." The super-alloys are divided
into five principal groups:
(a) Nickel-Base.
(b) Iron-Nickel-Base.
(c) Cobalt-Base.
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1-13
(d) Molybdenum-Base.
(e) Titanium-Base.
Each group contains other alloying elements which are added to
impart specific physical properties.
Most statistics pertaining to "alloy" steeJs refer to that
class of steels encompassed by the following AISI definition:
"'By common custom steel is considered to be
alloy steel when the maximum of the range
given for the content of alloying elements
exceeds one or more of the following limits;
manganese, 1.65%; silicon, 0.60%; copper,
0.60%; or in which a definite range or a def-
inite minimum quantity of any of the follow-
ing elements is specified or required within
the limits of the recognized field of con-
structional alloy steels: aluminum, chromium
up to 3.99%, cobalt, columbium, molybdenum,
nickel, titanium, tungsten, vanadium, zirconium,
or any other alloying element added to obtain
a desired alloying effect.1 It may be noted
that steels that contain 4.00% or more of
chromium are included by convention among the
special types of alloy steels known as stainless
steels."
This definition covers approximately 10.2 million tons, not includ-
ing stainless and heat resisting steels, or about 9.3% of the total
1974 net shipments reported by AISI. The alloy steel referred to
in this study is a small fraction of this 10.2-million-ton total.
This study does not include high strength low alloy steel (HSLA),
as this class of steels, though accounting for a large fraction of
the reported total alloy steel tonnage, does not contain alloying
additives in excess of 5%.
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1-14
DEFINITION OF SPECIALTY
STEEL INDUSTRY
ESTABLISHMENTS
(1)
Specialty steel establishments are defined here as separ-
ately operated establishments where the manufacture or processing
(conversion) of stainless, tool and high alloy steel (in any
combination) accounts for more than 50% of the total plant
production. This report's analysis is focused on this group
of establishments; however, the study does contain some information
and observations about other establishments which produce specialty
steels.
1)
Establishment as defined by the Standard Industrial Clas-
sification Manual is:
"An economic unit, generally at a single physical loca-
tion where business is conducted or where services or indus-
trial operations are performed. (For example: a factory,
mill, or store.)"
"Where distinct and separate economic activities are
performed at a single physical location (such as construction
activities operated out of the same physical location as a
lumber yard), each activity should be treated as a separate
establishment wherever (1) no one industry description in
the classification includes such combined activities; (2)
the employment in each such economic activity is significant;
and (3) reports can be prepared on the number of employees,
their wages and salaries, sales or receipts, and other es-
tablishment type data..."
"An establishment is not necessarily identical with the
enterprise or company which may consist of one or more es-
tablishments. Also, it is to be distinguished from sub-units,
departments or divisions. Supplemental interpretations of
the definition of an establishment are included in the indus-
try descriptions of the Standard Industrial Classification
where appropriate."
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1-15
Establishments whose pri»ry activity is the production
or conversion of carbon steelfctve been covered in separate
EPA reports and are excluded few this study. This study also
excludes forging establishment except where specialty steel
comprises more than 50% of toM. plant production, and processes
are utilized which are coveredin this investigation.
INDUSTRY
STRUCTURE
Judged by the size of opsations and revenues, the special-
ty steel industry is composed mnly of-relatively small com-
panies. Several major steel capanies make specialty steels,
but their output accounts for -m more than one-third of the spec-
ialty steel industry's tonnagesfeipments..
Exhibit 1-3 provides a coalete listing of establishments
engaged in specialty steel projection, citing plant location,
categories of specialty steel induced, and
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1-16
(a) Integrated
Producers
Integrated producers are included in SIC Code 3312. These
c :panies may be grouped into three classifications as follows:
1. Eight of the nation's major carbon steel companies
also participate in specialty steel operations in varying de-
grees. Specialty steel accounts for only a minor part of this
group's total steel production. These companies, including
those who have no establishments for which specialty steel com-
prises over 50% of total plant production, are listed with their
product specialization, in Table 1-1 below:
Table T-l
Major Steel Companies Participating in
the Specialty Stefcl Indusjtrjf
Company Types of Specialty Steel
Armco Steel Corp. Stainless and High Alloy
Bethlehem Steel Corp. Tool
Jones & Laughlin Steel Corp. Stainless
McLouth Steel Co. Stainless
Republic Steel Corp. Stainless and High Alloy
Sharon Steel Corp. Stainless
Timken Company Stainless
United S":ates Steel Corp. Stainless
2. A second group of companies consists of relatively
large, diversified producers, whose major business is specialty
steels. These companies produce and convert a wide range of
stainless, tool and high alloy products.
3. A third group includes integrated steel producers
who concentrate on particular specialty steel categories or prod-
uct form types. Among those included in this group are producers
who manufacture stainless steel of all or most product form types,
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1-17
producers who manufacture stainless, tool and high alloy bars,
and producers who manufacture only stainless steel plate.
A list of integrated producer establishments where
specialty steel accounts for over 50% of total production
(and which are included in the economic impact analysis),
citing plant locations, size, employment, categories of spec-
ialty steel produced, type of primary production and product
form types, appears in Exhibit 1-5.
(b) Firms Which Purchase
Semi-Finished Specialty
Steel and Convert
In addition to integrated producers, the specialty steel
industry includes firms which purchase semi-finished specialty
steels and which roll, draw, fabricate, or otherwise convert or
finish these materials.
(2)
These establishments may be grouped into three segments
by type of product form produced:
1. Specialty Steel Wire Processors. These processors,
who are included in SIC Code 3315, purchase steel in wire rod form
from domestic or foreign integrated producers for conversion into
wire for end-use or for further processing by others. They are
(2)
All further industry descriptions (and the economic impact
analysis) associated with firms which purchase semi-finished
specialty steel and convert apply to stainless steel. All
62 of the converting establishments where specialty steel
accounts for over 50% of total plant production process
stainless steel. No establishment processes tool steel only.
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1-18
converters and do not melt or hot roll specialty steel. Those
specific establishments of. large integrated steel companies
which convert specialty steel into wire for end use, but do not
melt or hot roll steel, are included in this group.
2. Specialty Steel Cold Rolled Sheet, Strip and Bar
Processors, These nonintegrated processors, who are included
in SIC Code 3316, purchase semi-finished specialty steel and
cold roll sheet and strip or cold finish bars. As with the
wire processors, some of the establishments in this group are
specific plants of integrated companies which process, but
do not melt or hot roll, specialty steel.
3. Specialty Steel Pipe and Tube Processors. These
processors, v/ho are included in SIC Code 3317, purchase tube
rounds, hollows or skelp from integrated specialty steel pro-
ducers and convert them into pipe and tubing. They are noninte-
grated in that they do not melt or hot roll steel, although
they may hot pierce or hot extrude prior to subsequent cold
finishing.
A list of establishments which convert semi-finished
specialty steei for end-use or for further processing appears
in Exhibit 1-6,. Only those plants are listed' in which specialty
steel products account for over 50% of production, and which
are, therefore, the focus of this study. The establishments
are grouped b} major product form type, and approximate employment
figures are provided for each plant.
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1-19
C - SPECIALTY STEEL MARKET AND
INDUSTRY CHARACTERISTICS
INTRODUCTION
This section discusses market characteristics of the
specialty steel industry and provides available market data rel-
evant to the economic impact analysis. The discussion is organ-
ized under the following subject headings:
- Market Demand
- Market Segmentation
Principal Markets
- Channels of Distribution
Industry Size
Product Line Offering
Employment
Foreign Trade.
MARKET DEMAND
(a) General Demand
Factors
Demand for specialty steels is generated by technical or
decorative applications requiring the physical and chemical
properties inherent in stainless, tool and high alloy steels.
Among the most important of such properties provided by var-
ious grades of specialty steel are the following:
- Corrosion resistance.
Heat and cold resistance.
Wear and abrasion resistance.
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1-20
Shock and impact resistance.
Hardness, red hardness, and depth of hardness.
Nondeforming qualities.
High stress resistance at extreme temperatures.
High strength.
Toughness at low temperatures.
Cleanability.
Retention of purity of materials in contact.
Lowered maintenance costs.
Long product life.
Decorative qualities.
Typical customer product applications require specific
specialty steel form types and grade numbers. Economically
feasible substitutes for these specialty steel products are
generally unavailable under present technology.
As specialty steels are almost exclusively used as an input
in the manufacture of other, more highly processed, products,
rather than for their own final consumption value, the demand
for specialty steels is derived from other, more fundamental
product demands. In most cases, specialty steel inputs account
for a relatively small fraction of the total production costs
of end-use products containing them. The customers of the
specialty steel industry as a whole include the construction
industry as well as a broad spectrum of hard goods and capital
goods manufacturers.
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1-21
Domestic demand for stainless and tool steels is satis-
fied by both domestic and foreign producers, and import com-
petition has had a significant impact on the industry.
(b) Product
Applications
The following paragraphs summarize the key functional char-
acteristics of the three categories of specialty steel.
1. Stainless Steel. Principal applications for
stainless steel products are in areas where the following
characteristics are desirable:
Corrosion resistance.
Retention of purity of materials in
contact.
- High tensile strength to weight ratios.
Toughness at low temperatures.
Cleanability.
Lowered maintenance costs.
Long product life.
Decorative qualities.
2* Tool Steel. Tool steel is used to cut, form,
blank, shape and forge other materials. Principal applica-
tions include:
(a) Applications requiring long life
at relatively high operating
temperatures (such as for heavy
cuts in high speed machining).
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1-22
(b) Finishing operations in which
extreme wear resistance and the
ability to retain a smooth cutting
edge on light cuts is necessary.
(c) Applications requiring high resis-
tance both to wear or abrasion and
to shock or impact.
3. High Alloy Steel. High alloy steel and the super-
alloy steels have been developed to withstand the combination of
extreme temperatures and high stress. About 100 grades have
been developed for special applications such as jet engine parts,
gas turbine parts, critical nuclear and missile parts, and aero-
space structural members and skins.
(c) Potential
Substitutes
Efforts to find suitable substitutes for stainless steel
and tool steel have been going on for a long time. The specialty
steels are expensive to buy and work and they are generally pur-
chased as a last resort to satisfy specific material requirements.
1. Stainless Steel. The chromium and nickel content
•-hich gives stainless steel its distinctive properties also makes
;t a relatively expensive material. A number of less satisfac-
tory substitutes are available for various specific applications.
Chief among these substitutes are aluminum, chrome or nickel
plated steel or brass, and plastics. These materials, however,
are not necessarily appropriate to the same applications.
Glass, wood and surface coatings may be used in place of stainless
steel in a limited number of cases. Overall, stainless steel
is frequently preferred to potential substitutes despite a
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1-23
substantial cost disadvantage, and its usage continues to
grow.
Moreover, in some applications there are presently no
viable substitutes for stainless steel. In other cases (e.g.,
stainless steel used in food processing equipment) legal require-
ments dictate the continued use of stainless steel over possible
substitute materials.
2. Tool Steel. High alloy content and high labor in-
tensity in production make tool steels relatively expensive.
There has been a long history of research efforts devoted to
finding cheaper substitutes for tool steel. Shortages of nickel,
vanadium, tungsten and other alloying elements during World War
II caused certain grades to be changed and others to be eliminated
Lower production rates and increased fabrication costs often re-
sulted. Carburizing of carbon or alloy steel or hard surface
plating are substitutes for tool steel in certain applications.
Carbide cutting tools, which contain many of the ingredients of
tool steel in a different form, have gradually been substituted
for high speed tool steel during the last 30 years. In recent
years ceramic tools have also been used. Few other substitutes
exist for tool steel in most applications, and in many cases
there are no viable substitutes.
3. High Alloy Steel. High alloy steel and the super-
alloys are fairly new products brought about by the growth of
the aerospace industry. High alloy steel is very high priced
because it contains large proportions of expensive additive agents
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1-24
and is unusually difficult to forge, machine or weld. However,
when high alloy steel properties are required, there are gener-
ally no substitutes. Occasionally, the super-alloys, which are
no true "steels" but are made by specialty steel producers, are
used in place of high alloy steels.
MARKET
SEGMENTATION
The manufacture of specialty steels may be segmented by the
category of steel produced, while converting operations may be
classified by product form type. The major categories of spe-
cialty steels are:
Stainless Steel.
- Tool Steel.
High Alloy Steel (including the super-alloys).
Many grades of steel exist within each category of specialty
steels. A grade encompasses steel of a specific metallurgical
analysis produced by alloying iron with other elements whose
weinht concentrations are controlled within specified limits.
The grades are generally referred to by a standard AISI grade
number. Users expect steel of a specific grade to possess the
analysis and all properties associated with the grade, regard-
less of the producer from whom it is purchased.
Principal product form types include:
Ingots.
Blooms, billets, slabs.
-------
1-25
Plate, sheet, strip.
- Bar.
Rods, wire rods, wire.
Pipe, tubing.
Product form types are available in numerous lengths,
widths, diameters and gauges. There is little differentiation
among specialty steels of the same category, grade, product form
type, length, width and gauge. Comparable products of different
producers may be viewed as interchangeable.
The net ton is used by the specialty steel industry as a
measure of product quantity. However, the industry responds to
many orders for quantities of specialty steels amounting to a
few hundred pounds or less, a practice which is unusual in the
high tonnage carbon steel industry.
PRINCIPAL
MARKETS
The principal markets for each of the three major specialty
steel categories are presented as follows.
(a) Stainless
Steel
Table 1-2 summarizes the market distribution of stainless
steel producers' tonnage shipments in 1970, 1972 and 1974. Ex-
hibit 1-7 presents actual stainless steel tonnages shipped by
product form type for 1970 through 1974.
-------
1-26
Table 1-2
Estimated Market Distribution of Net Total
Domestic Shipments of Stainless Steel Producers
Percent of Tonnage
Market
Automotive
Machinery, Industrial Equipment,
and Tools
Non~Electr ic
Electrical
Domestic and Commercial Applications
Appliances, Utensils and Cutlery
Equipment
Conocruction , Maintenance, and
Contractors' Products
Industrial Fasteners
Forgings
Aircraft and Aerospace, Rail
Transport, and Marine
Other End-Use Markets
Total End-Use Markets
Steel Service Centers and Distri-
butors
Steel for Converting and Processing
Total
1970
11.8%
11.3
8.0
3.2
9.2
6.6
2.6
4.0
2.1
2.0
2.5
4.8
47.6%
41.5
10.9
100.0%
1972
14.4%
10.1
7.3
2.7
10.8
7.2
3.5
5.4
2.1
1.9
1.2
6.1
51.9%
40.4
7.7
100.0%
Shipped
1974
12.9%
10.7
8.7
2.0
7.8
4.9
3.0
4.5
2.1
1.9
1.3
7.0
48.2%
43.0
8.9
100.0%
Source: Exhibit 1-7.
As indicated in Table 1-2, roughly 10% of producers' ship-
ments consist of steel for further processing and converting, and
an additional 40% of shipments go to steel service centers and
distributors. These service centers and warehouse distributors
resell stainless steel, frequently for further conversion and
fabrication into end products. Thus, only about half of stain-
less producers' shipments are direct to end-use markets.
-------
1-27
Table 1-2 indicates a tendency of producers' shipments
direct to end-users—particularly in the automotive, domestic
and commercial, and construction markets—to form a significant-
ly larger fraction of total shipments in years of expanding
business activity (such as 1972) than in years of recession
(such as 1970 and 1974). The table also shows the decline in
importance of the aerospace, rail, and marine transportation
markets for specialty steels in the early 1970's, and a corres-
ponding increase in the importance of "other," fragmented end-use
markets.
While recent statistics on the market distribution of steel
service centers' stainless shipments are apparently unavailable,
the Steel Service Center Institute of Cleveland, Ohio conducted
a 1969 survey of its members' specialty steel markets. The re-
sults of this survey, for broad customer categories, are pre-
sented in Table 1-3. They are also combined with the distribu-
tion of direct shipments of stainless steel producers to end-users
in 1970 to provide a rough composite of the end-use distribution
of about 90% of stainless steel tonnage shipments.
-------
1-28
Table 1-3
Estimated Composite End-Use Distribution of
Stainless Steel Products by Markets, 1969-1970
Market Group
Machine-y, Equipment,
and Tools
Automotive
Domestic and Commercial
Equipment
Construction and
Contractors' Equipment
Appliances, Utensils,
dad Cutlery
Shipbuilding and Marine
Equipment
Aircraft and Aerospace
Other
Total
Percent of
Producers'
Direct Tonnage
Shipments(l)
23.5%
25.0
5.5
8.5
14.0
0.5
1.5
22.0
100.0%
Percent of
Service Center
Tonnage
Shipments(2)
32%
N/A(4)
18
14
7
5
4
20
100%
Percent of
Composite
End-Use
Tonnage
Shipments(3)
26.5%
13.5(4)
11.5
11.0
11.0
2.5
2.5
21.5(4)
100.0%
Notes: (1) Based upon Table 1-2 and Exhibit 1-7, AISI data for
1970. Direct shipments to end-users comprised 47.6'
of all stainless steel shipments in 1970.
(2) Steel Service Center Institute figures for 1969.
Shipments from stainless steel producers to steel
service centers comprised 41.5% of all stainless
steel shipments.
(3) Based upon 89.1% of stainless steel producers' 1970
shipments which were either to service centers or
direct to end-users. Estimates involve mingling
of 1969 and 1970 data.
(4) Shipments to the automotive industry are probably
greater, and shipments to other end-users lower,
than the figures cited, since separate figures for
service center shipments to the automotive indus-
try were unavailable.
Sources: Exhibit 1-7; and Steel Service Center Institute.
-------
1-29
(b) Tool Steel
Table 1-4 below summarizes the percentage distribution of
reported tool steel shipments by market for 1970, 1972 and 1974.
Exhibit 1-8 presents tool steel tonnage shipments by market during
the years 1970 through 1974. It is estimated that over 50% of
total tool steel shipments are bars. The majority of the remain-
ing shipments are in rods or wire form. A very small amount of
plate, sheet and strip is shipped.
Table 1-4
Estimated Market Distribution of Total
Shipments of Tool Steel Producers,
1970, 1972 and 1974
Percent of Tonnage Shipped
Market 1970 TTT2 1974
Steel Service Centers and
Distributors 20.8% 19.8% 20.3%
Machinery, Industrial Equipment
and Tools
Forgings
Construction and Maintenance
Other and Unclassified
Total 100.0% 100.0% 100.0%
Source: Exhibit 1-8.
The majority of tool steel shipments are not classified by
market destination. Moreover, the shipments to steel service
centers may not be viewed as end-use shipments, as these centers
normally resell tool steel for further conversion and fabrica-
tion. Roughly 75%-80% of tool steel shipments, for which end-use
is reported, is to manufacturers of industrial machinery, equip-
ment and tools. Tool steel industry sources indicate these
-------
1-30
industrial markets also absorb the great bulk of unclassified
shipments. The automotive industry is said to account for about
20% of the end-use market for tool steel.
(c) High Alloy
Steel
A detailed classification of high alloy steel shipments by
principal end-use market is not available. However, the major
high alloy steel markets are manufacturers of chemical process-
ing machinery, petroleum processing machinery, electric power
generation equipment (including nuclear), high temperature heat-
ing equipment, and aerospace equipment. Exhibit 1-9 presents
actual high alloy steel shipments by product form type (but not
by market) for the years 1971, 1972 and 1973.
CHANNELS OF
DISTRIBUTION
Most specialty steel reaches end-use markets either through
direct shipments from integrated producers and processors of
semi-finished steels or through resale from steel service cen-
srs and warehouse distributors. As is indicated in Tables 1-3
and 1-4, steel service centers and distributors account for ap-
proximately 40% of stainless steel tonnage shipments and about
20% of tool steel tonnage. Service centers account for roughly
equivalent proportions of dollar sales for each of these spe-
cialty steel categories. The role of steel service centers in
distributing high alloy steel products is far smaller. Kearney
estimates that sales of service centers and warehouses account
-------
1-31
for less than 10% of the high alloy steel total.
Far more specialty steel is sold indirectly through steel
service centers and distributors than to any individual end-
use market.
INDUSTRY SIZE
(a) Tonnage and Value
of Shipments
Sales and shipments of the specialty steel industry are
markedly cyclical. The duration and timing of specialty steel
cycles generally correspond to those of the steel industry as
a whole, but the amplitude of the fluctuations is much more pro-
nounced for specialty steels. On average, during the period
since 1965, specialty steel shipments comprise about 1% of total
steel industry tonnage shipments, but account for 7% to 10% of
the total dollar value of steel industry shipments. Kearney
estimates the value of stainless steel shipments in 1974 at about
$2.2 billion, up from about $1.5 billion in 1973. The value of
tool steel shipments in 1974 was estimated at about $300 million,
compared with $240 million in 1973.
Table 1-5 summarizes specialty steel tonnage shipments in
relation to the steel industry as a whole during the past several
years. More detailed information on shipments is provided in
Exhibits 1-1, 1-8 and 1-9.
-------
- 32
Table- 1-5
Shipments of Specialty Steel by Grade
in Relation to Total Steel
Industry Shipments, 1964-1975
Year
1964
1966
1968
1970
1972
1973
1974
1975(1)
Total Steel
Industry
(000 Nat Tons)
8-, 945
8i ,995
91,856
90,798
91,305
111, 430
109,472
80,597
Stainless
000 Net Tons
771
93.",
819
709
855
1,134
1,345
753
Steel
Percent
of Total
0.9?
1.0
0.9
0.8
0.9
1.0
1.2
0.9
Tool
Steel
Percent
000 Net Tons o£ Total
102
121
106
88
90
111
113
70
0.18
0.1
0.1
0.1
0.1
0.1
0.1
0.1
High Alloy
000 Net Tons
N/A
N/A
N/A
N/A
49.3
64.6 (2)
Steel
Percent
of Total
0.05%
0.06
Notes: (1) First 11 months at annual rate.
(2) Kearney estimate.
Sources: Exhibits 1-7, 1-8 and 1-9; and AISI Annual Statistical Reports.
(b) Number of
E s t ab 1 i s hme n t s
Kearney identified 160 establishments which produce or con-
vert (process) specialty steel. As had been noted previously,
only those specialty steel establishments where stainless, tool
and high alloy steel operations account for more than 50% of the
total plant production are the focus of the analysis of this
report. Kearney has identified 87 establishments satisfying this
criterion. Table 1-6 summarizes the number of specialty steel
establishments identified by major type. A more detailed break-
down of the number of specialty steel establishments by level
of integration, and by grades of steel and product form types
produced is provided in Exhibit 1-4.
-------
I - 33
Table 1-6
Number of Specialty Steel Establishments
by Major Type
Ail IdonUficd 5t»«i Operation* Account
Typ» of gi>caJ)U«haant Eatabliihrnytj for Ow_SQjo^ Pjoduct^on
Intaqtatad f roducy»
Flat Rolled Produce Flanu 9
Section Product ?laat» 17
Firm Which PurehM* Swtl-
rinl*ft«d Sp^cialtj* st«l
_jnd_Conv»rt
Cold Rolled Sh»»t, Strip
*nd BAT Procntor*
s*ir* Proc«««or«
Plp« uid Tub* Pr
!ourc««i Exhibits 1-3 and 1-4.
Roughly half the integrated producer establishments are
primarily engaged in specialty steel production. About three-
quarters of the wire processors and a somewhat higher proportion
of pipe and tube processing establishments are primarily oriented
towards specialty steels. However, most of the cold rolled sheet,
strip and bar processors produce only small amounts of high alloy
steel, and in only about one-sixth of these establishments does
specialty steel output account for over 50% of plant production.
The integrated establishments primarily engaged in specialty
steel production were further segmented by size for purpose of
economic impact analysis. Of the flat rolled product plants,
three were considered large (producing over 100,000 tons per
year), while four were considered small (producing less than
100,000 tons per year). Of the section product plants, seven
were large (over 100,000 tons per year), four were medium-sized
(20,000-100,000 tons per year), and seven were small (less
-------
1-34
than 20,000 tons per year). A listing of the integrated producer
establishments included in each size category appears in
Exhibit 1-5.
PRODUCT LINE
OFFERING
Specialty steel establishments vary considerably in the
variety of product line offered. In general, establishments
which purchase specialty steel and convert furnish only one or
two product forms in a single steel grade (stainless steel for
wire and for pipe and tube processors, and stainless or alloy
steel for cold rolled sheet, strip and bar processors). Inte-
grated establishments, however, frequently produce several forms
of steel, and nearly half of these establishments produce more
than one specialty steel grade.
Table 1-7 summarizes the specialty steel grade mix of the
integrated producers. Exhibit 1-4 provides a more complete enu-
meration of integrated and other establishments producing each
of various combinations of product form and grade.
-------
1-35
Table 1-7
Number of Integrated Specialty Steel
Establishments by Categories of
Specialty Steel Produced
Plants Where Specialty
All Identified Steel Operations Account
Categories Produced Establishments for Over 50% of Production
All Three Specialty
Grades 9 5
Two Grades Only 14(1) 9(1)
Stainless Steel
Only 20 6
Tool or High Alloy
Steel Only _8 J5
Total 51 25
Note: (1) Only one of these establishments does not
produce stainless steel.
Source: Exhibit 1-4.
EMPLOYMENT
Total employment in U.S. specialty steel operations has been
estimated at about 65,000 during recent periods of efficient ca-
pacity utilization, as in 1973 and early 1974. The establishments
identified by Kearney as being primarily engaged in specialty
steel production employ about 45,000 of these workers. Of this
number, roughly 25,000, or 55%, are employed by the ten large in-
tegrated producer establishments, and an additional 9,000, or 20%,
are employed at other integrated plants. The 62 establishments
identified by Kearney as being primarily engaged in processing
and converting semi-finished specialty steel account for only
c-bout 11,000, or 25% of the 45,000 employees. toire processors
employed about 3,000 of these workers, pipe and tube processors
-------
1-36
employed 6,000, and cold rolled sheet, strip and bar processors
employed less than 2,000. Exhibits 1-5 and 1-6 give approximate
employment figures for each of the establishments primarily en-
gaged in specialty steel operations.
Specialty steel operations are highly labor intensive in
relation to the steel industry in general. In 1974, approxi-
mately 25 tons of specialty steel were shipped for each employee,
while the steel industry as a whole shipped over 200 tons of prod-
uct per employee. In terms of value of shipments, specialty
steels accounted for slightly more than 10% of the steel indus-
try total in 1974, while accounting for over 12% of steel indus-
try employment. Moreover, tool steel production tends to be less
automated than carbon steel operations, and requires an average
level of employee skill higher than the steel industry as a whole
The highly cyclical nature of specialty steel production is
reflected in industry employment figures as well as in industry
shipments. The impact of the 1974-1975 recession is evidenced
by a 27% reduction in employment at 12 representative specialty
steel companies (accounting for about 35% of specialty steel em-
ployment) between July 1974 and July 1975. This compares with
a 15% reduction in payroll employment in primary metals indus-
tries and a 10.5% reduction in total manufacturing payroll em-
ployment during the same period. Employment of production
workers at these specialty steel companies declined more than
31% over this 12-month period, compared with a 17.4% decline
-------
1-37
in employment of production workers in primary metals industries
and a 13% decline in all manufacturing. Total man-hours worked
at specialty steel companies surveyed in connection with the
industry's petition for relief to the U.S. International Trade
Commission declined an even more pronounced 45% between the
third quarter of 1974 and the third quarter of 1975.
Figure 1-1
Cyclical Trends in Man-Hours Worked by
Production and Related Workers -
Stainless Steel, Tool Steel and All
Manufacturing Industries
o
o
in
X
w
Q
z
120
110
100
ALL MANUFACTURING
TOOL STEEL-/
1970
1971
1972
1973
1974
1975
Sources: J. K. Lasser Survey, reported in Testimony to U.S.
International Trade Commission, re: Specialty Steel; and
U.S. Department of Commerce Survpv of rii-r-»-o«f Wno-i^^^o
-------
1-38
FOREIGN
TRADE
In recent years, foreign trade has been a major factor in
the domestic specialty steel market. The Tool and Stainless
Steel Industry Committee, comprised of companies accounting for
about 75% of domestic specialty steel production, petitioned the
U.S. International Trade Commission in June 1975 for relief from
import competition. The Committee contended this competition
was inflicting major injury on U.S. producers and their employees
(a) General
Environment
Until about 15 years ago, imports were only a minor factor
in domestic steel markets. As the world's largest and most
diversified producer of mill products, the United States was a
consistent and substantial net exporter of steel from the begin-
ning of the century until 1959. At about that time steel produc-
tion in a number of foreign countries began to exceed these
nations' domestic and traditional export requirements. This
expanding foreign supply, made competitive by hourly labor costs
far lower than those in the United States and the overvaluation
of the U.S. dollar in foreign exchange, brought about a shift in
the U.S. position from a net exporter of steel to a net importer.
Between 1958 and 1964 steel imports to this country rose
from two million tons to 7.7 million, and a further increase to
19.5 million tons was posted by 1968. Since 1968, steel imports
have generally fallen in the range of 15 to 20 million tons
-------
1-39
annually, equalling 16% to 22% of domestic producers' shipments.
Export shipments of U.S. producers have also risen during this
period, but by a far smaller amount, averaging about 5.5 million
tons annually in the early 1970's, compared with an average of
3.1 million tons in the mid-1960's. Steel is an important nega-
tive item in the U.S. balance of trade. The U.S. has experienced
a steel trade deficit in each year since 1965, and in 1974, this
deficit totalled nearly $3 billion.
(b) Overall Specialty
Steel Balance of
Trade
Approximately 90% of identifiable specialty steel product
imports are stainless steels; the remaining 10% are tool steels.
Little high alloy steel is imported. Imports of stainless and
tool steels are believed to have significant effects on the
overall level of shipments of domestic producers. A large in-
crease in the average level of specialty steel imports to this
country during the years from about 1964 to 1972 appears to have
been a major cause of stagnation in domestic producers' ship-
ment levels over that time period.
Figure 1-2 on the following page illustrates the rapid rise
in stainless steel imports during the late 1960's; both in ton-
nage terms and as a percent of apparent domestic consumption.
Figure 1-3 illustrates the rising importance of tool steel im-
oorts as a fraction of apparent U.S. consumption tonnage. Ex-
hibits 1-10 and 1-11 provide annual tonnage statistics of
-------
THOUSANDS OF NET TONS
CO
0)
CO
en
CO
rt
ro
n>
3
TJ
o
•t
n-
CQ
fl)
I
to
I
o
PERCENT OF CONSUMPTION
-------
THOUSANDS OF NET TONS AND PERCENT OF CONSUMPTION
o
o
en
rr
tt>
3
TJ
O
•-<
rr
W
C
>-<
fD
I
OJ
-------
1-42
stainless and tool steel imports, respectively, in relation to
exports and to domestic production and consumption of the two
categories of specialty steel.
Since the mid-1960's, the volume of specialty steel imports
has been strongly related to world business cycle developments.
For reasons discussed in Section III of this report, foreign
producers appear to be under considerably stronger pressure to
maintain output levels during periods of weak demand and rela-
tively low prices than are U.S. producers. As a result, imports
have tended to be highest relative to overall domestic consump-
tion during recession years. Figure 1-2 indicates that tool
steel imports as a percent of consumption reached at least tem-
porary highs in the recession years of 1967, 1970 and 1974.
Stainless steel imports as a percent of consumption attained its
highest levels during the 1970-1971 business downturn. Strong
world demand for steel in the boom years of 1972 and 1973, to-
gether with price controls and the dollar devaluations which
made the U.S. a relatively unattractive market, led to lowered
import levels in those years. However, both stainless and tool
steel imports posted dramatic increases relative to domestic
consumption in the adverse world economic environment of 1975,
as is indicated in Table 1-8 on the following page.
-------
1-43
Table 1-8
Specialty Steel Imports and Apparent
Domestic Consumption, 1970-1975
(Thousands of: Net Tons)
Stainless Steel
Year
1970
1971
1972
1973
1974
1975(2)
Imports
177.2
191.9
149.1
128.3
176.1
192.0
Domestic
Consumption (1)
802.9
855.2
941.6
1,166.4
1,383.6
897.7
Imports as a
% of Consumption
21.4%
22.4
15.8
11.0
12.7
21.4
Tool Steel
Domestic
Imports Consumption(l)
15.5 101.7
9.2 83.6
11.9 99.0
15.0 119.6
16.0 120.8
27.0 92.0
Imports as a
% of Consumption
15.
11.
12.
12.
13.
29.
2%
0
0
5
2
3
Notes: (1) Domestic producers' shipments plus imports minus export3.
(2) Estimated annual rate based on first seven months data.
Source: Exhibits 1-10 and 1-11.
As indicated in Exhibit 1-10, U.S. stainless steel exports
during the period 1964-1974 held fairly steady in the 80,000- to
120,000-ton range, except during 1971 and 1972, two years of
weak overseas demand, and 1974, when the cumulative effects of
U.S. price controls and the U.S. dollar devaluation made overseas
markets highly attractive to domestic producers. Otherwise there
appear to have been no consistent patterns in stainless steel ex-
ports .
Tool steel exports from this country, however, rose strongly
and consistently during the period between 1968 and 1974. How-
ever, the base from which this increase was posted was very
small, and in 1974 tool steel exports amounted to only 8,500 tons,
or 7.5% of U.S. producers' shipments.
The net volume of specialty steel imports to this country
rose very sharply from about 21,000 tons, or about 2.5% of the
domestic market in 1964, to 143,000 tons, or about 15% of apparent
-------
44
U.S. consumption, in 1971. Thereafter, the effects of U.S. price
controls, the dollar devaluation, strong overseas demand, and
"voluntary" import restraints caused net imports to drop off to
46,000 tons in 1974, accounting for only 3% of the U.S. market
in that year. However, the sharp deterioration of foreign busi-
ness conditions in late 1974 and in 1975 brought about a renewed
surge in net imports to the point where they constitute at least
15% of the domestic market.
Estimates of the dollar balance of trade in specialty steel
are highly suspect because of definitional discrepancies in the
U.S. Department of Commerce import and export statistics, and
inconsistencies between the Commerce Department's trade tonnage
and average value statistics and similar data emanating from
industry sources. On the basis of the net import tonnages in-
dicated in Exhibits 1-10 and 1-11 and composite industry selling
prices in the domestic market, Kearney has derived dollar balance
of trade figures which are indicated in Table 1-9 on the follow-
ing page. These figures cannot be viewed with much confidence,
however, if only because the average values of imports and ex-
ports probably vary considerably from composite domestic prices
due to differences in specific product mix and freight and in-
surance charges.
-------
1-45
Table 1-9
Specialty Steel Trade Balance/ 1972-1974
Year
1972
1973
1974
Sources :
(Millions of Dollars)
Stainless Steel Tool Steel
Trade Balance Trade Balance
-105
- 43
- 63
Exhibits 1-10 and
Current Industrial
-25
-32
-43
1-11; U.S. Bureau of the
Reports Series MA-33B.
Total
-103
- 75
-106
Census ,
The specialty steel deficit figures in Table 1-9 are larger
than those implied by Department of Commerce figures. They in-
dicate that while this deficit was substantial, it amounted to
under 5% of estimated specialty steel dollar shipments compared
with a comparable statistic of over 12% for the steel industry
as a whole. However, the specialty steel dollar trade deficit
appears to have risen dramatically in 1975. Based on net import
tonnage figures for the first seven months of the year, and as-
suming a 15% increase in composite prices over tne 1974 average
price, the specialty steel deficit in 1975 may have been as high
as $350 million.
(c) Foreign Trade Impacts
on Stainless Steel
Processors
Table 1-10 summarizes the significance of imports relative
to domestic producers' shipments of several specified processed
stainless steel products.
-------
1-46
Table 1-10
Imports of Selected Processed Stainless
Steel Items as a Percent of Domestic
Producers' Shipments
(Based on Product Tonnages)
Product
Stainless Wire
Stainless Cold Rolled
Sheet
Strip
Bars
1972
63
17
5
12
1973
57
9
3
5
1974
83
11
4
14
1975(1)
N/A
25
8
29
Note: (1) Based upon first eight months figures. 1975
statistics from testimony before U.S. International
Trade Commission of Raymond C. Meyer, re:
Specialty Steel.
Sources: American Metal Markets/ February 1974, and American
Iron and Steel Institute, Annual Statistical
Reports.
As indicated in the table, imported stainless steel wire
is extremely important in domestic markets, probably accounting
for over 40% of U.S. consumption by tonnage. Foreign stainless
wire, in the years prior to the 1973 devaluation of the dollar,
was occasionally as much as 40% cheaper than the U.S. product.
This price differential narrowed substantially in 1973 and 1974,
but imports of stainless wire continued to rise rapidly as domes-
tic capacity proved insufficient to meet a surge in demand re-
sulting from the boom in capital spending in early 1974. Indus-
try sources believe that after foreign demand recovers from the
1975 recession, foreign stainless wire prices will equal or ex-
ceed the U.S. level, stimulating the demand for domestic produc-
tion. This projected easing of competitive pressure will be
needed to sustain U.S. production capacity in a product line
-------
1-47
which has had profitability problems in the recent past.
The importance of cold rolled sheet strip and bar imports
in U.S. markets appears to reflect the cyclical variations ex-
hibited in the specialty steel market as a whole. Import sta-
tistics are not available for stainless steel pipe and tube
products. The role of imports in these product markets is be-
lieved to be minor because their high bulk to weight character-
istic generally makes shipping the processed product so costly
as to make imports uncompetitive.
-------
EXHIBIT 1-1
Page 1 of 2
ENVIRONMENTAL PROTECTION AGENCY
SOURCES OF PUBLISHED DATA
STUDIES AND REPORTS
COUNCIL ON ENVIRONMENTAL QUALITY: A Study of the Economic Impact
on the Steel Industry of the Costs of MeeTing Federal
Air and Water Pollution Abatement Requirements. Pre-
pared by Booz, Allen and Hamilton.Washington: Council
on Environmental Quality, 1972.
ENVIRONMENTAL PROTECTION AGENCY: Effluent Guidelines Study for
the Ferroalloys Manufacturing Industry.Prepared by
Datagraphics, Inc. Washington: Environmental
Protection Agency, 1974.
NATIONAL AIR POLLUTION CONTROL AGENCY: A Cost Analysis of Air
Pollution Controls in the Integrated Iron and Steel
Industry.Prepared by Battelle Memorial Institute.
National Air Pollution Control Agency, 1969.
A Systems Analysis Study
of the Integrated Iron and Steel Industry.Prepared by
Battelle MemorialInstitute.National Air Pollution
Control Agency, 1969.
ARTICLES AND DATA
AMERICAN IRON AND STEEL INSTITUTE: Annual Statistical Report of
the Iron and Steel Industry"! New York: American Iron
and Steel Institute, 1969-1973.
Directory of Iron and Steel
Plants in the USA and Canada. New YofklAmerican Iron
and Steel Institute, 1973.
Form AIS 16-S. New York:
American Iron and Steel Institute, 1970-1974.
ASSOCIATION OF IRON AND STEEL ENGINEERS: Iron and Steel Plant
Directory. Pittsburgh: Association of Iron and Steel
Engineersf 1973.
ANNUAL REPORTS; Steel companies who operate integrated iron and
steel plants.
-------
EXHIBIT 1-1
Page 2 of 2
BLAST FURNACE AND STEEL PLANT: magazine, January 1973 to date:
articles and reference data.
DUN AND BRADSTREET BUSINESS INFORMATION REPORTS; on specialty
steel companies and alloy steel foundr ies .
HOGAN, WILLIAM T. ; "Critical Times for Specialty Steels, " Steel
Service Center Institute/ Center Lines , VI (July,
1971) , 1-16.
IRON AGE ; magazine, January 1973 to date: articles and refer-
ence data.
IRON AND STEEL ENGINEER; magazine, January 1973 to date:
articles and reference data.
MOODY 'S INDUSTRIAL MANUAL; New York, Moody 's Investors Service,
33 MAGAZINE/MAGAZINE OF METALS; January 1973 to date; articles
and reference data.
U.S. BUREAU OF THE CENSUS. Census of Manufactures. Washington:
U.S. Government Printing Office, 1967, 1972 preliminary,
Current Industrial Reports.
Washington: U.S. Government Printing Office, 1967-
1974.
-------
EXHIBIT 1-2
ENVIRONMENTAL PROTECTION AGENCY
SPECIALTY STEEL INDUSTRY
INDUSTRIAL AND COMMERCIAL CONTACTS
Banks
American National Bank
Chemical Trust Company
Continental Bank of Alhambra
Continental Illinois National Bank
and Trust Company
Detroit Bank and Trust Company
First National Bank of Chicago
First National City Bank
Long Island Trust Company
National Boulevard Bank
Chicago, Illinois
New York, New York
Alhambra, California
Chicago, Illinois
Detroit, Michigan
Chicago, Illinois
New York, New York
New York, New York
Chicago, 111ino is
Industry Associations
American Iron and Steel Association
Ferroalloys Association
Pennsylvania Industrial Development
Authority
Steel Founders Society of America
Welded Steel Tube Institute
Wire Association
Washington, D.C.
Washington, D.C.
Harrisburg, Pennsylvania
Cleveland, Ohio
Cleveland, Ohio
Branford, Connecticut
Industry Executives of;
Allegheny-Ludlum Industries
Armco Steel Corporation
Bishop Tube Company
Carpenter Technical Corp.
Continental Sceel Corp.
Crucible, Inc.
Division of Colt Ind.
Cyclops Corp.
Interlake, Inc.
Plymouth Tube Division,
Van Pelt Corp.
Washington Steel Co.
Pittsburgh, Pennsylvania
Baltimore, Maryland
Frazer, Pennsylvania
Union, New Jersey
Kokomo, Indiana
Pittsburgh, Pennsylvania
Pittsburgh, Pennsylvania
Chicago, Illinois
Winfield, Illinois
Washington, Pennsylvania
Steal Industry Consultant
George W. Stamm, Consultant
Chicago, Illinois
-------
I-ROTECTIOX ACEMCX
Coapany
SUWAR! Of SfEClALn STKeU. CATCOttlES AHO rKOHICT
FORM TYrKS HAHUTACTDgEP »« ESTAgUSMMOITS BJGACtP M SPECIALTY STEEL r«OHUC1IOM
Ingota. glooaa,
lilata and glllen rlatea
Strip
Wlr« Itoda
Tub* Bound*
or HoiIowa
Eatablliiheiente Miare Specialty Steal Account! (or Kara
llua SOI o( Total riant Production (Included la
d
b
d
j
.
a
,
c
c
a
e
d
d
d
d
a
a
b
d
b
a
a
a
d
d
d
a
d
a
d
d
d
a
c
d
d
b
b
a
b
a
d
d
b
d
d
d
Acate Tuba. Inc.
ACS Induatriaa. Inc.
Aleakaa Copper and araaa Co.
Allegheny-Ludlum lad.
AHBCO Steel Corp.
Berber Corporation
aleaop Tuba Co., Chriatlana Hatala
gorg-Uamar Corp.
graaburn Divlatoa, Continental C & S
tranford Wire and Hfg. Co.
grlatol Metal rroducta
kraokfleld Wire Co.
Cabat laduatriee
Carpenter Technology Corp.
Coluabla Tool Steal Co.
Conaolidatad Hatala Corp.
Crucible Mvialou, Colt lad.
Cyclopa Corp.
•aawacua Tube Dlviaioa, Sharon Staal
Oavla ripe • Maul
Drlver-Harrla Co.
Durable Wire Co.
Eaatautc Co.
•atoa Corp.
Claccralloy
ralkar Iroa. HCg. Co.
rlaaoalca DlvlaioB of U.O.r.
General Cable Corp.
Oihaon Tuba, lac.
Greenville Tub.. Blvtalou. baraon
SoMircat ,
Ubouackat,
Seattle,
grackanridge/
Hat rone/
B. Uecaburg
Dunkirk,/
Uacarvliot,
Haw Hartford,
Han Caatle,
Ualllagford,
taltlnora.
hitler.
Houaton,
UildwMd,
remandina aeach.
fraaar.
Hau Caatle,
graebum.
Horth Haven,
griatol.
gnokflald.
Kokoan,
goading.
Bridgeport .
Union,
Janesburg,
£1 Cajon,
Chicago Halghta.
Clifton,
Midland,
Beet Troy,
Carrolltoa,
fttllarton.
gridgavilla.
Coahocton,
Cxaaavilla,
griatol.
Herri aon.
granford.
galtiawra.
Clavalaad,
Oil City,
MaralUlald,
gartlett.
Hav lark,
garkaley Heighta,
Graeavilla,
Clarkavllla,
H.J.
«.l.
Uaah.
r..
«.».'•
H.Y.
lad.
Coaa.
Md.
Fa.
Tan.
ria.
ria.
ra.
Ind.
ra.
Conn.
Tann.
Han.
Ind.
ra.
Conn.
H.J.
H.J.
Calif.
111.
M.J.
Pa.
Wlac.
Ca.
Calif.
ra.
Ohio
ra.
Va.
H.J.
Conn.
Md.
Colo
ra.
Hiac.
111.
H.I.
H.J.
ra.
Ark.
SS. UA
S, TS, HA
SS, HA
SS
SS, TS
TS
SS, HA
SS, TS, HA
SS
SS, HA
SS, TS, HA
SS. UA SS, HA
SS, HA, TS
SS. TS. UA
SS. HA
SS. TS TS
TS
SS
SS
SS, TS SS, TS SS, TS
SS, HA SS. HA SS. HA
SS
ss
SS. HA
SS
SS
IS
SS
SS, UA
S3, TS, HA
SS
TS
SS SS
SS. TS. HA
SS. HA
SS
SS, HA
SS SS, TS, HA SS
SS SS
SS
SS
SS, TS, HA
S«
SS
SS, TS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
Kay: a - Integrated rroducar.
b - Flra> that purchaaea a
c - rim that purchaaaa a
d - tlrm that purcLaaaa a
Category: SS - Stalnleaa Steel.
TS - Tool Steel.
HA . High Alloy Steal.
al-finlaaed apacialty atael and convarta - apevialty wire producer.
al-finlahad apacialty ataal and convert! - specialty cold rolled ahaet, atrip and bar processor.
al-finiahad apacialty ataal and convarta - apacialty atael pipe and tuba proeeaaor.
00
(D
r-h
-------
ENVIRONMENTAL PROTECTION AGENCY
EBtablishmeats Where Specialty Steel Accounts
for tore Than 501 of Total Plan Production
(Included in Economic Analysis) (Cgn_cinua4) „
Handy and Hanson Tube Co.
Harper, H M. Division, I.T T.
Hovnaet Corp.
Inductoweld Tube Corp.
International Wire Products Co.
Jessup Steel Division, Athione
Jones & Laughlln Steel Corp.
Joslyn Stainless Steels
Latrobo Steel Co
Maryland Specialty Wire, Inc.
National Standard Co.
Oakley Tube Corp.
Plymouth Tube Division, Van Pelt
Porter, H. K. Co
Scientific Tube, Inc.
Sterling Stainless Tube, t.T.T.
Slmonds Division, Wallace-Murray
Superior Tube Co.
Swepco Tube Co.
Sylvanla Division, G T.E.
Techalloy Co.
Teladyne
Tube Manufacturing Co.
Tube Methods, Inc.
Tubeoaker Corp.
Tubex Corp.
Ulbrlch Stainless Steel
Uniform Tubes, Inc.
United Industries, Inc.
Wall Tube Co.
Washington Steel Co
Wilson Lee Engineering Co.
Youngstown Welding & Engineering
Other Establishment* Engaged in Specialty
Steel Production ____
a Allaghany-Ludlum Industries
Babcock & Wllcox Co
Baron Steel Co.
Bethlehem SEeel Corp.
Key: a - Integrated Producer.
Plant
Norristown.
Morton Grove,
Northampton,
Bronx,
Wyckopf,
Washington ,
Warren,
Louisville,
Ft . Wayne ,
Latrobe
Cockeysville,
Miles,
Skokie,
Englevood,
Dunkirk,
Horshan.
Sourvllle,
Add 1 son.
Englewood,
Lockport ,
Wapakoneta,
Clifton,
Warren,
Raima,
Monaca ,
New Bedford,
Latrobe,
Monroe,
Elfchart ,
Sooervllle,
Bridgeport.
Melrose Park
Chicago ,
WalUngford.
Collegevllle,
Chicago ,
Nevport,
Washington,
Elyrla,
Youngstown .
Ferndale,
Detroit,
Beaver Falla,
Toledo
Bethlehem,
>eclalty ateel and
SUMMARY OF ESTABLISHMENTS ENCAGED IN SPECIALTY STEEL
Ingots, Blooms,
State Slaba and Billets Plates Bars
Pa.
111. SS SS
Maaa.
N.Y.
N.J.
Pa. SS, TS SS, TS SS, TS
Mich SS SS
Ohio*1'
Ind. SS SS
Pa. SS.TS.HA SS.TS.HA
Md. SS.TS
Mich.
111.
Colo.
N.Y.
Pa.
Maaa.
111.
Colo.
N.Y. SS, TS SS, TS SS, TS
Pa.
Ohio
N.J.
Pa.
Pa.
Pa. TS TS
Mass.
Pa TS, HA TS. HA
N.C. HA HA
Ind.
N.J.
Pa.
III.
III.
Conn.
Pa.
111.
Tenn.
Pa. SS
Ohio
Ohio
Mich. SS
Mich. TS
Pa. SS SS
Ohio
Pa. TS TS
converts - apeclalty wire producer.
PRODUCTION
Sheet
TS
SS
SS
Strip
Tube Rounds
or Hollowa
Pipe
SS
SS
SS
SS
SS
SS
SS.TS.HA SS.TS.HA
SS.TS.HA
SS
SS
SS
SS.TS
SS
SS
SS
SS
TS
TS, HA
TS
TS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
JS
SS
SS
SS
SS
SS
TJ
P>
09
0>
K)
-
Category: SS - Stainless Steel.
TS - Tool Steel.
HA - High Alloy Steel.
-------
LNViKONMtNlAl. PKOILC'I ION ACFNIY
SUHMAKY OF fch'IABI 1SHHFHTS KNl'ACLlI IN SPECIALTY S'UEl, PKODUCI'lUN
Company
Other Establishments Engaged in
Specialty Steel Production
(Continued)
Bliss and Luufchltn
Plant. State Slabs and
a, Bloom*,
Sheet SLrjp Wir
Tube Rounds
or Hollows
Pipe
Bundy Corp
Cameron Iron Works
Champion Steel Co,
Crucible Division, Colt Industries
Cuyahoga Division, Hoover Ball
Cyclops Corp
Briver W. B Co., Subsid. G.T.E.
Fitzbiununs Steel Co
Fort Huuard Steel Co
Greer Steel Co.
Heppenstall Corp
International Nickel Co.
Jessup Steel Division, Athlon*
Jones and Laughlin Steel Corp.
Jocgenson Steel Corp
LaSalle Steel Co.
Lukens. Steel
Madison Wire
MeLouth Steel Co.
Moltrop Steel Products
National Forge Co.
New England High Carbon Wire
Newman Crosby
Pacific Tube Co.
Phoenix Steel Corp.
Plymouth Steel Co.
Plymouth Tube Division, Van Pelt
Precision Drawn Steel Co.
Production Sceel Division, Whittaker
Republic Steel Corp.
Rtrne nauutaccuring Division, Revere C&B
Rum* Strip Steel Co.
Screw fc Bolt Corp.
Harvey .
Cleveland,
Detroit,
Loa Angeles,
Mansfield,
Buffalo,
Houston,
Warren,
Houston,
Orwell,
Syracuse,
Harrison,
Solon,
Pittsburgh,
Tltusville,
Uheacland,
Newark ,
Yotingstown,
Creen Bay ,
Dover,
Pittsburgh,
Philadelphia,
Hunting!, on,
Gwenaboro,
Oil City,
Los Angeles,
Seattle.
Hammond ,
Spring City,
Coatesvllle,
Buffalo,
Detroit,
beaver tails,
Irvine,
Hllbury,
Pawcucket ,
Loa Angeles,
Claymont ,
Detroit,
Los Angeles,
Blnalnghaa,
Streator,
Wlnnaiaac,
Dunkirk,
Korshan,
Pennaauken ,
Blloxl,
Detroit,
Cleveland,
Canton ,
Ruoie,
Home,
Aafcridge.
Chicago,
Newark,
Flyieouth.
Putnam,
Fan-ell,
lldgewoou,
111
Ohio
Mid.
Calif
Ohio
N.Y.
Te«.
Mich.
Tex.
Ohio
N.Y
N.J.
Ohio
P. (1)
Pa
Pa
N.J
Ohio
Wise.
Ohio
Pa (1>
Pa
W. Va.
Ky.
Pa
Calif.
Waih.
Ind.
re.
Pa.
N.Y.
Mich.
re.
Pa.
Mass.
R.I.
Calif.
Del.
Mich.
Calif.
Ala.
111.
Ind.
N.Y.
Pa.
H.J,
Miss.
Mich.
Ohio
Ohio
N.Y.
N.Y.
P«.
111.
Ohio
Midi.
Conn.
Pa.
N.J.
SS.TS.HA
IS
SS.TS.HA
SS , 1 S , HA
S3. HA
SS.13..1A
SS, HA
SS
SS
SS
SS
ss
SS
SS, HA
SS
I1A
IIA
IIA
IIA
HA
TS
SS.TS.HA
SS.'iS.liA SS.TS.HA
SS.TS,HA
SS.TS.HA SS.TS
SS, HA SS, HA
IIA
IIA
SS, HA SS, HA SS, HA SS SS, HA
IIA
IIA
SS
SS
IIA
HA
HA
HA
SS
SS
SS
SS
SS
S3
SS
SS
SS
SS, HA
HA
HA
HA
HA
HA
Sharon Steel Cu.
Sailth Tube Corp.
Key a - Integrated Producer.
b . Flra chat purchaaea semi-finished specialty areel and convert* - specialty wire producer.
c - Firm that purchases aeal-fInished apeclalty steel and converts - specialty cold rolled sheet, strip And bar processor.
d - Firm that purchases seml-fInished specialty steel and converts - specialty steel pipe and tube processor.
:gory: SS - Stainless Steel. ,
TS - Tool Steel- '
p>
OP
U)
o
r-h
M
03
I
LO
-------
ENVIRONMENTAL PROTECTION AGENCY
Company
SSZ.
c Superior Drawn Steel Co.
d Teledyne - Vasco
d
a Temescal Division, Airco
a Timken Co.
a U.S. Steel Corp.
Washington Steel Co.
Western Cold Drawn
Plant
Monaco,
Carnegie,
Scottdale,
Berkeley,
Caneon,
Vandergrift,
Duquesne,
Munhall,
Johnstown,
South Chicago,
Waukegan,
Los Angeles,
Elyrla,
SUWURY
State
Pa.
Pa.
Pa.
Calif.
Ohio
Pa.
Fa.
Pa.
Pa.
III.
111.
Calif.
Ohio
OK ESTABLISHMENTS
Ingots , Blooms ,
Slabs and Billets
SS, HA
SS, TS
SS
SS
SS
SS
SS
ENGAGED IN SPECIALTY STEEL
Plates Bars
HA
SS, TS
ss ss
SS
ss
ss ss
ss
PRODUCTION
Sheet Strl[
SS SS
SS
Tube Rounds
Wire gods Tub* or Hollows Pipe
SS
SS
TS
SS
SS
SS
Key: a - Integrated Producer.
b - Firm that purchases semi-finished specialty steel and converts - specialty wire processor.
c - Firm that purchases semi-finished specialty steel and converts - specialty cold rolled sheet, strip and bar processor.
d - Firm that purchases semi-finished specialty steel and converts - specialty steel pipe and tube processor.
Category: SS - Stainless Steel.
TS - Tool Steel.
HA - High Alloy Steel.
Note: (1) The^e plants receive raw materials (ingots, blooms, slabs, and billets) exclusively from divisional transfers. The parent corporation
considers these plants a part of the primary production plant at another geographical location.
Sources: Din
Diru^- -_, -_ _^-.. „.._ _-_-, .._ _
Specialty steel in^uat-y consultant
.rectory of Iron and Steel Plants, Association of Iron and Steel Engineers, 1
rectory of Iron and Steel Works at the United States and Canada. American In
itfcialtv steel In^jat-v conault^nrs.
•on and steel Institute, 1974.
00
ft)
-------
ENVIRONMENTAL PROTECTIOM AGENCY
SUMMARY BY CATEGORY AMD PRODUCT FORM TYPE
OF THE NUMBER OF ESTABLISHMEMTS ENGAGED IN SPECIALTY STEEL MANUFACTURING
ESTABLISHMENTS WHERE SPECIALTY STEM. ACCOUHTS FOR MORE THAU 50% OP TOTAL PLAJfT PSO
or Producer and Categories Produced and/or Processed
Product Form Type
Ingots, Blooms, Slabs
and Billets
Plates
Bars
Sheet
Strip
Wire
Rods
Wire Rods
Tube
Tube Rounds and Hollows
Pipe
Total Number of
Establishments Producing
Each Grade Mix(2)
Firms Which Purchase
Semi- Finished Specialty Steel and
Integrated Producers
Stainless
Tool and
High Alloy
Steel
5
4
3
1
Stainless
and Tool
Steel Only
3
3
2
I
1
3
Stainless
and High
Alloy
Steel Only
5
1
2
1
2
1
1
1
Tool sxu
High
Alloy
Steel
Only
1
1
1
!
Scalnless
Steel
Only
6
5
It
7
3
3
2
1
2
1
Tool
Steel
Only
3
1
2
2
1
2
Total tfumber
o£ Integrated
High Producers
Alloy Manufacturing
Steel the Designated
Only^ Product Form Type"
2 25
5
2 18
7
7
11
8
6
2
2
1
Specialty
Wire Processors
.3) Stainless Steel
1
2
14
1
1
Specialty
Cold Rolled
Sheet, Strip and
Bar Processors
Stainless Steal
2
6
2
I
Convert
Specialty
Sceel Pipe
and Tube
Processors
Stainless
Steel
42
17
25
14
42
Total Nuaber Total Number of
of Processors Establishments
Producing the Producing the
Designated Designated
Product Form Type Product form Type
1
2
8
14
45
19
25
5
19
9
15
25
8
6
47
2
20
62
Notes: (1) In this table, plants which are considered as a single operating unit by the parent company are classified as a alngle establishment, although they nay be
geographically separated. .
(2) Indicates the total number of establishments listed under each specialty steel grade category is not equal to toe sum of the establishments producing each
product form type because (a) most establishments produce more than one product form type and a total would involve double counting, and (b) nany eatabllahneuts
produce some product form types in more specialty steel categories than others.
(3) Equal to the sum of the establishments In each grade mix category, as these categories are mutually exclusive.
Source: Exhibit 1-3.
87
OQ
(D
W
X
O
Hi
W
M
H
K)
-------
ENVIRONMENTAL PROTECTION AGENCY
SUMMARY BY CATEGORY AND PRODUCT FORM TYPE
OF THE NUMBER OF ESTABLISHMENTS ENGAGED IN SPECIALTY STEEL MANUFACl'URINT.
FOR ALL ESTABLISHMENTS
Type of Producer and Categories Produced and/or Processed
Produce Form Type
Ingots, Blooms,
Slabs and Billets
Plates
Bara
Sheet
Strip
Wire
Rods
Wire Rods
Tube
Tube Rounds and
Hollows
Pipe
Total Number of
Establishments Producing
Each Grade Mix(2)
Stainless
Tool and Stainless
High Alloy and Tool
Steel Steel Only
9U) 4(2)
1 3
6 3
1
4 1
1 2
4
Stainless
and
High Alloy
Steel Only
9
2
4
2
1
4
I
2
2
Integrated Producers
Tool and
Steel Only Steel Only
1 20<2>
6
I 9
8
11
1 3
3
2
5
3
3
Total Number
of Integrated
Producers
Manuf ac turing
Steel Only Steel Only Product Form Type
6 2 51
I 13
4 2 29
2 13
12
2 15
2 9
8
1 8
3
3
Firms Which Purchase
Semi- Finished Specialty Steel and Convert
Specialty
Stainless
Steel
1
3
18
1
1
Cold Rolled Steel Pipe
Sheet, Strip and and Tube
ainless Alloy Stainless
Steel Steel Steel
3 21
2
11 1
4
2 53
1 20
Total Number
of Processors
Producing the
Designated Product
Form Type
25
2
15
22
56
22
Total Number of
Establishments
Producing the
Designated Product
Form Type
51
13
54
15
27
37
9
8
64
3
25
9(1)
4(2)
20(2)
108
159
Notes: (1) This figure Includes two plants which receive raw material* (ingota, blooms, slabs, and billets) exclusively from later-divisional tranafers.
The parent corporations consider these plants part of the primary production operation. However, since they ace located at different geographical
locations t thry *»*•*; classified as separata integrated esribllahivnts.
(2) Indicates the total number of establishments which produce this (these) category (categories) of specialty steel. These are derived from Exhibit 1-3.
The rotal of all establishments listed under each apecialt) steel category is nut applicable as most establishments produce cor . thai, one product
form type and a total would involve double counting.
Source; Exhibit 1-3.
OQ
fl>
ro
o
Mi
H
*
M
I
4^
-------
ENVIRONMENTAL PROTECTION AliENCY
CUSSIFICATION OF INTEGRATED PRODUCER ESTABLISHMENTS
PRIMARILY ENGAGED IN THE PRODUCTION OF SPECIALTY STEELS
BY SIZE AND MAJOR PRODUCT LINE
Product Line and Plant Size Category
Flat-Rolled Products
Large - Over 100.000 Tons per Year
Allegheny-Ludlum
Arraco Steel Corporation
Crucible, Inc.
Small - Under 100,000 Tons per Year
Borg-Warner Corporation
Jessup Steel Division
Eastmet Corporation
Washington Steel Company
Plant Location
Brackenridge/Natrona/W. Leechburg, Pa.
Butler, Pennsylvania
Midland, Pennsylvania
New Castle, Indiana
Washington, Pennsylvania
Baltimore, Maryland
Washington, Pennsylvania
Approximate Plant Employment
6,800
4,200
4,500
750
1,100
1,000
800
Specialty Steel Categories
High Alloy
Stainless
Tool
Section Products
Large - Over 100.000 Tons per Year
Allegheny-Ludlum
Armco Steel Corporation
Carpenter Technology
Cyclops Corporation
Jones and Laughlin Steel
Latrobe Steel Company
Medium - 20-100,000 Tons per Year
Cabot Industries
Joslyn Stainless Steel
Simonds Steel Division
Electralloy
Small - Under 20.000 Tons per Year
Watervliet/Dunkirk, New York
Baltimore, Maryland
Bridgeport, Connecticut
Reading, Pennsylvania
Bridgeville, Pennsylvania
Warren, Michigan
Latrobe, Pennsylvania
Kokomo, Indiana
Fort Wayne, Indiana
Lockport, New York
Oil City, Pennsylvania
2,200
1,350
810
2,800
950
1,000
1,400
2,100
750
400
300
X
X
X
X
Allegheny-Ludlum
Braeburn Division, Continental
Columbia Tool Steel Company
Harper Division, I.T.T.
Teledyne Corporation
New Hartford, New York
Braebum, Pennsylvania
Chicago Heights, Illinois
Morton Grove, Illinois
Latrobe, Pennsylvania
Monaco, Pennsylvania
Monroe, North Carolina
400
350
150
350
850
250
200
W
M
-------
ENVIRONMENTAL PROTECTION AGENCY
NONINTEGRATED PROCESSING ESTABLISHMENTS.
PRIMARILY ENGAGED IN THE PROCESSING OF
SPECIALTY STEELS
EXHIBIT 1-6
Page 1 of 4
Specialty Wire Processors
Firm Name
ACS Industries
Branford Wire & Mfg,
Company
Brookfield Wire
Company
Driver-Harris
Company
Durable Wire
Company
Eaton Corporation
General Cable
Corporation
Howmet
Corporation
International
Wire Products
Maryland Specialty
Wire, Inc.
National Standard
Company
H.K. Porter
Company
Sylvania Division,
G.T.E.
Techalloy Company
Size(l) Plant Location
(S) Woonsocket, Rhode
Island
North Haven,
(S) Connecticut
Brookfield,
(S) Massachusetts
Harrison, New
(L) Jersey
Branford,
(S) Connecticut
(L) Cleveland, Ohio
New York,
(L) New York
Northampton,
(S) Massachusetts
(S) Wycopf, New Jersey
Cockeysville/
(S) Maryland
(L) Niles, Michigan
Somerville,
(L) Massachusetts
Warren,
(S) Pennsylvania
(S) Rahna,
Pennsylvania
Note: (1) (L) « large. (S) = small.
Estimated
Employment
110
80
70
340
50
700
240
80
180
200
600
210
100
200
Sources: Directory of Iron and Steel Plants, Association of
Iron and Steel Engineers, 1975.
Directory of Iron and Steel Works of the United
States and Canada, American Iron and Steel Institute,
1974.
Specialty steel industry consultants.
Iron and Steel Works of the World, Metal Bulletin Book
Ltd., 1974.
-------
EXHIBIT 1+6
Page 2 of 4
NONINTEGRATED PROCESSING ESTABLISHMENTS
PRIMARILY ENGAGED IN THE PROCESSING
OF SPECIALTY STEELS
Specialty Cold Rolled Sheet,
Strip and Bar Processors
Firm Name
Allegheny-Ludlum
Cyclops Corporation
Jones & Laughlin
Teledyne
Ulbrich Stainless
Steel Co.
Size(l)
(S)
(L)
(D
(S)
(S)
(S)
•plant Location
New Castle,
Indiana
Wallingford,
Connecticut
Coshocton, Ohio
Louisville, Ohio
New Bedford,
Massachusetts
Wallingford,
Connecticut
Estimated
Employment
375
200
300
400
250
200
Note: (1) (L) = large. (S) = small.
Sources: Directory of Iron and Steel Plants, Association of
Iron and Steel Engineers, 1975.
Directory of Iron and Steel Works of the United
States and Canada, American Iron and Steel
Institute, 1974.
Specialty steel industry consultants.
Iron and Steel Work of the World, Metal Bulletin
Book, Ltd., 1974.
-------
NONINTEGRATED PROCESSING ESTABLISHMENTS
PRIMARILY ENGAGED IN THE
PROCESSING OF SPECIALTY STEELS
EXHIBIT 1-6
Page 3 of 4
Specialty Pipe and Tube
Firm Name Size (I)"
Acme Tube Company
Alaskan Copper &
Brass Co.
Armco Steel
Corporation
Barber Corporation
Bishop Tube Company
Bristol Metal
Products
Cartech Corporation
Consolidated Metals
Corp.
Crucible Division,
Colt
Damascus Tube
Div. Sharon
Davis Pipe &
Metal
Felker Bros. Mfg.
Flexonics Division,
U.O.P.
Gibson Tube, Inc.
Greenville Tube Div.,
Emerson
Handy & Harmon
Inductoweld Tube
(S)
(S)
(S)
(S)
(S)
(S)
(S)
(S)
(S)
(L)
(S)
(L)
(S)
(S)
(S)
(S)
(S)
(L)
(S)
(L)
(S)
(S)
(S)
Processors
Plant Location
Somerset,
New Jersey
Seattle,
Washington
Houston, Texas
Wildwood, Florida
Fernandina Beach,
Florida
Frazer, Pennsylvania
Bristol,
Tennessee
El Cajon,
California
Jamesburg,
New Jersey
Union, New Jersey
Clifton,
New Jersey
East Troy,
Wisconsin
Carrollton,
Georgia
Fullerton,
California
Greenville,
Pennsylvania
Bristol,
Virginia
Marshfield,
Wisconsin
Bartlett, Illinois
Berkeley Heights,
New Jersey
Greenville,
Pennsylvania
Clarksville,
Arkansas
Norristown,
Pennsylvania
Bronx, New York
Estimated
Employment
N/A
N/A
50
200
15
180
250
110
N/A
300
30
310
100
100
230
25
220
400
20
300
250.
200
10
-------
NONINTEGRATED PROCESSING ESTABLISHMENTS
PRIMARILY ENGAGED IN THE
PROCESSING OF SPECIALTY STEELS
EXHIBIT 1-6
Page 4 of 4
Specialty Pipe and Tube Processors
Firm Name Size(l) Plant Location
Oakley Tube Corp.
Plymouth Tube
Company
Scientific Tube
Company
Sterling Stainless
Tube
Superior Tube
Company
Swepco Tube
Company
Teledyne
Tube Mfg.
Company
Tube Methods, Inc.
Tubemaker
Corporation
Tubex Corporation
Uniform Tubes, Inc.
United Industries
Wall Tube Company
Wilson, Lee
Engineering Co.
Youngstown Welding
& Engineering
Company
(S)
(S)
(S)
(S)
(S)
(S)
(L)
(S)
(S)
(S)
(S)
(S)
(S)
(S)
(L)
(S)
(L)
(S)
(L)
Skokie, Illinois
Englewood, Colorado
Dunkirk, New York
Horsham,
Pennsylvania
Wisconsin
Addison, Illinois
Englewood, Colorado
Norristown,
Pennsylvania
Wapakoneta, Ohio
Clifton, New Jersey
Elkhart, Indiana
Estimated
Employment
30
40
80
35
37
5
100
900
180
200
175
Somerville, New Jersey
Bridgeport,
Pennsylvania
Melrose Park, Illinois
Chicago, Illinois
Collegeville,
Pennsylvania
Chicago, Illinois
Newport, Tennessee
Elyria, Ohio
Youngstown, Ohio
Note: (1) (L) = large. (S) = small.
Source: Welded Steel Tube Institute.
30
100
N/A
25
400
135
350
N/A
300
-------
EHVIROIMEHTAL PROTECTION AGENCY
STAINLESS STEEL SHIPMENTS BV MARKET AND PRODUCT FORM TYPE - 1970
(Net Tons)
Ingots, Blooms,
Slabs, Billets,
Tube Rounds.
Sheet Bars. etc.
32,311
5,597
26,714
9,824
3
6,534
148
""
1,673
431
-
5
1,624
70
"
-
-
36
277
47,691
3,771
51,462
Bars
Wire Rod.
3,403
202
3,201
-
489
1,513
115
~
28
-
"
1,336
~
10
-
1
6,693
80
6,773
Structural
Shapes
(Heawl
_
-
-
-
-
21
56
-
-
~
~
_
~
-
-
-
77
-
77
Plates
2,717
616
2,101
-
-
34,316
1,137
451
442
861
1,738
53
70
3
3,382
179
37
37
19
309
8,926
54,061
693
54,754
Hot Rolled
(Including
Light
576
10
566
1,417
225
15,031
237
220
4,029
13
100
3,891
297
199
18
4,380
7,263
3?
378
76
94
3,343
41,809
1,023
42,832
Cold
Flniahei
2,984
4
2.980
1,985
9,753
33,021
87
1,704
4,545
26
215
1,452
796
83
7
11,681
3,383
850
3,136
694
150
912
77,460
1,685
79,145
Pipe
i and Tubinf
1,091
698
393
_
-
13,762
361
353
125
-
194
463
233
3
51
6,697
1,230
26
534
59
59
6,214
30,757
1,362
32,119
Sheet a
p Wire Draw" !W DnHo^ Ft*'lA Bnllo
1,949
136
1,813
.
2,118
5,172
25
231
678
-
29
36
-
-
2,858
663
151
249
_
36
387
14,446
228
14,674
6,384
-
6,384
_
-
11,600
78
253
981
5
~
_
11
2,184
71
561
136
229
655
23,148
10,619
33,767
3,676
944
2,732
203
96,394
1,117
7,436
12,293
1,191
583
618
213
623
8,542
2,461
4,987
4,188
221
743
144,545
13,174
157,719
Strl
2 Hot Rolled C
11,945
1,078
10,867
13
7,852
71
71
17
_
28
693
83
133
3
19,831
3.577
23,408
p All
old Rolled Other
15,877
1,300
14,577
581 13
48,965 31
1,039
11,257
54,732
2.112
100
1,213
58
500
9,502 67
6,106
36,604
8,506
3,099
315
528 517
199,794 628
12,280 5
212,074 633
Net Total
Stainless
Steel
PrcKJuy u
82,913
10,585
72,328
13,226
13,398
274,212
4,285
22,091
78,248
4,208
2,959
9,444
1 757
626
1,246
52,946
21,426
43,331
17,307
4,400
1^742
21,760
660,940
48,497
709,437
Percent of
•fee Total
Dmeatle
S"1""""
10.94
2.OO
2.03
41.49
3i 34
11.84
145
1.43
.27
.09
.19
8.01
3.24
t.56
2.62
47
'.26
3.29
100.00
XXX
XXX
Steel for Converting and Processing
Less Shipments to Reporting Members
Group Total
Forglngs (Not elsewhere classified)
Industrial Fasteners
Steel Service Centers and
Distributors
Construction, Including Maintenance
Contractors' Products
Automotive
Rail Transportation
Shipbuilding and Marine Equipment
Aircraft and Aerospace
Oil and Gas Drilling
Mining, Quarrying and Lumbering
Agricultural
Machinery, Industrial Equlpmei ' and
Tools
Electrical Equipment
Appliances, Utensils and Cutlery
Other Domestic and Coumercial
Equipment
Container Packaging and Shipping
Materials
Ordnance and Other Military
Monclassified Shipments
Total Domestic - All Groups
(1 to 21)
Export (Reporting Companies Only)O)
Total - All Groups (1 to 21)
Notes: (1) - - No shipments of that product for that classification.
(2) mot - Not applicable.
(3) - includes only direct exports of reporting producers.
Source: American Iron and Steel Institute, Annual Statistical Report and AIS 16-S, 1970.
OQ
n>
M
-~J
-------
STAIMUSS STKU. MUPMfcHTS BY HARKff AMU rKOQUCT fc'OKH TYfE - 1971
V i'X:t»fi»ing
(Hot el*Huj«} Plarea
2,21)7
555
1.7J2
.
-
50 29 581
126 '632
651
1,065
30
442
25
_
226
-
4.735
261
4S
215
,
73
».9M
f6 4'5 650
i,178
176 50,a?8
<
Ba*
Nut Ton a)
:*
(Including
Shapea)
817
229
588
2.520
205
14.144
266
124
5.828
7
214
2,078
298
86
33
4.099
o 734
24
353
!,£.
rn
2,300
4-J,a»6
1. 13'{
42,139
v"t" '. j'letl
"27
43
«86
723
5.248
33.203
116
1,213
3,831
8
211
902
489
17
27
10,477
3,316
762
2,319
IS
i'*1)
558
64. •;«
•M4
65 ,4fto
..ml Tubing
891
295
596
_
-
9,765
1,037
295
112
8
206
47
356
54
30
5,7-H
L I'JiI
*29
«5
73
I'l
5,252
25,617
5.,0'jO
2«.,;'U7
Wtre-Dc^wt'
2 -,3,1
'160
2,379
_
5,002
3,694
16
546
2,072
_
60
&8
_
_
26
2,529
87ii
112
2<
„
,
228
17,171
-.56
IS, 12 7
Shi
HQ c aT?n <*.d
5,266
1.5J2
3,694
_
-
6,473
44
182
2,138
_
_
3
_
25
823
110
HO
317
no
4
265
14,501
V»5'J
IS.OCfi
•sea
Colu Bolte3'
5,446
819
4,627
_
115
108,853
1,865
10,831
15,855
1,157
217
601
_
210
1,142
14,440
2,254
6,010
5.301
817
1,328
-
.--,,533
ii rno
irtr.,5;-*
set
...
Hot B.illed C .li! aolla?
11.223
1.280
9,943
_
5
4,642
_
140
50
_
_
39
_
_
19
371
14
61
465
ti
_
-
.j , .» '.
'*,"sS
:, , '.-.^
16,280
1,229
15.U51
_
«3
60.417
563
14,660
£9 ili
z'.ivi
114
£76
_
47
720
9,791
6,158
•13, '.IS
10,756
3,493
113
384
?V./M
' ,'»?2
iW.53
Statutes/
Other rfi-ilw.ca
C9.7.'V
60.461
13, SI".
tsli/?
9 276, 3Vi
4,82-*
uo'iso
3.427
1,464
6,464
1,465
6'.0
41 57,276
21,252
44,775
21,218
'..654
4 1,308
220 19.405
m «-* ;»?
j:-. ,""/.
274 Jlo.X1'
Het rot«l
PJ(*0<.K"^t^
t
i,x
•,. , ib
j I
4 i -'
1 ') . 70
!ji
.94
0'*
'.30
£.37
j.U
3.0
68
.26
2.14
I K V
.-<
r^-;
Tot#l - AH •:C(-MIJ»)| (1 cu 21)
tloccis: (I* • *• Ho siUpmoiics u? tha; pfudu^c for th.->c c* i^alHcjij'ion.
tx*i •" Mot. -ap^lLcabl^.
*» I .to I Klaa only Direct nxports of •*<••!? wirt log prodi'c^ca.
l«aa Iron •":•'- era'/-? ;:~.o,':'S"-C a, Anntuil Scu^inCical RMpoiff. .'(id */T? l'i-C, 197*.
t'
_|
' •>
-------
STAINLESS STEEL SHIPMENTS BY MARKET AND PRODUCT FORM TYPE - 1972
Steel for Converting and Processing
Less Shipments to Reporting Members
Group Total
Forgings (Not elsewhere classified)
Industrial Fasteners
Steal Service Centers and
Distributors
Construction, Including Maintenance
Contractors' Products
Automotive
Rail Transportation
Shipbuilding and Marine Equipment
Aircraft and Aerospace
Oil and Gas Drilling
Mining, Quarrying and Umbering
Agricultural
Machinery, Industrial Equipment and
Tools
Electrical Equipment
Appliances, Utensils and Cutlery
Other Domestic and Commercial
Equipment
Container Packaging and Shipping
Materials
Ordnance and Other Military
NonclassiEled Shipments
Total Domestic - All Groups
(1 to 21)
Export (Reporting Companies Only) '
Total - All Groups
(1 co 21)
(Met Tons)
Bars
Ingots, Blooms,
Slabs, Billets,
Tube Rounds,
Sheet Bars. etc.
24,371
8.375
15,996
12,447
27
7,555
329
34
300
-d)
1,409
513
-
-
1,998
936
-
-
-
-
2,988
44,532
79
Structural
ShaDefi
Wire Rods
5,811
435
5,376
_
2,558
311
192
54
504
-
-
21
-
-
-
1,882
21
-
329
-
7
1,781
13,036
115
(He ivy)
2
-
2
_
-
145
272
_
-
-
_
-
-
-
-
_
-
-
-
_
_
-
419
3
Plates
2,932
563
2,369
.
-
31,426
586
1.133
2.815
285
460
29
_
217
-
4,162
317
79
142
4
265
11,790
56,079
506
Hot Rolled
(Including
Light Cold
Shapes)
551
85
466
2,466
148
13,759
284
286
8,739
-
286
2,398
346
_
55
3,214
4,314
40
960
17
417
5,718
43,913
898
Finished
460
36
444
734
4,816
32,208
90
1,028
4,176
19
105
871
548
17
29
9,820
2,129
950
2,561
16
297
8,975
69,833
605
Pipe
and Tubing
910
282
628
_
-
12,664
665
327
187
27
449
55
492
97
13
3,977
1,784
46
907
39
58
5,625
28,040
732
Sheets
Wire-Drawn
2,656
98
2,558
.
8,564
5,189
1.472
1.007
2,725
_
50
126
_
_
11
2,936
1,851
107
1,066
_
10
1,705
29,377
382
Hot Rolled
20,308
16,929
3,379
-
4,488
177
1,112
2,907
_
_
25
_
_
131
760
46
339
356
.
3
297
14,020
3,701
Cold Rolled
10,935
1,107
9,828
19
96
159,659
1,115
13,543
18,504
679
139
497
4
212
1.289
18,685
2,919
7,312
8,073
469
1,048
244,090
14,609
Strip
Hot Rolled
15,160
6,954
8,206
10
1,590
13
373
144
_
37
6
_
_
_
992
40
479
931
2
12,823
3,107
Cold Rolled
16,197
2,555
13,642
717
59,936
809
18,730
75.747
892
79
1,071
20
878
11,211
7,671
49.378
13,399
2,352
125
298
256.955
16,529
All
Other
9
-
9
-
27
_
_
_
_
_
_
_
_
76
_
-
_
167
279
1
Net Total
Stainless
Steel
Products
100,322
37,419
62,903
15 666
16^936
32f:2H
37,627
116,748
1,902
1.605
6,508
1,903
563
2,406
59,713
22,028
58,730
28,724
2,897
2,232
39,344
813,396
41,267
Percent of
Nat Total
Domestic
Shipments
7.731
XXX
7.73
XXX
1.93
2.08
40.44
.73
4.63
14.35
.23
.20
.80
.23
.07
.30
7.34
2.71
7.22
3.53
.36
.27
4.84
100.00
44,611
13,151
422
56,585
44,811 70,438
28,772
29,759 17.721
258,699
15,930
273,484 280 854,663
Notes: (l)
8*
- - No shipments of that product for that classification.
xxx • Not applicable.
Includes only direct exports of reporting producers.
Source; American Iron and steel Institute, Annual Statistical Report and AIS 16-S, 1972.
OQ
CO
O
r-h
w
-------
SlAlNLbSS STEEL SHIPMENTS BY MARKET AND PRODUCT FORM TYPE - 1973
(Net Tons)
Bars
Ingots, Blooms,
Slabs, Billets.
Tube Rounds .
Sheet
Steel for Converting and Processing
Less Shipments to Reporting Members
Croup Total
IK
rorglngs tnot elsewhere classified)
Steel Service Centers and Distributors
Construction. Including Maintenance
Contractors' Products
Automotive
Rail Transportation
Shipbuilding and Marine Equipment
Aircraft and Aerospace
Oil and Gas Drilling
Mining, Quarrying and Limbering
Agricultural
Machinery, Industrial Equipment and
Tools
Electrical Equipment
Appliances, Utensils and Cutlery
Other Domestic and Commercial
Equipment
Container Packaging and Shipping
Materials
Ordnance and Other Military
Monclasslfied Shipments
Total Domestic - All Groups
(1 to 21)
Export (Reporting Companies Only)
Total - All Groups
(1 to 21)
Bars , etc .
53,845
33,049
20,796
17 674
5,949
662
_
363
_
_
1,525
345
3
3,276
707
_
_
_
31
3,005
54,336
102
54,438
Wire Rods
10,215
602
9,613
4 316
l|980
621
40
1,094
_
_
149
_
-
2,471
66
77
30
_
5
2,670
23,132
247
23,379
Structural
Shapes
(Heavy) Plates
2,468
1,357
1,111
2
98 44,426
91 874
1,124
1,428
686
15
61
_
228
5
6,367
466
121
67
_
305
19,321
189 76,607
1,392
189 77,999
Hot Rolled
(Including
Light Cold
Shapes)
882
721
161
3 112
'l7l
15,749
311
812
12,036
17
181
2,518
315
11
98
3,965
5,106
288
1,019
20
324
7,844
54,058
1,546
55,604
Finished
785
71
714
623
6 553
46|l31
412
1,434
5,507
14
312
1,315
748
58
29
12.645
2,595
1,009
3,800
36
320
9,678
93,933
908
94,841
Pipe
and Tubing
1,737
1,010
727
14,955
834
274
180
8
385
48
480
69
39
5,047
1,364
60
818
72
1
9,636
34,997
914
35,911
Sheets
Wire-Drawn
3,162
129
3,033
10,103
7^199
4,492
1,004
3,743
_
83
155
_
17
76
3,814
2,150
45
938
_
_
2,087
38,939
195
39,134
Hot Rolli
35,680
31,246
4,434
5,945
124
1,000
3,446
3
21
692
_
321
1,036
15
552
1,226
8
72
408
19,303
1,532
20,835
id Cold Rolled
15,033
6,255
8,778
133
241,868
910
25,196
20,923
1,339
285
801
_
171
2,328
26,307
4,469
10,211
8,089
310
1,084
1
353,203
22,927
376.130
Strip
Hot Rolled
17,811
3,275
14,536
16
1,867
10
848
137
87
325
66
_
-
1,221
9
1,746
1,362
55
14
-
22,299
3,635
25,934
Cold Rolled
23,528
3,662
19,866
1 002
77|082
605
21,038
89,149
393
111
1,086
_
66
616
13,413
8,084
59,216
12,359
3,576
353
276
308,291
20,766
329,057
All
Other
10
10
8
_
_
36
_
-
_
.
-
89
^
_
_
»
_
304
447
-12
435
Net Total
Stainless
Steel
Products
165,156
81,377
83,779
21 411
22^294
463,257
9,946
52,770
138,042
2,547
1,718
8,416
1,888
623
3,512
79,651
25,031
73,325
29 , 708
4,077
2,509
55,230
1,079,734
54,152
1,133,886
Net Total
Domestic
Shipments
7.761
XXX
7.76
1 98
2.' 06
42.90
.92
4.89
12.78
.24
.16
.78
.17
.06
.33
7.38
2.32
6.79
2.75
38
125
5.12
100.00
XXX
XXX
Notes: (1) - - Ho shipments of that product for that classification.
(2) xxx . Not applicable.
(3) Includes only direct exports o£ reporting producers.
Source: American Iron and irteel Institute, Annual Statistical Report and AIS 16-S, 1973.
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STAINLESS STEEL SHIPMEHTS BY MARKET AM) PRODUCT FORM TYPE - 1974
Steel for Converting and Processing
Less Shipments to Reporting Members
Group Total
Forglngs (Hot elsewhere classified)
Industrial Fasteners
Steel Service Centers and Distributors
Construction, Including Maintenance
Contractors' Products
Automotive
Rail Transportation
Shipbuilding and Marine Equipment
Aircraft and Aerospace
Oil and Gaa Drilling
Mining, Quarrying and Lumbering
Agricultural
Machinery, Industrial Equipment and Tools
Electrical Equlpoent
Appliances, Utensils and Cutlery
Other Domestic and Commercial Equipment
Container Packaging and Shipping Materials
Ordnance and Other Military
Nonclasslfied Shipments
Total Domestic - All Groups
(1 to 21) O)
Export (Reporting Companies Only)
Total - All Groups (1 to 21)
Ingots, Blooms,
Slabs, Billets,
Tube Rounds
Sheet Bars, etc. Wire Rods
52,819
28.911
23,908
20,705
2,615
4,461
179
14
375
-
-
919
154
-
-
9,256
377
-
-
-
-
3.251
66.214
667
66.881
11,530
1.717
9,813
-
4,545
1,205
33
19
1,433
-
-
12
-
-
-
5,681
27
56
57
-
-
1.842
24.723
214
24.937
Hot Rolled
Structural (Including
Shapes Light Cold
(Heavy) Plates Shapes) Finished
-«> 5,527
1.160
4,367
-
10
67 72,873
55 1,467
1,284
313
507
30
60
-
233
-
10,203
910
154
404
33
504
31.856
122 125.208
29 1.978
m 127,186
690
659
31
2,774
143
17,333
389
375
7,741
20
143
3,125
354
15
8
8,189
7,040
30
748
16
115
9.337
57.926
1.181
59.107
928
88
840
554
7,137
53,408
359
1,940
2,302
111
329
1,336
995
48
41
16,962
3,792
1,162
3,862
51
164
9.415
104.808
1.205
106,013
Pipe
and Tubing!
1,588
608
980
-
-
16,368
108
368
193
-
184
44
-
77
33
3,874
1,540
68
1,087
45
10
17.660
42.639
678
43.317
Sheets
Wire- Drawn
4,906
290
4,616
-
11,641
6,205
3,530
1,471
1,885
80
59
145
7
23
24
3,988
1,097
22
684
-
4
1.973
37.454
676
38.130
Hot Rolled
8,948
1.998
6,950
-
_
6,292
442
2,624
19,938
-
115
15
-
83
979
-
464
633
-
-
489
39.024
5.479
44.503
Cold Rolled
18.801
1.867
16.934
-
279
288.462
1,128
23,713
55,467
2,989
39
704
7
240
1,955
35,298
3,551
8,707
13,481
701
1,553
_
455.208
20.304
475.512
Strip
Hot Rolled
6,007
102
5,905
-
_
1,950
-
568
4,221
-
212
82
-
-
-
1,447
-
223
313
136
_
_
15.057
2.063
17,120
Cold Rolled
42,631
3.876
38,755
-
779
79,598
988
16,070
70,470
3,846
294
1,252
17
21
702
15,177
7,378
51,533
16,396
4,441
191
201
308.109
17.679
325 . 788
Net Total
Stainless
Steel
Other Products
_
_
-
-
-
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
_
2_ 1.
2 1
154,375
41.276
113,099
24,033
27,149
548,224
8,678
48,446
164,338
7,553
1,405
7,694
1,534
657
2,846
111,054
25,712
62,419
37,665
5,423
2,541
76.024
.276.494
52.153
.328.647
Percent of
Net total
Domestic
Shipments
8. 861
XXX
8.861
1.88
2.13
42.95
.68
3.80
12.87
.59
.11
.60
.12
.05
.22
8.70
2.01
4.89
2.95
.43
.20
5.96
100.01
XXX
XXX
Notes: (1) - - No shipments of that product for that classification.
(2) xxx - Hot applicable.
(3) Includes only direct exports of reporting producers.
Source; American Iron and Steel Institute, Annual Statistical Report and A1S 16-S, 1974.
TJ
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ENVIRONMENTAL PROTECTION AGENCY
TOOL STEEL SHIPMENTS
Market
Steel for Converting and Processing
Forgings
Industrial Fasteners (Bolts, Nuts, Rivets and Screws)
Steel Service Centers and Distributors
Construction, Including Maintenance
Contractors Products
Automotive
Aircraft and Aerospace
Mining Quarrying and Lumbering
Agricultural
Machinery, Industrial Equipment and Tools
Domestic and Commercial Equipment
Ordnance and Other Military
Other
Direct Export ^ '
Total
BY MARKET DURING THE YEARS 1970 THROUGH 1974
(Net Tons)
1970
206
3,296
163
18,339
662
-
26
186
311
4
11,659
8
41
53,372
6A
88.337
Note: (1) Most tool steel exports are not shipped directly by specialty
categories. For total export figures see Exhibit 1-11.
Sources: American Iron and Steel Institute, AIS 16-S
for the years 1970,
1971
10
2,760
66
15,446
498
-
-
114
132
_
9,013
12
52
49.646
261
78.010
steel producers
1971, 1972, 1973
Year
1972
164
3,102
62
17,858
643
3
10
123
107
-
10,028
2
4
58,055
69
90.230
1973
157
3,269
89
22,818
1,086
-
-
-
120
_
13,767
15
6
69,262
155
110,744
and are included in other
and 1974.
1974
130
2,425
123
22,952
976
4
-
129
121
-
14,966
58
3
71,184
264
113,335^
market
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ENVIRONMENTAL PROTECTION AGENCY
HIGH ALLOY STEEL SHIPMENTS
Product Form Type
Ingots and Alloys for Castings
Blooms, Slabs, Billets, Sheets, Bars,
and Tube Rounds
Wire - Rods and Drawn Coils
Plates
Bars - Hot Rolled and Cold Finished
Tubing
Sheets - Hot Rolled and Cold Rolled
Strip - Hot Rolled and Cold Rolled
All Other Products
Shipments not Reported
Gross Shipments
1971
High Alloy
Steel Alloy Steel
6,923
4,623
434
584
3,875
100
2,167
2,153
310
2.057
23,226
Less Shipments to Reporting Companies 2,154
3,460
Total
10,383
6,197 10,820
158
65
4,767
-
-
-
456
788
592
649
8,642
100
2,167
2,153
766
2,845
15,891 39,117
717
2,871
Net Shipments 21,072 15,174 36,246
BY PRODUCT FORM TYPE - 1971-1973
1972
1973
High Alloy High Alloy
Steel Alloy Steel Total Steel Alloy Steel Total
6,949
6,762
1,014
639
6,024
99
2,776
3,082
259
740
28,344
316
28,028
631
15,928
309
32
4,782
-
114
-
314
1.070
23,180
1.387
21,793
7,580
22,690
1,323
671
10,806
99
2,890
3,082
573
1.810
51,524
1.703
49,821^
7,300 2,150 9,450
9,725 18,781 28.5O6
1,333 137 1,470
967 - 967
6,374 7,586 13,960
215 - 215
3,061 - 3,061
4,442 - 4,442
429 310 739
1.484 1.220 2.704
35,330 30,184 65,514
507 374 881
34,823 29,810 64,633
Notes: (1) All shipments are produced in vacuum melting furnaces.
(2) The low alloy steel produced with vacuum melting equipment is included in the total high alloy tonnage for the analysis
of economic impact. The reason for this is that high alloy and low alloy vacuum melted steel is in all cases produced
on the same vacuum melting equipment and in all cases the tonnages of high alloy production are greater than those for
low alloy production. On this basis, the costs associated with the proposed effluent guidelines will apply to both the
high and low alloy steel produced in vacuum melted furnaces and therefore the combined tonnages will be used for the
analysis of economic impact.
Source: Subcommittee on General Legislation of the United States
Senate
Committee on
Armed Services.
EXHIBI
1
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ENVIRONMENTAL PROTECTION AGENCY
STAINLESS STEEL PRODUCTION. CONSUMPTION,
IMPORTS AND EXPORTS - 1964-1975
(Thousands of
Year
1975(2)
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
Domestic
Producers '
Shipments
744.7
1,344.7
1,133.8
855.0
718.1
709.4
910.4
819.0
837.0
932.9
879.2
771.2
Exports
39.0
137.2
95.7
62.5
54.8
83.7
87.3
87.6
115.0
89.3
93.1
96.0
Exports as a
Percent of U.S.
Shipments
5.2
10.2
8.4
7.3
7.6
11.8
9.6
10.7
13.7
9.6
10.6
12.4
Imports
192.0
176.1
128.3
149.1
191.9
177,2
182.2
174.0
149.3
137.4
113.5
79.4
Net Tons)
Apparent
Domestic ,.. .
Consumption' *•'
897.7
1,383.6
1,166.4
941.6
855.2
802.9
1,005.3
905.4
871.3
981.0
899.6
754.6
Imports as a
Percent of
Domestic
Consumption
21.4
12.7
11.0
15.8
22.4
22.1
18.1
19.2
17.1
14.0
12.6
10.5
Net
Imports
153.0
38.9
32.6
86.6
137.1
93.5
94.9
86.4
34.3
48.1
20.4
16.6
Net Imports
as a Percent
of Domestic
Consumption
17.0
2.8
2.8
9.2
16.0
11.6
9.4
9.5
3.9
4.9
2.3
2.2
Notes: (1) Apparent domestic consumption equals domestic producers' shipments minus exports plus imports,
and thus includes net additions to stocks.
(2) Import, export, and shipments figures are annual rates based on first seven months data, as
reported in testimony of S. Nehmer before U.S. International Trade Commission, re. Specialty
Steel.
Source: American Iron and Steel Institute, Annual Statistical Reports.
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ENVIRONMENTAL PROTECTION AGENCY
TOOL STEEL PRODUCTION, CONSUMPTION,
IMPORTS AND EXPORTS - 1964-1975
Year
1975(2)
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
Domestic
Producers'
Shipments
73.0
113.3
110.7
90.2
78.0
88.3
113.9
106.4
109.9
121.3
118.2
102.4
Exports
8.0
8.5
6.7
3.1
3.6
2.1
2.7
1.6
1.6
1.8
1.7
2.3
(Thousands of Net Tons)
Exports
Percent of
U.S. Shipments
10.9
7.5
6.1
3.4
4.6
2.4
2.4
1.5
1.5
1.5
1.4
2.2
Imports
27.0
16.0
15.0
11.9
9.2
15.5
12.5
13.6
17.2
15.8
11.2
6.8
Apparent
Domestic . .
Consumption^1^
92.0
120.8
119.6
99.0
83.6
101.7
123.7
118.4
125.5
135.3
127.7
106.9
Imports
Percent of
Domestic
Consumption
29.3
13.2
12.5
12.0
11.0
15.2
10.1
11.5
13.7
11.7
8.8
6.4
Net
Imports
19.0
7.5
8.3
8.8
5.6
13.4
9.8
12.0
15.6
14.0
9.5
4.5
Net Imports
Percent of
Domestic
Consumption
20.7
6.2
6.9
8.9
6.7
13.2
7.9
10.1
12.4
10.3
7.4
4.2
Notes: (1) Apparent domestic consumption equals domestic producers' shipments minus exports plus
imports, and thus includes net additions to stocks.
(2) Import, export, and shipments figures are annual rates based on first seven months
data, as reported in testimony of S. Nehmer before U.S. International Trade Commission,
re: Specialty Steel.
Source: American Iron and Steel Institute, Annual Statistical Reports.
H
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II - FINANCIAL CHARACTERISTICS OF THE
FIRMS IN THE INDUSTRY
The availability of financial information for firms in the
specialty steel industry is limited for the following reasons:
1. Government and steel industry financial data usually
combine the specialty steel segment with the high tonnage carbon
steel producing companies.
2. Many of the specialty steel producers that report
publicly are subsidiaries or divisions of large diversified cor-
porations. Financial data for these subsidiaries or divisions
are usually included in total corporate data, and are not avail-
able for individual subsidiaries, divisions, or plants.
3. Many of the specialty steel companies, particular-
ly the nonintegrated processors, are relatively small and/or
privately held. Most of these firms consider financial informa-
tion highly confidential and do not disclose it publicly.
4. Available financial data are of limited use because
they usually do not allow a breakdown by category of specialty
steel produced (stainless, tool, or high alloy steel).
Where possible, financial characteristics have been present-
ed for the specialty steel industry only. The financial informa-
tion that is available has been supplemented by direct contacts
with individual firms.
-------
II - 2
GENERAL FINANCIAL
CHARACTERISTICS
Table II-l, below, presents the distribution of specialty
steel industry employment and shipments value by establishment
size for those establishments where specialty steel production
represents more than 50% of plant output and whose parent firms
reported these statistics.
Table II-l
Specialty Steel Industry
Statistics, 1974
Establishment
Size by Number
of Employees
Less than 100
100-249
250-499
500-999
1,000-2,499
Over 2,500
Unknown
Total
Number of
Establishments
16
23
21
9
7
4
5
Total Number
of Employees
570
3,890
6,850
7,110
10,150
18,300
Value of Shipments
Reporting
Plants(l)(2)
(? Millions)
69.3
254.4
463.1
335.9
928.0
47.000
2,050.7(1)
Notes: (1)
(2)
Includes only firms reporting separate shipment values
for specialty steel products. These firms include 17
of the 25 integrated producer establishments and 13 of
the 62 processing establishments. These establish-
ments, however, are believed to account for over 80%
of the total industry shipments value.
Total shipments value of multi-establishment firms is
included in the size category of the firm's largest
establishment.
Sources: Dun and Bradstreet; Fortune Double 500 Survey, 1975
state directories; annual reports; and Iron Age
Industry Analysis, April 28, 1975.
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II - 3
The industry is dominated by the larger firms. Establish-
ments with over 500 employees account for about 75% of total
reported employment. Firms having at least one establishment
with over 500 employees account for nearly 85% of total value of
shipments reported in Table II-l and probably account for at
least 75% of the actual total value of industry shipments.
For purposes of economic impact analysis, the establishments
primarily oriented towards specialty steel production have been
divided into the four product line categories described in Chap-
ter I. Exhibit II-l provides financial statistics, where avail-
able, for firms having establishments in each of these industry
segments. These statistics include specialty steel sales and
profits, and parent company sales, profits, assets, debt, equity,
and current ratios. Firms having both integrated and nonintegra-
ted establishments are included with the integrated producers.
As is evident from the data in this exhibit, individual firm
sales and profit data for specialty steel operations are available
for only a minority of the establishments included in the study
(though these tend to be the larger establishments). Even overall
parent firm sales, profit, and other financial data are generally
unavailable for the smaller specialty steel processors. More-
over, where separate data for specialty steel operations are
available, they are subject to arbitrary accounting allocations
and may not be fully reflective of true economic conditions.
In many cases, the specialty steel data includes distributive
-------
II - 4
operations and operations at establishments where specialty
steel accounts for less than 50% of plant output, and thus may
not relate exclusively to the plants included in this study.
The specialty steel sales of 12 reporting integrated produc-
ers (in SIC 3312), operating 17 integrated establishments and 11
(1)
processing establishments, totalled over $1.85 billion in 1974.
Average sales per firm, therefore, were about $150 million.
Average sales per integrated establishment were about $110 mil-
lion. Specialty steel profits of this group of firms totalled
$160 million, yielding an average margin on sales of 8.5% for
these reporting firms. This represents an average profit per firm
of about $13 million and an average profit per integrated estab-
lishment of $9.4 million. There were insufficient reported data
from individual specialty steel processing firms (SIC 3315-17) to
draw meaningful averages from these sources.
PROFITABILITY
As noted, profitability data relating to specialty steel
operations are available for only a limited number of individual
firms. The available specialty steel profits and sales data for
these firms are included in the financial statistics in Exhibit
II-l. Profits attributable to specialty steel operations totalled
$175 million on $2.05 billion sales for the 15 reporting inte-
grated and processing firms, yielding a pre-tax margin of 8.5%.
(1)
1973 figures were used for two of the smaller firms in this
group.
-------
II - 5
This margin did not differ significantly between the 12 integra-
ted and three nonintegrated firms.
More complete profit margins data for the specialty steel
industry as a whole were presented to the U.S. International
Trade Commission as a part of evidence related to the 1975 indus-
try petition for relief from import competition. These data were
collected in a survey by J. K. Lasser & Co. which covered firms
accounting for about 70% of U.S. specialty steel shipment tonnage
Table II-2 below indicates the before- and after-tax industry pro-
fit margins reported by this survey for the years 1969-1974, and
for the first three quarters of 1975.
Table II-2
Stainless and Tool Steel Profits as a Percent
of Sales, 1969-1975
Year
1969
1970
1971
1972
1973
1974
1975
Notes;
Specialty
Pre-Tax(l)
8.5
3.7
0.4
4.7
7.8
11.2
6.5(3)
Steel Margins
After-Tax
4.3
1.9
0.2
2.4
3.9
5.6
N/A
After-Tax
Steel
Producers( 2)
4.6
2.8
2.8
3.4
4.4
6.4
N/A
Margins
All
Manuf actur
Firms
4.8
4.0
4.2
4.3
5.0
5.5
N/A
ing
(1) Net profits.
(2) As reported by AISI.
(3) First three quarters only.
Source: Testimony before U.S. International Trade Commission,
re: Specialty Steel.
These data indicate that specialty steel operations exhibited
-------
II - 6
a cyclical profitability pattern similar to that of the steel In-
dustry as a whole. Specialty steel profits as a percent of sales
were reported to be somewhat lower than similar margins for the
steel industry as a whole and for all manufacturing firms. How-
ever, it may be misleading to conclude on this basis that special-
ty steel operations were relatively unprofitable in the more
meaningful sense of rate of return on capital invested. The labor
intensity of the specialty steel industry suggests that sales
values may be high per dollar of invested capital, at least in
relation to the carbon steel industry. Moreover, the reported
profits of carbon steel producers include earnings on non-steel
operations, which are typically in expanding, high-yielding
industries.
The Lasser survey did not break down specialty steel profits
by industry segment as defined in this study. It did, however,
indicate the average profit margins of reporting firms in various
product lines. These margins for 1973, 1974, and the first half
of 1975 are presented in Table II-3. These figures should be in-
terpreted cautiously as they are believed to be drawn largely from
integrated producers and may also include arbitrary standard cost
accounting allocations. Thus, these data may not accurately re-
flect profit conditions facing the processing firms producing the
various items, particularly the smaller of these firms.
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II - 7
Table II-3
Profits as a Percent of Sales
in Selected Specialty Steel Product Lines
Net Profit Margins
Sales Reported by Before Taxes(l)
Product Line Surveyed
Flat Stainless Steel
Plate
Stainless Hot Rolled
Wire Rods
Stainless Steel Bars
Stainless Cold Rolled
Sheet
Stainless Cold Rolled
Strip
High Speed Tool Steels
Tool Steel Bars
(? Mill
183
21
79
403
388
4
41
Firms
ions j
.2
.6
.3
.0
.8
.1
.7
1973
14
(13
(4
9
11
(11
4
.0
.1)
.7)
.4
.7
.1)
.9
1974
21
9
3
15
15
(0
6
.7
.7
.7
.3
.8
.4)
.9
1975(2)
20
2
(2
3
1
(3
7
.7
.6
.7)
.0
.5
.6)
.9
Notes: (1) Figures in parentheses indicate losses.
(2) First half figures only.
Source: Testimony before U.S. International Trade Commission,
re: Specialty Steel.
As indicated in Table II-3, there is considerable variation
in profit margins among the various specialty steel items. The
bulk items of the industry appear to have been quite profitable
in 1974, and reduced profit margins were maintained even in the
depths of the 1975 recession. Several of the processed items,
however, appear to have been unprofitable except during the 1974
boom in steel demand. However, this apparent unprofitability
may result from the orientation of the survey toward the large
integrated producers, whose processed products are mainly non-
customized "standard specification" items which have faced par-
ticularly strong import competition. The specialized processing
firms, particularly the smaller ones, produce largely for the
-------
II - 8
customized "made-to-order" market, and are thought to be less
exposed to competing foreign producers. These processing firms'
profit margins may be significantly higher than those of inte-
grated producers in these product lines.
BALANCE SHEET
ITEMS
Lenders' evaluations of the economic strength and credit-
worthiness of corporations are based fundamentally upon judgments
about the basic profitability outlook for their industries and
products lines, and particularly upon their abilities to generate
sufficient cash flow to comfortably repay borrowings. However,
when future trends are unclear, or in distinguishing between
firms with apparently similar prospects, creditors frequently
examine several standard balance sheet items and financial ratios.
Several of these critical statistics have been reviewed for those
firms in the specialty steel market for which they are available.
These statistics appear on an individual firm basis in Exhibit
II-l. The industry averages presented in this section apply only
to the data reported in Exhibit II-l, and refer to balance sheets
of the firm as a whole and not specifically to specialty steel
operations.
(a) Capital
Invested
Table II-4 indicates recent sales and profits as a percent-
age of long-term capital invested for reporting firms in various
-------
II - 9
specialty steel industry segments, where long-term capital invest-
ed includes long-term debt plus equity. Where available, 1974
data were used; otherwise 1973 data were employed. The inter-
mingling of figures from two years is a possible source of dis-
tortions, but appears to be of limited importance because the
firms for whom 1974 statistics are reported, as a group, do not
have dramatically different average ratios from the group of
firms for whom 1973 statistics are reported.
Table II-4
Sales and Profits as a Percent of
Long-Term Capital Invested for
Specialty Steel Producing Firms
by Industry Segment(lj
Industry Segment
Integrated Producers
Large
Small and Medium(2)
Wire Processors(3)
Sheet, Strip and
Processors(4)
Pipe and Tube
Processors( 3)
Number
of Firms
Reporting
4
3
1974 Sales 1974 Profit
as a Percent as a Percent
of Long-Term of Long-Term
Capital(2) Capital(2)
201.8%
217.6
229.9
18.4%
9.7
21.6
180.8
25.0
Notes: (1) Total corporate sales or profits of firms in industry
segment as a percent of total corporate long-term
debt plus equity.
(2) 1973 data employed for two firms for which 1974 data
were unavailable.
(3) 1973 data.
(4) All reporting firms having wire processing establish-
ments were integrated producers.
Source: Exhibit II-l.
-------
II - 10
Table II-4 indicates a relatively high ratio of profits to
long-term capital invested for reporting firms other than small
and medium sized integrated producers. To the extent that these
measures are valid and these firms are typical of others in the
industry, it does not appear to be populated by weak corporations.
(b) Debt-Equity
Ratios
Exhibit II-l indicates the debt-equity ratios of reporting
firms. All but nine of the 31 firms for whom the statistic is
collected have ratios of less than 0.5, and only three have
ratios in excess of 0.6. Thus, the reporting firms appear to
meet this particular institutional criterion of credit-worthiness,
(c) Current Ratio
The ratio of current assets to current liabilities further
describes the financial condition of the specialty steel produ-
cers. Exhibit II-2 details these ratios from 1963 to 1975 for
four major specialty steel producers. These four producers have
maintained a higher current ratio than the iron and steel indus-
try in general. This higher ratio indicates that the company
can more readily cover existing obligations with current assets.
Current ratios have also been obtained for several companies
who engage in .specialty steel as a secondary or subsidiary activ-
ity. The average current ratios of all firms engaged in spe-
cialty steel operations who report these statistics, which are
applicable to their overall operations (i.e., including
-------
II - 11
activities other than specialty steel production), are given by
specialty steel product category in Table II-5 below. These
ratios are significantly higher than the 1.9 figure applicable
to the iron and steel industry as a whole in 1973.
Table II-5
Current Ratios for Reporting Specialty Steel
Producers and Processors (1973)
Specialty Steel Category Average Current Ratio(l)
Integrated Producers 2.49
Wire Processors 2.21
Sheet, Strip and Bar Processors(2)
Pipe and Tube Processors 2.17
Notes: (1) The simple average ratio for all companies in the
category for which data were available.
(2) Sheet, strip and bar processors are included with
integrated producers.
FINANCING ADDITIONAL
CAPITAL REQUIREMENTS
Compliance with EPA effluent guidelines for pollution abate-
ment will require greater than ordinary investment expenditures
for companies producing and/or processing specialty steel.
Exhibit II-3 presents historical capital expenditures as a per-
cent of gross plant for the four major specialty steel producers.
Since 1970, these expenditures for three of the firms have typ-
ically ranged between 4% and 7% of gross plant value. The J. K.
Lasser survey, referred to earlier in this section, indicated
that capital outlays associated with specialty steels (excluding
research and development expenditures) averaged between 2.5%
and 4% of the total specialty steel sales of the reporting
-------
II - 12
integrated producers in each year between 1971 and 1974. Pol-
lution abatement related expenditures accounted for less than
than 20% of overall capital expenditures (and less than 1% of
sales) in each of these years, and were only 11% of capital
spending (0.3% of sales) in 1974.
In most cases, companies prefer to finance their capital in-
vestments from their cash flow, rather than by accumulating .--0*:!
tional debt,. Exhibit II-4 details cash flow and gross capital
expenditure statistics for the four major specialty steel produc-
ers during the period from 1964 to 1974. These figures indir,*_e
that in recent years the cash flow of these companies has beer.
adequate to support substantial increases in their cap:',^aj. apsr.c
ing. In earlier periods, however, two of these firms frequently
lacked sufficient cash flow to cover capital expansion, e^er, in
the absence of major investment in pollution control equipment,
As indicated in Exhibit II-4, gross capital expendituree fo;
these firms in the early 1970's tended to be fairly lew relative
to depreciation, indicating at best low levels of net i.-vestr.e~:;
This is particularly so since inflation typically causes bcok
depreciation fxgures to be far lower than the current replace-
ment values of depreciated plant and equipment. Thus the dol-
lar figures reported tend to overstate the net investment in
new plant and equipment which is actually occuring.
There are three major sources of financing available ~.~
specialty stsel companies seeking to utilize external sources -*.f
-------
II - 13
funds:
1. Conventional Debt Accumulation. This alternative
should be open to the majority of those firms in the industry
for which financial statistics were obtained. Most of these
companies satisfy the established institutional criteria for
borrowers.
2. Common or Preferred Stock Issues. Common or pre-
ferred stock issues are not a likely source of new capital because
of the unwillingness of these companies to dilute earnings which
are prone to strong cyclical swings. Moreover, in the past, the
stocks of these companies were not favored by large investors
because of their relatively low earnings growth. Although mar-
ket opinion has recently begun to swing in favor of these com-
panies, the selling costs of new issues might be still substantial,
3. Pollution Control Revenue Bonds. These revenue
bonds, which provide tax-exempt earnings to the bond holders, have
been utilized previously by the iron and steel industry. In 1971,
$7.4 million of these bonds were issued for the steel industry.
In 1972, $145.9 million were issued for steel companies, account-
ing for nearly 30% of the value of all such issues. Because
the interest rate is below the prime lending rate, and favorable
tax treatment is possible, revenue bonds represent a desirable
alternative in financing additional investments in pollution
control. However, where the capital requirement is under
$500,000, the cost of issuing this type of bond is too high to
justify this method of financing.
-------
II - 14
4. Small Business Administration Assistance. Accord-
ing to Small Business Administration (SBA) sources, SBA assis-
tance is available to many of the firms in this industry. Tiv.
"small" business criterion for the four SIC's under study is
total organizational employment of less than 1,000. Two fcrror
of SBA assistance are available: direct loans which are norraa,"
limited to $500,000 for no more than 30 years at 6-5/8%, and
guaranteed loans for which the SBA can guarantee up to 90% of
loans not exceeding $4 million—the interest charged by
on the guaranteed portion not to exceed 10-3/4%.
-------
ENVIRONMENTAL PROTECTION AGENCY
FINANCIAL DATA OF SPECIALTY STEEL
INTEGRATED PRODUCERS - 1974
Specialty Steel*1)
Company
Allegheny Ludlum*2)*3)
Armco Steel*2)*3)
Athlone Industries (Jessop Steel)*3)
Borg-Warner Corp.*1)
Cabot Corporation (Stellite Division)*3)
Carpenter Technology*2)*3)
Columbia Tool Steel*1)
Colt Industries (Crucible Division)*3)
Continental Copper and Steel (Braebura)
Cyclops*2)*3)
Eastmet Corporation*1)
ITT (Harper Division)*3)
Jones & Laughlin*2)
Joslyn Stainless Steel*1)
Lac robe Steel*2)
Teledyne*3)
Wallace Murray (Slmonds)<3)
Washington Steel* )
Notes: (1) 1973 data from Moody 's. Dun
(2) Source: Iron Ajse 1974 Indu
(3) Source: The fortune Double
(4) Includes only employees at
Number
of Sales*3' Profits*5) Sales
EmploveesW S(106) Sa06) Sfl06^
10,000
5,800
1,100
750
2,100
4,000
15
5,000
350
1,250
1,000
350
1,400
750
1,400
1,750
400
800
& Bradstreet
strv Financial
500 Directory
establishments
518.8 31.4
*
95.9 4.4
-
100.4 5.7
205.2 27.4
5.0
204.0 36.7
10.9 1.9
-
66.2 6.3
.
-
-
73.4 7.9
375.7 15.7
121.2 7.8
87.4 14.6
and annual reports, 197
Analysis. Aoril 28 19
,1951
where specialty steel
(5) In some cases, company specialty steel sales and profits figures
establishments primarily devoted to carbon St:ael production.
(6) Computed from 1974 debt and
and annual reports.
* - - Not available.
981.9
3,190.1
261.7
1,767.8
400.6
264.4
5.0
1,143.5
152.9
652.9
105.1
11,154.4
2,216.6
149.4
73.4
1,699.9
318.6
87.4
3 and 1974.
75.
Profits
Before Tax Debt
$(106) $U06)
76.5 133.2
319.3 468.9
26.3
72.7 135.5
41.2
31.5 18.4
-
136.8
10.9
35.9 50.3
6.9 10.0
1,045.5
268.1 233.6
10.4 12.5
5.4 9.4
65.0
22.1
12.6 5.4
Parent Company
Total
Equity Assets
Sqo6) $(IQ6)
304.4 656
1.274.7 2,541
48.0 169
675.5 1,171
262.9 562
123.8 189
3.6 4
339.7 777
48.8 102
148.3 340
32.0 65
4,134.0 10,696
.
63.9 105
_
497.2 1.127
100.6 197
-
.3
.7
.9
.5
.5
.1
.8
.6
.9
.3
.9
.5
_
.6
_
.6
.3
-
Current
Liabilities
$U06)(1)
146.4
373.7
29.8
307.8
63.3
28.0
0.5
396.3
29.3
91.4
22.4
589.9
238.1
27.2
9.3
207.4
38.2
8.2
Current
Assets
$(1Q6)
320.3
853.1
76.8
641.9
164.5
100.3
3.4
421.6
55.8
179.9
48.2
448.3
494.3
69.5
22.0
496.4
116.6
25.5
Debt
Equity
Rat loft)
0.44
0.37
0.28
.20
0.55
0.15
_
0.45
0.56
0.34
0.31
0.24
0.22
0.20
0.45
0.56
0.62
0.15
Current
totio(l)
2.19
2.28
2.57
2.09
2.59
3.58
6. SO
1.06
1.90
1.97
2.15
0.76
2.07
2.55
2.36
Z.39
3.05
3.13
operations account for over 507. of total plant output.
include distributive operations and
equity figures where available, otherwise based
on 1973 data from Moody'
operations at
s, Dun & Bradstreet
TJ
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-------
—
FINANCIAL DATA Of SPECIALTY STEEL PROCESSORS - 1974
Specialty Ste^l'1)
Driver-Harris Company'^)
Eaton Corporation ()
General Cable'3)
H. K. Porter Co.'3)
Howmet Corporation'3)
National Standard Company' )
Sylvanla Products (CTE)(1)
Number of
Employees
340
700
240
210
80
600
100
(5) Sales'6) Profits'6)
(SOOO',000) ($000,000)
109 11.6
-
Sales
($000,000)
40.3
1,759.7
518.7
363.4
416.4
218.8
1207.8
Total Parent Coupanv
Profits
Before Tax Debt Equity
($000,000) ($000,000) ($0o0,00u7
1.9 3.3 16.0
594.3
75.1 - 183.3
33.9 - 97.3
46.1 - 158.5
26.2 33.8 80.1
122.2 109.9 384.5
Total
Assets
($000,000)
30.0
1,316.8
363.0
152.4
444.4
157.7
844.6
Current
Uabtlttles(l)
(SOOO.OOO)
9.1
266.2
86.9
42.2
76.0
37.1
350.2
Current
Aasets(l)
20.1
700.4
144.8
87.5
195.5
93.3
625.6
bebt
Equity
Ratlo(7)
0.21
0.51
0.48
0.01
1.12
.42
0.29
Current
Hatto(l)
2
.23
2.63
1
2
2
2
1
.66
.07
.57
.51
.79
Specialty Sheet Strip and Bar Processors' '
Tube Processors
Emerson Electric (Greenville Tuba)'1*
Handy & Harmon Tube'3'
Phillips Petroleum (Wall Tube)<3)
Sharon Steel'2'
Synalloy (Bristol Hetal Products)'1)
U. O. P. (Fle-conic«)<1)
250
200
350
230
250
400
-
-
-
64.3 4.2
13.3 0.9
-
Whittaker Corporation (Bishop Tube
Production Steel)(3)
Wilson, Lea Engineering Co., Inc. ...
Notes: (1
il
(6
(7
1973 data from Moody' a, Dun &
Source* Iroti Atte 1974 TnHn^j
937.6
319.0
4.980.7
464.4
40.3
418.9
778.2
12.9
158.2 49.3 451.8
26.0 - 45.4
429.8 - 2,273.7
84.3 33.2
1.8 7.4 13.5
33.2 66.6 183.8
35.0 - 182.4
.4
602.6
157.2
4,028.1
-
25.9
396.4
563.4
8.7
106.6
72.0
620.8
48.6
5.0
124.0
196.4
5.9
422.2
100.7
1,232.0
103.8
16.3
214.3
368.0
7.5
.11
0.58
0.40
0.20
0.55
0.36
0.99
-
3
1
1
2
3
1
1
I
.96
.40
.99
.12
.22
.73
.&7
.27
Bradatreec and annual reports 1973 and 1974.
rv Financial AnalvBls. Aorll 28. 1975.
Source: fee Fortune Double 500 r)lT^-.torv 1975
Specialty Sheet, Strip and Bar Processors are Included with Specialty Steel Integrated Producers.
Includes only employees at establishments where specialty steel operations account for over 50X of total plant output.
In some cases, company specialty steel sales and profits figures Include distributive operations and operations at
establishments primarily devoted to carbon steel production.
Computed frcu 1974 debt and equity figures where available, otherwise baaed on 1973 data from Moody'a, Dun 6. Bradstreet,
and annual reports.
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-------
ENVIRONMENTAL PROTECTION AGENCY
Year
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
Notes
CURRENT RATIO ^ OF SELECTED INTEGRATED SPECIALTY
STEEL PRODUCERS (SIC 3312)
Allegheny
Ludlum
2.1:1
2.1:1
2.2:1
2.3:1
2.8
2.6
3.0
3.5
3.8
3.8
3.6
3.9
3.7
Ratio of
Sources:
Surveys ,
Carpenter
Technology
2.9:1
2.9
3.6
3.7:1
4.4
2.7
3.0
3.6
3.3
3.1
3.4
3.4
3.5
current assets to
Cyclops Latrobe Steel
1.8:1 N.A.(3)
1.8 N.A.
2.0 N.A.
2.0:1 2.4:1
2.3 2.1
2.2 2.6
3.1 2.6
3.0 2.5
2.6 2.5
2.9 2.2
2.5 2.3
3.1 2.9
3.0 3.3
current liabilities.
Industry ^
N.A.
1.8:1
1.9:1
1.9:1
1.9
1.9
1.8
2.0
2.2
2.3
2.4
2.4
2.7
American Iron and Steel Institute, and Standard & Poors Industry
Steel-Coal. September 19. 1974. Annual Statistical Report, 1974.
8)
Surve
(3) N.A. - Not Available.
Includes Carbon Steel Segment.
EC
M
W
M
H
-------
ENVIRONMENTAL PROTECTION AGENCY
Year
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
CAPITAL
EXPENDITURES FOR MAJOR
(As a
Allegheny Carpenter
Ludlum Technology
5.67o
4.2
5.9
3.6
5.1
7.7
9.9
7.0
15.3
11.7
3.5
3.0
8.370
6.8
4.4
5.5
5.7
5.7
11.3
14.7
9.9
5.0
3.3
9.3
Percentage of
Cyclops
6.67o
4.3
3.9
6.7
4.4
2.9
5.2
6.1
12.2
14.3
4.0
4.0
SPECIALTY STEEL PRODUCERS
Gross Plant)
Latrobe^
N.A.(l)
3.07.
2.7
1.0
0.9
7.1
23.4
17.3
7.0
6.2
12.4
25.3
Iron and
Steel Industry
N.A.
N.A.
3.570
2.3
5.6
6.9
8.2
8.2
7.9
7.9
7.4
5.1
Capital Expenditures
($ Millions)
1972
1973
1974
Source :
$27.7
20.7
28.8
Standard & Poor
$ 5.85
9.64
12.68
1 s Indus try
$10.70
12.28
19.92
$5.14
N.A.
N.A.
Surveys, Steel-Coal, September
-
-
-
25, 1975.
§
M
Cd
(1) N.A.
(2) Latrobe Steel acquired by Timkens Co., April 25, 1975.
Notes: (1) N.A. - Not Available.
-------
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ENVIRONMENTAL PROTECTION AGENCY
MEASURING THE ABILITY TO FINANCE EXPENDITURES THROUGH CASH FLOW FOR MAJOR PRODUCERS
(Millions of Dollars)
Carpenter Technology
Year
Gross
Earnings
Cash Flc'.:
Dividends
Adjusted
Gash Flow(2)
Capital
Expenditures
A
-------
Ill - PRICING ANALYSIS
MARKET
STRUCTURE
(a) Supply
The supply side of the domestic specialty steel market is
marked by a large number of producers and processors of vary-
ing sizes who manufacture a wide variety of overlapping product
lines. As indicated in the exhibits to Chapter I of this report,
about 160 firms maintain establishments which produce specialty
steels, and somewhat more than half this number operate estab-
lishments where specialty steel accounts for over 50% of total
plant output. The firms primarily oriented towards specialty
steel production range in size from 17 firms with less than
100 specialty steel employees to a firm with over 10,000 such
employees.
Ten large firms with integrated production facilities
account for the bulk of the industry's production and sales,
but none of these has a dominant role in the market. Many
establishments primarily devoted to carbon steel production
have the potential to increase their production of specialty
steels in response to favorable market conditions, thereby
assisting competitive forces in the industry. In addition,
most of the integrated producers, and a few of the processing
firms, have the ability to make significant shifts in the
composition of their output between product forms in response
to changing marketing opportunities. Thus, the production of
-------
Ill - 2
specialty steel in this country takes place within a reasonably
competitive framework.
(b) Demand
The demand side of the domestic market is characterized by
an even larger number of customers. As indicated in Chapter I,
55% to 60% of the tonnage sold outside the industry (i.e., tonnag;
not sold for converting and processing) goes directly to end-
users in a wide range of producers' and consumers' durable goods
industries and in various types of construction. The remaining
tonnage is shipped to steel service centers and warehouse dis-
tributors, who maintain an active and highly competitive market
in many varieties of steel.
(c) World Market
Relationships
The U.S. market for stainless and tool steel forms a part of
a broader worldwide market linked by substantial international
trade flows. The U.S. is the world's largest specialty steel
consumer, but does not dominate either the world supply or the
world demand except in the case of high alloy products.
Industry observers believe the U.S. accounts fcr 25% to 30% of
free world stairless steel consumption, 40% to 60% of tool steel
consumption, and 65% to 75% of high alloy steel consumption.
Foreign specialty steel production is generally organized
along less competitive lines than is U.S. production. In Japan
-------
Ill - 3
and in many Western European nations, specialty steel facilities
are partially owned by governments or are cartelized under public
guidance. Trade protection, export incentives, and direct sub-
sidies are frequently extended to foreign producers with the
goals of supporting full employment, improving foreign exchange
earnings, and enabling these producers to build installations
of efficient scale while their internal markets develop. This
supportive role of government to foreign specialty steel pro-
ducers is not enjoyed by domestic producers who often find them-
selves cast as apparent adversaries of U.S. governmental policy.
PRICING
TECHNIQUES
The nominal pricing mechanism utilized by specialty steel
producers is a system of base prices which are developed for
each grade of steel. "Extras" are added for size, surface qual-
ity, and order volume. Base prices reflect alloy content and
the difficulty of producing the grade. "Extras" reflect the
costs of producing particular shape(s), width(s), diameter(s),
length(s), and surface qualities. Base prices and extras are
published by each producer and are generally available to custo-
mers. Competitive pressures normally result in published base
prices and extras for all producers being almost identical.
Actual industry selling prices are almost always below
published book prices, indicating the probable existence of
some degree of discrimination by producer firms between buyers.
-------
Ill
Such discounting probably reflects, to an even greater degree,
the resistance of producers to lowering established product
prices in periods of weak demand that are viewed as temporary.
While movements in published book prices do parallel movements
in actual selling prices to some degree, the actual discount
from published prices varies considerably among specific products
and over time. In early 1974, when demand for specialty steels
was strong and the lingering effects of price controls were
still felt, actual selling prices were usually less than 5%
below book prices. In the weak demand years of 1971 and 1972,
by comparison, actual selling prices of many products ranged
between 20% and 30% below book prices.
COST AND SUPPLY
DETERMINANTS
The integrated specialty steel industry, like the high
tonnage carbon steel industry, requires a substantial fixed
capital investment and finds its profitability eroded by idle
capacity. However, labor and raw materials costs are relatively
more important in the specialty steel industry, which leads to
a significantly different relationship between selling prices
and supply tonnages.
(a) Raw
Mater ials
Integrated carbon steel producers generally have signifi-
cant control over their input mix of raw materials and can
fairly easily shift to lower output grades requiring fewer
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Ill - 5
processing steps. Moreover, the carbon steel industry is the
major or predominant user of many of its raw materials inputs,
allowing much of the slack in prices during periods of weak de-
mand to be shifted back to suppliers. The specialty steel pro-
ducers, in contrast, tend to have little control over the quan-
tities of expensive alloying materials they must use to produce
high quality products. They also are unable to exert a major
influence on the price of these materials because they typically
account for a limited proportion of total demand in markets that
are often worldwide in scope.
The most critical raw materials used in producing specialty
steels are chromium and nickel ferralloya, chrome-nickel scrap,
and carbon steel scrap. Sixty to eight-five percent of the raw
materials used in making "new" stainleas ateel consist of aeleet
grades of carbon steal and stainless ateel scrap. The balance
consist* of ferroalloy! and other additive agents. The moat
common additive agents used include ferroehromium, niekei, ferro-
manganese, ferromolybdenum, ferrotungaten, and ferrovanadiunu
Dernestic stainless steel produeera are only one eonaumlnf
group among many in the U.S. market for carbon steel aeraf* and
thus would be limited in their ability to shift baek a alaektninf
in price to these suppliers, even in a eiosed domestic market.
Moreover/ unlike virtually all other gauntries, whieh eeniider
these materials to be stratefie national resources, the United
States allows the exportation of stainless and @arb@n steel
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Ill - 6
scrap. Because Icirge quantities of chrome-nickel and car-
bon steel scrap were exported to foreign steel producing coun-
tries prior to 1974, the role of demand conditions in the U.S.
specialty steel market as a determinant of the price of the
industry's major raw materials inputs was further limited.
Practically all ferrochromium and nickel (in its varying
alloying forms) must be imported into this country, requiring
domestic specialty steel producers to purchase these raw materials
in competition with buyers throughout the world. A few attempts
by integrated specialty steel producers to achieve the raw
materials flexibility of integrated carbon steel producers have
been unsuccessful.
(b) Labor
Intensity
As was described in Section I, U.S. specialty steel opera-
tions are labor-intensive by the standards of the steel industry
as a whole. The specialty steel producers employ many times the
number of workers per ton of product that are used in carbon
steel production, and also account for a substantially larger
fraction of steel industry employment than of steel industry
dollar sales volume. As indicated in the J. K. Lasser & Co.
survey, which was presented as evidence before the U.S. Inter-
national Trade Commission and is described in Chapter II, direct
labor costs typically account for 18% to 29% of total specialty
steel unit production costs. A precisely comparable statistic
for the steel industry as a whole was unavailable. However, total
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Ill - 7
non-salaried employee costs of American Iron and Steel Institute
reporting companies comprised only 19% of these firms' total
costs in 1974, inclusive of non-steel operations. The proportion
of direct labor costs to total steelmaking costs was probably
significantly lower than 19%.
(c) Elasticity of
Domestic Supply
Taken together, labor and raw materials costs typically
account for between 75% and 80% of specialty steel producers'
overall costs. As has been described in preceding paragraphs,
these producers have little ability to influence the prices of
the raw materials they purchase. They also have only limited
control over the wage rates of their employees, which are nor-
mally negotiated within the context of the steel industry as a
whole. As a result, the variable cost per unit of specialty
steel output (i.e., the variable cost per ship ton) does not
appear to fall off substantially as output is reduced from high
levels of capacity utilization. Because the response of unit
variable costs to downward adjustments in output levels appears
to be small, a major reduction in volume should lead to a far
smaller proportional decline in the prices at which suppliers
can sell. Conversely, a relatively small reduction in the
industry selling price should force a substantial curtailment
in the tonnage producers are able to supply and still cover
variable costs.
As is discussed in a subsequent paragraph of this chapter,
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Ill - 8
the price and volume coordinates observed in the specialty steel
market over consecutive short time intervals (such as quarters
or years) appear to reflect fluctuating demand moving along a
relatively stable supply curve. The dynamics of this supply
relationship involve prices reacting to shifts in the level of
demand. Output changes are typically the first reaction to
short-run demand changes, and are followed by the corresponding
adjustments in price.
The short-term stability of the industry's supply function,
combined with fluctuating demand, makes it possible to infer or
estimate the industry's supply elasticity by observing short-term
market volume changes and the subsequent short-term reactions of
industry prices. In making such inferences, actual industry
price changes should be adjusted for the effects of general in-
flation, while actual industry output changes should be adjusted
to exclude the effects of long-term trend growth in the supply
potential of the economy at large and of long-term trend growth
in aggregate economic demand.
A rigorous estimation of the supply elasticity of specialty
steels was not attempted in this study. The qualitative observa-
tions made in this chapter about labor and raw materials costs
and intensities in the industry imply a fairly high supply elas-
ticity. This judgment was checked against recent short-term
movements in industry prices and output levels, utilizing methods
described in the previous paragraph. Between 1969 and 1971,
stainless steel tonnage shipments (adjusted for the trend increase
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Ill - 9
in economic output reflected by growth in "real" GNP) declined
24%. This was associated with a decline in stainless steel
prices (adjusted for general inflation measured by the Implicit
Price Deflator for GNP) of about 16% between early 1970 and
early 1972. Similarly adjusted stainless steel shipments in-
creased 37% between 1971 and 1973, and were followed by an ad-
justed price increase of 15% between early 1972 and early 1974.
Thus, the experience of recent years is consistent with a high
short-term supply elasticity of specialty steels, and suggests
a range of 1.5 to 3.0.
(d) Supply of
Imports
The supply elasticity of specialty steel imports is far
more difficult to determine with any precision than is the do-
mestic supply elasticity. In part this is due to an even more
incomplete data base upon which to draw estimates, and in part
it is due to a presumption of less stability of supply in in-
ternational markets. The overall supply function of foreign pro-
ducers is thought to be less elastic than that of U.S. producers.
In part this results from the modest growth rate of the U.S.
specialty steel industry during the past decade or more, which
has led to limited investment in new and modernized plant.
In addition to directly lowering the fixed cost component in
U.S. producers' cost structures relative to that of foreign pro-
ducers, the relatively low level of investment in new plant left
the U.S. with less modernized, more labor-intensive production
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Ill - 10
facilities. The overall effect is to make variable production
costs a substantially higher fraction of total costs in this
country at optimum operating rates, and to make reductions in per
ton variable costs more difficult to effect as output levels are
reduced .
Of additional importance in contributing to the inelasticity
of foreign producers' supply is the use of the foreign steel in-
dustry as an instrument of social-political policy in Japan and
in most Western European countries. As has been noted earlier,
the industry is frequently partially government owned or is
government subsidized in many of these nations, allowing produc-
tion to proceed at levels that might otherwise be unprofitable
during periods of slack demand. Moreover, apart from supply in-
elasticity resulting from economic factors, the goal of full
employment is more strongly emphasized overseas, so that producers
are often pressured to maintain labor forces and output levels
in times when it is unprofitable for them to do so.
The supply of imports to the U.S., however, is considerably
more elastic with respect to price than is the overall production
supply from foreign producers. This is because the supply avail-
able to the U.S. market is a residual—the amount remaining after
foreign demand is satisfied, not only in the producing countries
themselves but in potential importing countries other than the
U.S. An increase in the U.S. price relative to that of these
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Ill - 11
other nations, may cause a considerably larger proportion of
even a relatively fixed total foreign supply to enter the U.S.
market.
Over longer time periods, these import flows, or even the
prospect of these flows, will tend to equalize prices among the
various national markets, with allowances for variations in
product quality, transport costs, and a premium for reliability
of supply.
MARKET PRICE
INFLUENCES
The durable and capital goods industries utilizing specialty
steels are subject to major cyclical variations in demand, fre-
quently of the order of 30% or more over the course of a business
cycle. The demand for specialty steels is largely derived from
the demand for these products, and therefore itself varies sub-
stantially over the business cycle.
The supply function of specialty steel producers has tra-
ditionally been more stable in the short term. Unit labor costs,
and, until recently, unit plant, equipment and raw materials
costs, at any given level of output, did not exhibit nearly as
great year-to-year variations as did demand.
The result of this interaction between a relatively stable
supply function and sharp year-to-year fluctuations in the amount
of product demanded at any given price, is to cause the price-volume
coordinates observable in the market to move along the industry's
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Ill - 12
supply function, rather than its demand curve. Instead of dis-
playing the reduced volume of output which would result from a
rise in prices if demand were stable, the specialty steel market
data reveal the tendency of increased levels of demand for end-
products using these steels to contemporaneously .raise both prices
and output levels. This phenomenon makes it difficult to observe
the pure effect of price on demand, and hence the price elasticity
of demand, in market statistics.
MARKET
PRICES
Accurate price data for this industry are difficult to ob-
tain. Published book values do not generally reflect actual
selling prices, and difficulties arise due to apparent inconsis-
tencies between the various published sources of actual price
data. For purposes of this study the composite stainless and
tool steel prices in Table III-l are used. These composite prices
were obtained from statistics of the value of intercompany ship-
CD
ments and statistics of the related tonnage volume shipped.
U)
To the extent that reported individual dollar and tonnage
shipment figures erroneously include transfers to other
plants of the same company, these composite price data are
probably somewhat lower than actual composite selling prices.
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Ill - 13
Table III-l
Composite Prices of
Stainless and Tool Steels
Year
1969
1970
1971
1972
1973
1974
1975(1)
Stainless
($/Net Ton)
1,170
1,330
1,240
1,210
1,320
1,630
1,870
Tool Steel
($/Net Ton)
1,980
1,920
1,980
2,130
2,140
2,660
3,060
Note: (1) A. T. Kearney estimate of composite prices as of
July 1, based on typical price increase from 1974
average levels, as detailed in Exhibit III-l (15%
increase used for stainless and tool steel).
Source: Department of Commerce, Current Industrial Reports:
Steel Mill Products. Series MA 33B (Year) - 1.
For purposes of comparison, Exhibit III-l portrays price
data presented to the U.S. International Trade Commission on
behalf of the Tool and Stainless Steel Industry Committee.
For six stainless and three tool steel generic product form
types, a composite average price is shown based upon net dol-
lar sales and total shipments tonnage. The yearly average
"actual" selling price of a specified product belonging to each
generic product form type is also presented.
-------
ENVIRONMENTAL PROTECTION AGENCY
SELECTED SPECIALTY STEEL INDUSTRY SELLING PRICES - 1969-1975
(Dollars per Net Ton)
Year
1969
1970
1971
1972
1973
1974
1975
Notes
Stainless Steel
Stainless Cold
Flat Stainless Stainless Bars Rollsd Sheet
Stainless Steel Plate Hot Rolled Hire fyplcal Typical
Composite Typical Composite Rod Typical Composite Actual Composite Actual
Averaged) Actual(2)(3) Average(l) Actual(2)(4) Averaged) (2)(5) Averaged) (2)(6)
1.227 1.161 1,208 1,019 1,310 1,302 962 969
1,432 1,232 1,413 1,072 1,385 1,445 1.083 1,083
1,400 1,164 1,231 1,007 1,359 1,510 1,033 992
1,361 1,182 1,155 968 1,374 1,432 1,003 942
1,460 1,240 1,300 986 1,496 1,336 1,069 1,013
1,766 1,544 1,734 N/A(3> 1,947 1,604 1,343 1,262
2,026 1,767 2,198 N/A(7) 2,316 1,902 1,524 1,338
: (1 Composite Averages - Total Nee Sales for Product Form (as reported in source-Alls)
Stainless Hot
Rolled
Composite
Averaged)
521
621
7SO
642
674
1,395
1,673
Sheet
Typical
Actual
(2)(7)
S/A
a/A
N/A
N/A
N/A
N/A
N/A
Stainless Cold
Rolled
Conposit?
Averaged)
997
1,077
1,089
1,096
1,180
1,474
1,703
Strip
Typical
Actual
(2) (8)
1,090
1,198
1,208
1.196
1,222
1,478
1.622
High Spend Rod
Composite
Averaged)
3,529
2.726
2,631
2,925
2,772
3.567
4.346
Typical
Actual
(2) (7)
H/A
N/A
N/A
N/A
N/A
N/A
N/A
Tool Steel
High Speed Bar
Composite
Averaged)
3,371
3,432
3,532
3,741
3,811
4,774
5.824
Typical
Actual
(2) (9)
3,160
3,220
3,180
3,205
3.410
4,440
5.330
Tool Steel Bar
Composite
Average (|)
1,428
1,582
1,588
1,561
1,671
2,072
2,568
Typical
Actual
(2) (10)
1,396
1,478
1,530
1,577
1,657
2,026
2,349
* Total Sales for Product Form (ARS).
(2 Typical Average Cor one year Is the numerical average between the January lac actual selling
is the actual selling price a* of July 1, 1975.
3 Typical Average a for Grade 304, HHAP. 1/4" x 48" x 240".
4 Typical Average s for Grade 304, .250" to .287" Rd.
6 Typical Average s for Grade 304* 2«' Finish, 8-14 ga. x 48" x coil.
7 No data avallabl In source.
8 Typical Average a for Grade 304, 2 Finish, .035" x over 12" to 18" x coll.
9 Typical Average a for Grade H-2, 1" Rd. x Cue Length HR.
(10 Typical Average a for Grade A-2, 1-1/2" td. HR.
prices of that and
the succeeding year
except
for 1975.
The 1975
Typical Average
Source: Testimony before U.S. International Trade CooaUtfalon, r«: Specialty Steel.
W
M
Hi
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IV - IMPACT FRAMEWORK
INTRODUCTION
The economic framework established for impact assessment is
based on analytical models of the U.S. specialty steel industry
within the institutional context of the U.S. economy.
APPROACH TO
ASSESSMENT
The impact analysis attempts to assess the range of economic
adjustments which may occur as a result of the change in pollu-
tion abatement control efforts implicit in the effluent limita-
tion guidelines. Both short-term and long-term changes will take
place at the industry level which may have different impact indi-
vidual plants and firms or classes of plants and firms. In addi-
tion, the controls may have significant specific effects on the
national or regional economy, such as altering the balance of
foreign trade.
In estimating impacts, Kearney first attempts to examine
changes in market relationships, and then to determine the ef-
fects of these changed market conditions on specific plants and
firms. Iterative adjustments may then be made to make the market
and industry impacts consistent with the impacts on individual
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IV - 2
(1)
firms and plants.
ASSUMPTIONS
The framework established for impact assessment is based
on several key assumptions:
1. The cost and technical data base provided by other
EPA contractors, i.e., Datagraphics, Inc. and Cyrus Wm. Rice,
are assumed to reflect the true conditions which will result
from the effluent limitation guidelines.
2. Compliance with the BPT effluent guidelines limita-
tions is assumed to occur between 1979 and 1981, and compliance
with the BAT guidelines is assumed to occur a few years later.
Specialty steel producers and processors are assumed to act and
plan the conduct of their business on this basis at, the time the
regulation is effective in 1976.
3. The lead time provided the industry to meet the
required BPT and BAT standards is assumed to be adequate to
purchase and install the required equipment without creating ab-
normally long lead times or significant short-term increases in
the real prices of equipment as a result of supply bottlenecks
in water treatment systems and related applications engineering.
(I)
For example, an initial market price increase estimated on
the basis of pollution control costs of domestic producers
will not be consistent with overall supply-demand balance
in U.S. or world markets if substantial import flows into
this country occur in response to upward movements in prices.
In this instance, an iterative adjustment of market price,
domestic producers' shipments, and apparent consumption is
made in order to develop an impact assessment that is con-
sistent with balance in world supply-demand relationships
as a whole.
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IV - 3
The existence of previously granted permits for discharge rein-
force this assumption.
DYNAMICS OF
ADJUSTMENT
(a) Adjustment
Horizon
The firms' adjustment requirements are definite and sched-
uled. Owners and/or managers of specialty steel establish-
ments and their customers know at the time of promulgation what
changes will be mandated by the regulation at some point in the
future. Of course, there are uncertainties as to the precise
impacts of the regulations on the market.
(b) Adjustment versus
Baseline
The baseline forecasts developed in Chapter VI estimate
industry conditions over the next several years in the absence of
effluent guidelines. In addition to the effect of the legislation
itself, the promulgation of the effluent guidelines, and publica-
tion of associated cost and impact studies, will immediately
begin to cause changes in the development of the industry. This
is due to entrepreneurs' reactions to the information about
(2)
future industry conditions provided by these studies.
(2)
For example, if it were to become known in the industry that
smaller specialty steel processors are subject to relatively
higher costs of pollution control, new establishments of this
size would be less likely to enter the industry until a full
market adjustment to this knowledge takes place.
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IV - 4
These adjustments serve to ameliorate real world impacts
relative to what they would be in the absence of knowledge about
the effects of regulation on the industry. As a result, the
original measurement of impact against the baseline may become
an idealized calculation which overstates the actual real world
impact while the actual real world economic impact could not be
accurately forecast using the baseline conditions* An example
of how planning adjustments may cause variance from a baseline
forecast is illustrated in Exhibit IV-1.
IMPACT
FRAMEWORK
(a) Market
Conditions
Market changes resulting from the effluent guidelines are
measured against the baseline forecast conditions described in
Chapter VI. Market impacts are evaluated employing the techniques
and assumptions of conventional price theory. The major assump-
tions about market behavior are listed as follows:
1. Site-specific pollution abatement costs are not
considered, and unit costs arising from the controls are assumed
to be approximately equal for all establishments in the same
industry segment and size category. Cost differences arising
from establishment size and process categories are recognized.
2. The markets for noncustomized "standard specifica-
tion" products are assumed to be fully competitive. Market prices
are assumed to rise to cover those unit costs of pollution abate-
ment (including depreciation, operation and maintenance costs,
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IV - 5
and return-on-investment) which are common to all establishments
supplying a given product. Additional short-term price increases
to cover costs incurred by some, but not all, of the size and
process categories are assumed if the lower cost categories do
not appear to have sufficient capacity to meet overall demand for
the product. Higher costs specific to establishments producing
less than 20% of the tonnage of the product are, in general,
assumed not to be reflected in market prices, as the lower cost
plants are assumed to be able to expand their output to meet full
(3)
market demand if required.
3. The markets for the more customized "made-to-order"
products are assumed to be characterized by less than full
competition because significant costs are believed to be involved
in locating the potential lowest cost producers and/or highest
paying customers. In addition, the creation of an adequate custo-
mer working relationship needed to service such product orders, is
assumed to involve time and effort on the part of both customers
and suppliers. Hence limited price variation is assumed to occur
among similar customized products produced by different firms.
Establishment size and process categories having atypically high
unit abatement costs, are assumed to be able to pass through at
least a fraction of these costs to their "made-to-order" customers,
(T)
Some establishments may actually be insulated from strong
market competition due to geographic location or for other
reasons. These plants may be able to obtain at least tem-
porary premiums over competitive prices if their costs
require it.
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IV - 6
4. Forecast changes in industry volume are based upon
the projected market price increases and inferred ranges of
price elasticities of demand.
(b) Customers
and Suppliers
Changed conditions in the specialty steel market resulting
from the emissions control guidelines may have a significant
impact on the customers and suppliers of the industry. Where
they exist, these transferred impacts are identified and des-
cribed, and the potential for secondary and feedback effects
is reviewed.
(c) Capital Investment
and Financing
Financing of pollution control equipment creates the
potential for additional adverse impacts. Investment require-
ments may be large in relation to normal capital expenditure
levels. Normal channels of financing may not be adequate since
cash flow and/or borrowing characteristics of the industry may
not be favorable. In order to assess these potential financing
impacts, the economic and financial characteristics of the indus-
try are reviewed in relation to the general standards of perfor-
mance required by financing institutions.
(d) Micro
Impacts
In many cases an establishment, or a class of establish-
ments, set apart by size, level of integration, or degree of
diversification, is affected to a different extent than the
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IV - 7
industry as a whole. The primary cause of differential adjust-
ments to pollution controls is the possibility of significantly
higher treatment costs for a class of firms in relation to the
typical treatment costs which are incurred and are reflected
in market demand, supply, and prices.
Some typical cases of potential for differential impacts
are as follows:
1. Economies of Size in Pollution Abatement. Treat-
ment system technology is such that its costs cannot be reduced
below a minimum point, though the capacity of the system continues
to exceed the establishment's actual flow requirements. More-*
over, low flow volumes tend to have higher unit treatment costs
than higher flow volumes. Thus, technical costs of small firms
tend to be higher than those of larger firms, and they may be
impacted more seriously unless they attain certain economies
in system management and operation. At the opposite end of
the size spectrum, potential large scale economies may exist
which could differentially benefit the very largest firms.
2. Economies of Process Specialization. Treatment
of wastes from different processes may be significantly differ-
ent, creating economies of process specialization which may
result in some firms changing the mix of specialty steel products
they offer.
3. Economies of Size in Financing. Institutional
factors may create economies of size in financing, allowing
large firms to obtain funds at lower cost than small firms, or
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IV -
giving them access to sources of funds which are not available
to the smaller firms.
4 . Varying Degrees o£ Competition in Selling MarKets -
The specialty steel industry's output consists of customized
"made-to-order" products (about one-third of the industry's ship-
ment tonm\ge), and noncustomized "standard specification" iteirs.
The "made-to-order" market is assumed to be less competitive 'Jan
the "standard specification" product market, firms or industry
segments having relatively high unit costs of pollution abatement
are believed to be more capable of passing these costs through to
"made-to-order" customers than in their more "standardized" pro-
ducts. Hence, firms or industry segments more heavily oriented
towards customized products may be in a better position to adjust
to pollution abatement costs.
(e) Closure
_ Criteria
Severely impacted individual firms may close as a result
of the economic adjustments required by the abatement controls.
In assessing the probability of such closures, the study
examines likely trends in industry segment profitability, in-
cluding cyclical impacts and changes in competitive conditions
(e.g. restrictions on imports). Available data pertaining to
the profitability, debt and equity structure, specific product
specializations, and other relevant operating characteristics
of individual firms are also analyzed in industry segments where
closures are considered a significant possibility. The costs
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IV - 9
of the required investment are analyzed for these firms in rela-
tion to corporate cash flow and previous levels of capital
expenditure where these data are available. In general, a 10%
return on long-term capital invested (debt plus equity) is used
as a guideline minimum return necessary to attract major new
capital investment.
Such establishments, if any, viewed as likely to close as
a result of the BPT or BAT guidelines are assumed to make such a
decision and act on it at the time of the issuance of the regu-
lations. Such action would likely result in closing when com-
pliance with the applicable guidelines was required, but might
result in a somewhat earlier closure if cyclical conditions in
the intervening period are viewed as unfavorable. In the case
where the BAT guidelines are judged as likely to precipitate
closure, given the present size and product mix of the esta-
blishment, the additional alternative of altering these plant
characteristics may be feasible. In other cases, plants whose
actual closure decision results from the BAT guidelines may
terminate operations at the compliance date for the BPT regula-
tions, rather than undertake the BPT investment in order to con-
tinue operations for a limited time period.
(f) Other
Impacts
Impacts transmitted to other portions of the economy are
also considered including foreign trade effects and impacts on
local economies.
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EXHIBIT IV-1
ENVIRONMENTAL PROTECTION AGENCY
EXAMPLES OF MEASURES OF FUTURE IMPACT
Alternative
Case 1
Case 2
Impact Condition:
Small Establishments
Close
Impact Base Measure:
Present Number
of Establishments
Baseline forecast
indicates growth
in number of small
establishments.
Growth does not oc-
cur because plans
are changed in re-
sponse to regula-
tions. This mea-
sure estimates
actual closures.
Impact Base Measure:
Baseline Number of
Establishments
Because growth does
not actually occur,
this measure over-
states real world
closures. The dif-
ference between the
higher baseline es-
timate and the
present number of
plants represents
a foregone oppor-
tunity for the ex-
pansion of small
business, rather
than closures.
Baseline forecast indi-
cates decline in number
of small establishments.
Part of the decline is
attributable to estab-
lished economic trends
and not to the effluent
guidelines. Thus, using
the present number of
shops as a base would
overestimate impact. In
addition, the initial
rate of decline in the
number of establishments
is likely to accelerate
due to the effect of
the publication of the
guidelines on firms which
otherwise would have
closed at a later date.
The real world closure
impact is best esti-
mated by the baseline
estimate, since it iso-
lates the closures due
to the impact of the ef-
fluent guidelines from
closures which occur as
a result of already
established economic
trends. However, using
the baseline forecast
will lead to an over-
estimate of the number
of closures in the first
year of enforcement.
Publication of the effluent
guidelines will accelerate
closures which would have
resulted later in the period
as a result of already es-
tablished trends, making
these appear to be due to
the regulation.
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V - TECHNICAL AND COSTS DATA BASE
A - SPECIALTY STEEL PRODUCTION PROCESSES
Detailed discussions of the processes that are used to pro-
duce specialty steels and that come under the purview of the
proposed and interim final effluent guidelines can be found in
"Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Alloy and Stainless
Steel Segment of the Iron and Steel Manufacturing Point Source
Category", dated June 1975. Brief discussions of these processes
are found in the Appendix of this report.
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V - 2
B - SPECIALTY STEEL WATER POLLUTION
ABATEMENT COSTS
INTRODUCTION
The total specialty steel costs to install and operate water
pollution abatement facilities were computed froir the costs de-
veloped for model plants. For each model plant, representative
of a specified segment of the industry, total plant (establish-
ment) costs were based on the costs of the individual processes
defining that plant. The costs for each model plant were ex-
tended to derive total costs for the industry segment. The total
segment costs were summed to provide industry totals. This
methodology is more fully discussed in the following sections.
In fulfillment of Contract No. 68-01-1527, Datagraphics,
Inc., the technical contractor, submitted to the EPA a draft of
"Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Alloy and Stainless
Steel Segment of the Iron and Steel Manufacturing Point Source
Category," dated June 1975. This Development Document presents
the BPT and BAT guidelines and limitations; discusses control and
treatment technology; and presents unit costs of compliance with
the proposed guidelines and limitations employing the recommended
methodologies. Although these costs will be briefly discussed,
the reader is referred to the Development Document for a more
complete explanation of the costs, their development and their
limitations.
-------
V - 3
PROCESS
COSTS
For the purpose of establishing effluent limitations guide-
lines and determining the attendant costs of compliance, Data-
graphics categorized the production processes found in this in-
dustry. The 16 categories selected include melting, molten metal
disposition, hot forming, cleaning and finishing operations. The
specific categories chosen are listed in Exhibit V-l. For stated
production levels expressed in tons per day, BPT and BAT incremen-
tal water pollution abatement investment costs per annual ton
were developed by Datagraphics for each category. For each cat-
egory, BPT and BAT incremental operating costs of these treat-
ment facilities per ton processed by operations assigned to that
category were also developed by Datagraphics. The investment and
operating costs (originally expressed in August 1971 dollars and
updated to December 1975 dollars) and the tonnages on which they
were based, by category, to comply with BPT and BAT requirements,
are shown in Exhibits V-2 and V-3 respectively.
The following points should be noted with respect to the
costs developed by Datagraphics, Inc. and provided to A. T.
Kearney, Inc. by EPA for use in this study. These costs are
presented in Exhibits V-2 and V-3.
Within each of the 16 process categories,
the age and specific type of facility are
deemed not to significantly influence
costs.
The feasibility and influence on costs of
commingling different waste streams emanating
from two or more different process categories
is not discussed.
-------
V - 4
Important elements of the total investment re-
quired to affect pollution abatement in the
recommended manner have not been included in
the Datagraphics cost estimates. As stated in
their Development Document:
"Construction costs are dependent upon
many different variable conditions and
in order to determine definitive costs
the following parameters are established
as the basis of estimates. In addition,
the cost estimates as developed reflect
only average costs.
a. The treatment facilities are contained
within a 'battery limit1 site location
and are erected on a 'green field1 site,
Site clearance costs such as existing
plant equipment relocation, etc.( are
not included in cost estimates.
b. Equipment costs are based on specific
effluent water rates. A change in
water flow rates will affect costs.
c. The treatment facilities are located
in close proximity to the steelmaking
process area. Piping and other util-
ity costs for interconnecting utility
runs between the treatment facilities
battery limits and process equipment
areas are not included in cost esti-
mates.
d. Sales and use taxes or freight char gat.
are not included in cost estimates.
e. Land acquisition costs are not included
in cost estimates.
f. Expansion of existing supporting utili-
ties such as sewage, river water pump-
ing stations, and increased boiler
capacity are not included in cost
estimates.
g. Potable water, fire lines and sewage
lines to service treatment facilities
are not included in cost estimates.
-------
V - 5
h. Limited instrumentation has been included
for pH and fluoride control, but no auto-
matic samplers, temperature indicators,
flow meters, recorders, etc., are included
in cost estimates.
j. The site conditions are based on:
1. No hardpan or rock excavation,
blasting, etc.
2. No pilings or spread footing
foundations for poor soil con-
ditions.
3. No well pointing.
4. No dams, channels, or site
drainage required.
5. No cut and fill or grading of
site.
6. No seeding or planting of grasses
and only minor site grubbing and
small shrubs clearance; no tree
removal.
k. Controls buildings are prefabricated build-
ings, not brick or block type.
1. No painting, pipe insulation, and steam or
electric heat tracing are included.
m. No special guardrails, buildings, lab
test facilities, signs, docks are included.
Other factors that affect costs but cannot be
evaluated:
a. Geographic location in the United States.
b. Metropolitan or rural areas.
c. Labor rates, local union rules, regula-
tions, and restrictions.
d. Manpower requirements.
e. Type of contract.
f. Weather conditions or season.
g. Transportation of men, materials, and
equipment.
-------
h. Building code requirements.
j. Safety requirements."
The cost estimates used in this study to assess sconovaic
impact are subject to the above assumptions and qu«aJ.ificatir;ig,„
MODEL
PLANTS
In order to use the process category investn^nt c.nc opercas-
ing costs in a meaningful manner, the development of raodil r.-lants
was agreed upon with EPA and Datagraphics, Inc. Th.i iiiocel plants
were developed to be representative of particular t-.^guintito of the
specialty steel industry. This approach allows the various proc-
esses found in any given segment to be sized relative to one
another in terms of capacities. This in turn permits the deter-
mination of total model plant investment, operating and total an-
nual costs reflective of the costs actual segment establishments
will face.
The 87 establishments studied in this assessment were seg-
mented based on overall size, product mix, precedes and their
capacities. The segments developed for the SIC'3 und^r study and
the number of establishments in each are shown in Table V--1 on
the following page.
-------
V - 7
Table V-l
Industry Segmentation for Purposes of Model
Plant Development and the Number of
Establishments in Each
SIC
3312
3312
3312
3312
3312
3315
3315
3316
3316
3317
3317
Large
Small
Large
Medium
Small
Large
Small
Large
Small
Large
Small
Model Plant Description
Flat Rolled Product Mill
Flat Rolled Product Mill
Section Product Mill
Section Product Mill
Section Product Mill
Wire Drawer
Wire Drawer
Sheet, Strip and Bar Processors
Sheet, Strip and Bar Processors
Pipe and Tube Makers
Pipe and Tube Makers
Number
3
4
7
4
7
5
9
2
4
8
34
Total
87
Source: Exhibits 1-5 and 1-6.
Exhibits 1-5 and 1-6 detail this segmentation showing spe-
cific establishments in each segment and their respective numbers
of employees.
As available, published information was used to ascertain
the processes and their capacities for each establishment in the
11 industry segments. From these data and information furnished
by knowledgeable industry personnel, model plant specifications
(processes by type and annual capacity) were developed to be
representative of the establishments in each segment. The model
plants so developed are not meant to reflect the actual config-
uration of any one establishment. Each model plant was developed,
however, so that an actual plant of the specified configuration
could exist. The product mix of all establishments in any given
-------
V -
segment is also reflected in the product mix of the modal
plant.
The configurations of all model plants are found in Exhibit
V-4. Capacities are expressed in terms of input product tons.
Input product tons are defined as the number of different to:u-.
entering a given process one or more times. Thus, input pr
-------
V - 9
by the annual input process ton capacity.
2. Total process operating cost was derived by multi-
plying the annual input process ton capacity by the unit operat-
ing cost reported in either Exhibit V-2 or V-3.
3. The individual total process investment and oper-
ating costs were summed to give their respective totals for each
model plant.
The results of the calculations are shown in Exhibits V-5
and V-6. Exhibit V-5 gives only the BPT costs for SIC 3312.
For SIC's 3315-7, both BPT and BAT costs are given, as the meth-
odologies recommended for BPT implementation will also result
in compliance with BAT limitations. Exhibit V-6 presents the
BAT costs for SIC 3312.
INDUSTRY
COSTS
(a) Investment
Cost
Total costs for each SIC were developed from the model plant
total investment and operating costs. Total industry investment
costs by SIC, for both BPT and BAT, were determined by extending
the model plant costs by the appropriate number of establishments,
These are shown in Table V-2 on the following page.
-------
V - 10
Table V-2
BPT and BAT Industry Investment Costs
Total Investment
($ OOO's)
SIC
3312
3315
3316
3317
Description
Integrated Producers
Wire Drawers
Sh<;et, Strip and Bar Processors
Pipe and Tube Makers
BPT
$123,829
5,733
7,264
4,412
BAT
$59,313
_
-
$141,238 $59,313
Source: Exhibits V--9 and V-10.
(b) Operating
Cost
Operating costs are direct costs. They vary directly with
production. Because economic impact will be assessed on the
basis of tonnages sold, total operating costs per "ship" ton
were calculated. Costs per "ship" ton for each model plant were
computed by dividing its total operating cost (see Exhibits V-5
and V-6) by its annual "ship" capacity. Model plant total an-
nual "ship" capacities, shown in Exhibit V-7, were developed
from the appropriate product mixes and process yields. The
process yields as used in these calculations are shown in Ex-
hibit V-8.
The BPT and BAT total operating costs per "ship" ton for
SIC 3312, by segment, are displayed in Exhibits V-9 and V-10
respectively. BPT total operating costs for'SIC's 3315-7 are
found in Exhibit V-9. There are no incremental BAT operating
-------
V - 11
costs for these three SIC's as BPT treatment complies with the
BAT regulations.
(c) Annual Cost per
"Ship" Ton
Total costs per "ship" ton are dependent upon total annual
costs. Total annual costs are comprised of two components:
fixed annual charges that are incurred regardless of operating
levels; and those operating costs that are directly related to
operating levels. For each model plant, total cost per "ship"
ton calculations were performed for four assumed capacity util-
izations: 60%, 75%, 90% and 100%.
In each case fixed annual charges were added to the total
operating costs for one year. This sum was divided by the as-
sumed annual shipments to determine total annual costs per ship
ton. Using a capital recovery factor for 10% interest for 10
years, the total investment cost was apportioned to an equivalent
annual investment cost. The total operating costs for one year
are the total unit operating costs per "ship" ton multiplied by
the assumed annual shipments.
The results of these computations to determine total annual
cost per ship ton for each model plant are shown in Exhibits V-9
and V-10. Exhibit V-9 presents the BPT costs for all segments
and the appropriate SIC totals and weighted averages. Exhibit
V-10 presents the same information for SIC 3312 only as it con-
tains all segments incrementally affected by BAT regulations.
-------
V - 12
The weighted average incremental total annual cost per ship
ton, by SIC, for the assumed capacity utilizations is shovn ir.
Table V-3.
Table V-3
Incremental SIC Total Annual Cost per
Ship Ton as a Function of Capacity
Utilization
SIC
($/Ship Ton)
Description 6
3312
331
331
331
331
331
2
2
5
6
7
Integrated
Integrated
Integrated
and BAT
Wire
Producers - BPT
Producers - BAT
Producers - BPT
Drawers
Sheet, Strip
Processors
Pipe
BPT
and Tube
and BAT
- BPT and BAT
and Bar
- BPT and BAT
Makers -
$14
6
20
36
7
8
0%
.49
.14
.63
.00
.92
.76
70%
$12
5
17
29
6
7
.22
.06
.28
.59
.90
.16
90% if;-"?.
$10,
4.
15.
25.
6.
6.
72 SS.5--
33 3.9";
05 13. Si
31 23.1?
23 5.20
11 5.53
Source: Exhibits V-9 and V-10.
-------
EXHIBIT V-l
ENVIRONMENTAL PROTECTION AGENCY
CATEGORIES USED FOR DEVELOPMENT
OF PRODUCTION PROCESS UN.IT COSTS
I. Basic Oxygen Furnace (Wet Air Pollution Controls)
II. Vacuum Degassing Subcategory
III. Continuous Casting and Pressure Slab Molding
IV. Hot-Forming (Primary)
V. Hot-Forming (Section)
VI. Hot-Forming (Sheet and Strip)
VII. Hot-Forming (Plate)
VIII. Sulfuric Acid Batch Pickling
IX. Combination Acid Pickling (Continuous)
X. Combination Acid Pickling (Batch Pipe and Tube)
XI. Combination Acid Pickling (Other Batch)
XII. Kolene Scale Removal
XIII. Hydride Scale Removal
XIV. Continuous Alkaline Cleaning
XV. Wire Coating and Pickling
XVI. Cold Rolling (Recirculation)
Source: Datagraphics, Inc.
-------
KffllBXT V-2
ENVIRONMENTAL PROTECTION AGENCY
BPT INCREMENTAL WASTE WATER TREATMENT INVESTMENT
AND OPERATING COSTS BY CATEGORY
I.
II.
III.
IV.
V.
VI.
VII,
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.
XV.
XVI.
Basic Oxygen Furnace (Wee Air
Pollution Controls)
Vacuum Degassing Subcategory
Continuous Casting and Pressure
Slab Molding
Hot -Forming (Primary)
Hot-Forming (Section)
Hot-Forming (Sheet and Strip)
Hot-Forming (Plate)
Sulfuric Acid Batch Pickling
Combination Acid Pickling
(Continuous)
Combination Acid Pickling (Batch
Pipe and Tube)
Combination Acid Pickling
(Other Batch)
Kolene Scale Removal
Hydride Scale Romoval
Continuous Alkaline Cleaning
Wire Coating and Pickling
Cold Rolling (Recirculation)
Base Tonnage
(Tons per Day)
2,800
520
600
2,364
360
2,041
528
250
1,384
21
144
29
60
144
547
2,493
Investment Cost
($ /Annual Ton) (2)
$ 0.438
3.120
3.903
2.6C2
11.248
8.324
34.667
13.696
3.903
25.574
5.652
18.509
23.489
7.219
8.044
0.102
Notes: (1) All costs expressed in December 1975 dollars.
(2) Annual Tons - Base Tonnage x 365.
(3) Net saving relative to current disposition of waste water.
Source: Datagraphics, Inc.
Operating Cost
($/Ton) .. __
$ 0.116
0.263
0.101
0.183
0.417
0.536
2.244
0.827
0.669
0.191
0.491
1.142
0.286
0.891
0.009
-------
EXHIBIT V-3
ENVIRONMENTAL PROTECTION AGENCY
BAT INCREMENTAL WASTE WATER TREATMENT INVESTMENT
AND OPERATING COSTS BY CATEGORY
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
xrv.
XV.
XVI.
Basic Oxygen Furnace (Wet Air
Pollution Controls)
Vacuum Degassing Subcategory
Continuous Casting and Pressure
Slab Molding
Hot-Forming (Primary)
Hot-Forming (Section)
Hot-Forming (Sheet and Strip)
Hot-Forming (Plate)
Sulfuric Acid Batch Pickling
Combination Acid Pickling
(Continuous)
Combination Acid Pickling (Batch
Pipe and Tube)
Combination Acid Pickling
(Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Cold Rolling (Recirculation)
Base Tonnage
(Tons per Day)
2,800
520
600
2,364
360
2,041
528
250
1,384
21
144
29
60
144
547
2,493
Investment Cost
($/Annual Ton) (2)
$ 0.343
2.266
0.190
2.980
12.871
6.645
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
Operating Cos
($/Ton)
$0.022
0.289
0.011
0.133
0.435
0.302
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
Notes: (1) All costs expressed in December 1975 dollars.
(2) Annual Tons - Base Tonnage x 365.
Source: Datagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
SPECIALTY STEEL INDUSTRY SEGMENTS: MODEL PLANT CONFIGURATIONS,
PROCESSES AND ANNUAL INPUT PRODUCT TON CAPACITIES
Number of Establishments
Processes
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten
Teeming
pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulfuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extn-ding
Drawing-Wire
Pipe and Tube forming
(Thousands of Net Tons)
Integrated Producers - SIC 3312
Flat
Rolled Products
Large
Small
Without With
Cupol- Cupola
2
750
150
300
450
300
650
600
350
625
1
750
500
350
1,250
1,200
900
25
750
40
800
4
80
80
75
35
40
12
30
25
4
30
Section proH»ct:
Small
Large Medium Rollins Forglne
7 A 2 5
150 50 15 12.5
30
150 50 15 12.5
12
145 30 14
110 13 7 10.5
25
40 12
10 10
20 6
15
40 4
3,5 7
Wire Drawers
SIC •*?!.;
Large Small
5 9
8.3 L.I
8.3 1.1
Sheet, Strip and
Bar Processors
SIC 3316
LargeSmall
Pipe and Tube
Makers
SIC 3317
Large' Small
135 45
16
135 45
8.1 i.l
15
0.9
td
H
H
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: LARGE FLAT ROLLED WITHOUT CUPOLA
Investment Cost Annual Operating Cost
Annual Input Capacity Per Annual
Product Tons
Process Tons Input Process Ton Total Unit(l) Total(^)
processes 1000's of Tons) (OOO's of Tonsl " ($/Ton) ($ x OOO's) ($/Ton) ($ x OOO's)
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs /Blooms /Billets
Secondary Reduction
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
(Hot)
750
150
300
450
300
650
750 $ - $ - $ - $ .
150 3.43 514 0.265 40
300
450 2.92 1,314 0.101 45
600 3.01 1,806 0.183 110
650 8.79 5,714 0.536 348
Sulphuric Acid Batch Pickling
Combination Acid
Combination Acid
(Batch Pipe and
Combination Acid
Pickling (Continuous)
Pickling
Tube)
Pickling (Other Batch)
Kolene Scale Removal
600
350
1,800 2.35 4,230 0.827 1,489
350 4.56 1,596 0.491 172
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and
Finishing
Cold Rolling and
Pickling
Drawing
625
Forging and Extruding
Drawing-Wire
1,875 0.08 150 0.009 17 $
00
».
pipe and Tube Forming i_i
* *
Notes: (1) Values are found in Exhibit
(2) Process Ton Capacity x Unit
V-2.
Cost.
Totals $15.324 $2f221 O
*-*
5
I— I
H
<
\
Source: Datagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT COSTS
SIG 3312 - INTEGRATED PRODUCERS: LARGE FLAT ROLLED WITH CUPOLA
Armviai inpuc
Prodm £ 7ons
Procssses {OOO's ^jc Tr-r^) ;
Melting Operations
Electric Arc
30F
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/ Cogging- Slabs /Blooms /Billats
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing- Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit
(2) Process Ton Capacity x Unit
Source: Datagraphis, Inc.
750
500
350
19250
1,200
900
25
750
40
800
V-2.
Cost.
Ca-QELcicy
Pr-3c23S Tens
/5€J
500
350
1,250
2,400
900
75
2,250
40
2,400
.CnvestiBsnc Cost
?s£ Amyaai
In^ut iiGc^ss Ton Tocai
S - $ -
0,58 290
1.73 4,152
7.72 6,948
14.82 1,112
2.14 4,815
10.87 435
0.07 168
Totals HJUIIg
Annual Ocaratinc Cost
feit(l) Total(2)
(i/Ton) ($ x OOO's)
$ - $ -
0.116 58
0.183 439
0.536 482
-0.524 -39
0.827 1,861
0.491 20
0.009 22
Pi £r
.§?»M1 «"« i
" !D K
Jtx
IH
o
rti<
i
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS; SMALL FLAT ROLLED
Processes
Annual Input Capacity
Product Toni> Process Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Melting Operations
Electric Arc 80 80
30F
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting 80 80
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets 75 150
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip 35 35
Plate 40 40
Scale Removal
Sulphuric Acid Batch Pickling 12 36
Combination Acid Pickling (Continuous) 30 90
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch) 25 75
Kolene Scale Removal 4 4
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 30 90
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
5.83
5.23
28.29
65.01
19.87
7.78
4.90
27.31
0.26
Total
($ x OOP's)
$ -
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
466
784
990
2,600
715
700
368
109
23
0.101
0.183
0.536
2.244
-0.524
0.827
0.191
0.491
0.009
8
27
19
90
-19
74
14
2
Totals
OQ
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphlcs, Inc.
10
t-h
-------
ENVIRONMENTAL PROTECTION AGENCY
SIC 3312
BPT
MODEL PLANT
- INTEGRATED PRODUCERS:
Annual Input
Product Tons
Processes (000 '
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging- Slabs/Blooms /Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit
(2) Process Ton Capacity x Unit
s of Tons)
150
30
150
145
110
25
40
10
20
15
40
V-2.
Cost.
Capacity
Process Tons
COSTS
LARGE SECTION PRODUCTS
Investment Cost Annual OperatinE Cost
Per Annual
Input Process Ton Total Unit(l) Total(2)
(OOO's of Tons) ($/Ton) ($ x OOO's) ($/Ton) ($ x OOO's)
150
30
150
290
110
75
120
10
20
45
120
$ - $ - $ - $ -
6.52 196 0.265 8
-
4.03 1,169 0.183 53
12.07 1,328 0.417 46
14,82 1,112 -0.524 -39
4.06 48? 0.191 23
18.93 189 0.491 5
24.36 487 1.142 23
14.59 657 0.891 40
0.23 23 0.009 1
•r)
P>
Totals $5.653 $160 OQ
* ' * :=r — ^j
•P*
o
f-
M
S
£*
M
cti
M
H
<;
i
U1
Source: Datagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT
SIC 3312 - INTEGRATED PRODUCERS:
COSTS
MEDIUM SECTION PRODUCTS
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Melting Operations
Electric Arc 50 50
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming 50 50
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets 30 60
Secondary Reduction (Hot)
Forging
Rolling
Sections 13 13
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch) 12 36
Kolene Scale Removal 10 10
Hydride Scale Removal 6 6
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 4 12
Forging and Extruding 3.5 3.5
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
($ x OOP's)
Unit(l)
($/Ton)
$ -
Total(2)
($ x OOP's)
7.55
28.37
6.58
18.93
39.42
0.58
Totals
453
369
0.183
0.417
11
237
189
237
0.191
0.491
1.142
0.009
7
5
7
U M
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: SMALL SECTION PRODUCTS. ROLLING
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Annual Operating Cost
15
15
14
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Bille ts
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
15
15
28
Per Annual
Input Process Ton
($/Ton)
$ -
Total
($ x OOP's)
$ -
Unit(l)
($/Ton)
$ -
Total(2)
($ x OOP's)
$ -
10.25
36.35
287
254
0.183
0.417
Totals
OP
cr
o
HI
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS; SMALL SECTION PRODUCTS, FORGING
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
($ x OOP's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
Melting Operations
Electric Arc 12.5
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming 12.5
Pressure Casting
Continuous Casting
Primary Reduction
Forging 12
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections 10.5
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging anil Extruding
Drawing-Wire
Pipe and Tube Forming
Notes: (I) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
12.5
12.5
12
10.5
30.90
324
0.417
P>
OQ
(0
Totals
H
i
ui
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3315 - WIRE DRAWERS: LARGE
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
($ x OOP's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch pickling
Combination Acid pickling (Continuous)
Combination Acid pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal 8.3
Continuous Alkaline Cleaning
Wire Coating and Pickling 8.3
Finishing
Cold Rolling and Drawing
Forgfng and Extruding
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
8.3
24.9
$34.63
18.49
$287
460
$1.142
0.891
$ 9
22
Totals
•X)
P>
OQ
(D
oo
3
i
Ul
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3315 - WIRE DRAWERS; SMALL
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
($ x OOP's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
Melting Operations
Electric Arc
EOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
1.1
1.1
1.1
3.3
$77.71
41.51
$ 85
137
$1.142
0.891
$1
3
Totals
Notes:
Values are found in Exhibit V-2.
Process Ton Capacity x Unit Cost.
00
vfl
Source: Datagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3316 - SHEET STRIP AND BAR PROCESSORS:
LARGE
Processes
Annual Input Capacity
Product Tons Process Tons
(OOP's of Tons) (OOP's of Tons)
Inve s tmen C Cos t
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
x OOP's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost,
Source: Datagraphics, Inc.
135
405
$4.27
$1,729
$0.827
$335
135
405
0.14
0.009
Totals
o
Hi
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3316 - SHEET STRIP AND BAR PROCESSORS; SMALL
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous) 45 135
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 45 135
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
Per Annual
Input Process Ton
($/Ton)
Annual Operating Cost
Total
(.$ x OOP's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
$6.62
$894
$0.827
$112
0.22
30
0.009
OQ
Totals
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3317 - PIPE AND TUBE MAKERS: LARGE
Annual Input Capacity
Investment Cost
Annual Operating Cost
Processes
Per Annual
Product Tons ^Process Tons Input Process Ton Total Unit(l) Total(2)
(OOP's of Tons) (OOP's of Tons) ($/Ton) ($ x OOP's) ($/Ton) ($ x OOP's)
Melting Operations
Electric Arc
EOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
16
16
$19.05
$305
$0.669
$11
15
15
OQ
Totals
6
K
W
Notes: (I) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost,
Source: Datagraphics, Inc.
O
H
u*
-------
ENVIRONMENTAL PROTECTION AGENCY
BPT AND BAT MODEL PLANT COSTS
SIC 3317 - PIPE AND TUBE MAKERS: SMALL
Processes
Annual Input Capacity
Product Tons Process Tons
Investment Cost
Per Annual
Annual Operating Cost
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Castling
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube) 1
Combination Acid PicHing (Other Batch)
Kclene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming .9
Notes: m Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
(OOP's of Tons) (OOP's of Tons)
Input Process Ton
($/Ton)
Total
($ x 000's)
Unit(l)
($/Ton)
Total(2)
($ x OOP's)
$57.75
$58
$0.669
$i
.9
P>
00
0>
Totals
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: LARGE FLAT ROLLED WITHOUT CUPOLA
Investment Cost
Annual Input Capacity
Processes
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms /Billets
Product Tons
(000 's of Tons)
750
150
300
450
300
Process Tons
(OOO's of Tons)
750
150
300
450
600
Per Annual
Input Process Ton
($/Ton)
$ -
2.49
_
0.14
3.44
Total
($ x OOO's)
$ -
374
_
63
2,064
Annual Operating Cost
Unlt(l)
($/Ton)
$ -
0.289
_
0.011
0.133
Total(2)
($ x OOO's)
$ -
43
_
5
80
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip 650 650 7.02 4,563 0.302 196
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous) 600 1,800 - -
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal 350 350 - -
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 625 1,875 - - - _j; _
Forging and Extruding
Drawing-Wire Totals S7.064 $324
Pipe and Tube Forming
Notes: (I) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
ft
OQ
(D
W
M
H
O
l
CJ\
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: LARGE FLAT ROLLED WITHOUT CUPOLA
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Melting Operations
Electric Arc 750
BOF 500
Cupola 350
Degassing
Disposition of Molten Metal
Teeming 1,250
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets 1,200
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip 900
Plate
Scale Removal
Sulphuric Acid Batch Pickling 25
Combination Acid Pickling (Continuous) 750
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal 40
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 800
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
750
500
350
1,250
2,400
900
75
2,250
40
2,400
1.97
6.16
Total
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Total
($ x OOP's)
Annual Operating Cost
Unit(l)Total(2)
($/Ton) ($ x OOP's)
$ - $- $- $ -
P.46 230 0.022 11
4.728 0.133
5,544 0.302
319
272
»T3
OQ
re
ro
rt
Source: Dacagraphics, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: SMALL FLAT ROLLED
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Total
Annual Ope rat: in a Cost
ikiita) Total(2)
($/Ton) ($ x OOP's)
Melting Operations
Electric Arc 80
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting 80
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets 75
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip 35
Plate 40
Scale Removal
Sulphuric Acid Batch Pickling 12
Combination Acid Pickling (Continuous) 30
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid pickling (Other Batch) 25
Kolene Scale Removal 4
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing 30
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
ou
80
150
35
40
36
90
75
4
90
0,28
6.00
22.58
22
900
790
$ -
0.011
0.133
0,302
$ -
20
11
Totals
$1.712
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
00
ro
u
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: LARGE SECTION PRODUCTS
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Total
($ x OOP's)
Annual Operating Cost
Unit(l)Total(2)
($/Ton) ($ x OOP's)
Melting Operations
Electric Arc
EOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
150
30
15P
145
IIP
25
40
10
2P
15
40
150
30
150
290
110
75
120
10
20
45
120
$ - $ - $ - $ -
4.74 142 0.289 9
4.60
13.82
1,334
1,520
0.133
0.435
39
48
Totals
Notes:
(1)
(2)
Values are found in Exhibit V-2.
Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
P>
00
<
I
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: MEDIUM SECTION PRODUCTS
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per Annual
Input Process Ton
($/Ton)
Total
($ x OOP's)
Annual Operating Cost
Unit(l)Total(2)
($ x OOP's)
($/Ton)
Melting Operations
Electric Arc
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
5C
50
30
13
12
10
6
4
3.5
50
50
60
13
$ -
8.66
32.47
520
422
0.133
0.435
36
10
6
12
3.5
Totals
Notes:
Values are found in Exhibit V-2.
Process Ton Capacity x Unit Cost.
(B
00
X
Source: Datagraphics, Inc.
Cd
M
O
l-f
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: SMALL SECTION PRODUCTS. ROLLING
Processes
Annual Input Capacity
Product TonsProcess Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Melting Operations
Electric Arc 15
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming 15
Pressure Casting
Continuous Casting
Primary Reduction
Forging
Rolling/Cogging-Slabs/Blooms/Billets 14
Secondary Reduction (Hot)
Forging
Rolling
Sections 7
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding 7
Drawing-Wire
Pipe and Tube Forming
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
15
15
28
Per Annual Total
Input Process Ton
($/Ton) ($ x OOP's)
$ -
Annual Operating Cost
Unit(l)Total(2)
($/Ton) ($ x OOP's)
$ -
$-
11.74
41.59
329
291
0.133
0.435
Totals
$620
00
to
-------
ENVIRONMENTAL PROTECTION AGENCY
BAT MODEL PLANT COSTS
SIC 3312 - INTEGRATED PRODUCERS: SMALL SECTION PRODUCTS,
FORGING
Processes
Annual Input Capacity
Product Tons Process Tons
(OOP's of Tons) (OOP's of Tons)
Investment Cost
Per AnnualTotal
Input Process Ton
($/Ton) ($ x OOP1'
Annual Operating Cost
UnitU) Total(2>
($/Ton) ($ x OOP's)
MeItlug Operations
Electric Aic 12.5
BOF
Cupola
Degassing
Disposition of Molten Metal
Teeming 12.5
Pressure Casting
Con t inuous Cas ting
Primary Reduction
Forging 12
Rolling/Cogging-Slabs/Blooms/Billets
Secondary Reduction (Hot)
Forging
Rolling
Sections 10.5
Sheet/Strip
Plate
Scale Removal
Sulphuric Acid Batch Pickling
Combination Acid Pickling (Continuous)
Combination Acid Pickling
(Batch Pipe and Tube)
Combination Acid Pickling (Other Batch)
Kolene Scale Removal
Hydride Scale Removal
Continuous Alkaline Cleaning
Wire Coating and Pickling
Finishing
Cold Rolling and Drawing
Forging and Extruding
Drawing-Wire
Pipe and Tube Forming
12.5
12.5
12
10.5
$ -
$ -
$ -
$-
35.37
371
0.435
Totals
Notes: (1) Values are found in Exhibit V-2.
(2) Process Ton Capacity x Unit Cost.
Source: Datagraphics, Inc.
(B
09
SD
O
Hi
-------
ENVIRONMENTAL PROTECTION AGENCY
Produc t
Primary Forms
Ingots
Blooms /Bars
Forgings
Plate
Hot and Cold Rolled Sheet
and Ship
Hot Rolled Section Product
Cold Rolled Section Product
Wire
Cold Processed Sheet,
Strip and Bars
Pipe and Tube
Total - Model Plant
Number of Establishments
Total _ Industry Segment
MODEL PLANT SHIPMENT PRODUCT MIX
(Thousands of Net Tons)
Integrated Producers-SIC 3312
Flat Rolled Products . „ ,
Large Small Section Products
witnout With Large Medium small
Cupola Cupola Rolling Forging
3.5
15
9
3
36
553 708 . 27
50 7 1 9
6.2
36 3 »
13
553 708 63 99 37 9.7 9
2 15 732 5
1,106 708 315 693 111 19.4 45
Sheet Strip and Pipe and
Wire Drawers Bar processors Tube Makers
SIC 3315 SIC 3316 SIC 3317
Large Small Large Small Large Small
7.9 1
118 39
15 .9
7.9 1 118 39 15 .9
5 9 2 4 8 3&
39.5 9 236 156 120 30.6
Sources: Datagraphics, Inc.; and A. T. Kearney, Inc.
w
M
H
-------
EXHIBIT V-8
ENVIRONMENTAL PROTECTION AGENCY
PROCESS YIELDS AS USED TO DETERMINE
MODEL PLANT TOTAL ANNUAL SHIP CAPACITIES
Process or Operation Yield (1)
All Melting Operations 100.0%
Teeming 90.0
Casting - Pressure or Continuous 94.5
Primary Reduction 75.0
Secondary Reduction 90.0
All Scale Removal Processes 98.5
Cold Rolling 88.5
Drawing 88.5
Pipe and Tube Making 95.0
Notes: (1) Defined as output relative to input product ton
Capacity.
Sources: Datagraphics, Inc., and A, T. Kearney, Inc.
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BPT TOTAL INVESTMENT COSTS AND TOTAL ANNUAL COSTS
PER SHIP TON FOR SIC 3312
Industry Segment
Large Flat Products
Without Cupola
Large Flat Products
With Cupola
Small Flat Products
Large Section Products
Medium Section Products
Number
of Real
Establish-
ments in
Segment
2
1
4
7
4
Model Capacities*1)
Ship-
R.S.T. ment
(103 NT) (103 NT)
750
1,250
80
150
50
553
708
63
99
37
Model BPT Costs*2)
total
Invest-
ment
($•103)
$15,324
17,920
6,755
5,653
1,492
Total
Operating
($/NT
Ship)
$4.02
4.02
3.43
1.62
0.95
Total
Segment
Ship
Capacity
(103 NT) (3)
1,106
708
252
693
148
Total
Invest-
ment (4)
($•103)
$30,648
17,920
27,020
39,571
5.968
Industry Segment
Total Annual Cost/!
60Z
Ship
Capacity
$11.54
10.88
32.51
17.11
11.89
75Z
Ship
Capacity
$10.03
9.51
26.70
14.01
9.70
Costs
Ship Ton ($/
90%
Ship
$ 9.03
8.60
22.82
11.95
8.24
'NTW5).
loot
Ship
$ 8.53
8.14
20.88
10.91
7.51
Small Section Products -
Rolled
Small Section Products -
Forged
Totals and Composites
15
12.5
9.7
541 0.82
324 0.44
19.4
45
1,082 15.95 12.92 10.91
1.620 10.20
8.25 6.95
9.90
6.30
2.971.4 $123.829 $14.49 $12.22 $10.72 $ 9.96
Notes: (1) See Exhibits V-5, V-7 and V-8.
(2) Coats aa provided by Datagiaphlcs, Inc. through the EPA. (See Exhibit V-5.)
(3) Colum (t) x Colum (3).
(4) Column (I) x Column (4).
(5) [(Column <4) x ( Crf (101. 10 years) - 0.16275 JJ / ( Column (3) > appropriate percantage ) ] + Col
(5).
0<5
fl>
|S>
-------
ENVIRONMENTAL PROTECTION AGENCY
SIC
3315
3315
3315
3316
3316
3316
3317
3317
3317
Industry
Large Wire
Small Wire
Totals
Segment
Drawers
Drawers
and Composites
Large Sheet, Strip and
Bar Processors
Small Sheet, Strip and
Bar Processors
Totals
Large Pipe
Makers
Small Pipe
Makers
Totals
and Composites
and Tube
and Tube
and Composites
Number
of Real
Establish-
ments in
Segment
5
14
2
_4
6
8
34
42
INCREMENTAL BPT TOTAL INVESTMENT
PER SHIP TON FOR
COSTS AND TOTAL ANNUAL COSTS
SIC's 3315-7
... Model BPT Costs <2>
Model Capacities d) Total
Ship- Invest-
Input ments ment
(103 NT) (103 NT) ($-103)
8.3 7.9 $747
1.1 1.0 222
135 118 $1,786
45 3? 924
16 15.0 $ 305
1 .9 58
Total
Operating
($/NT
Ship)
$3.92
4.00
$2.87
2.90
$0.73
1. 11
Total
Segment
Ship
Capacity
39.5
9.0
48.5
236
156
m
120
30.6
150,6
Industry Segment
Total
Invest-
„ ment(4)
») ($ -1Q3)
$3,735
1.998
$5.733
$3,572
JI.692
$7.264
$2,440
1.972
$4.412
Costs
Total Annual Cost/Ship Ton ($/NT(5)
601
Ship
Capacity
$29.57
64.22
$36.00
$6.98
9.33
$7.92
$6.25
18.59
$8.76
75%
Ship
Capacity
$24.44
52.17
$29.59
$6.15
8.04
$6.90
$5.14
15.09
$7.16
901
Ship
Capacity
$21.02
44.14
$25.31
$5.61
7.18
$6.23
$4.41
12.76
$6.11
100%
Ship
Capacity
$19.31
40.13
$23.17
$5.33
6.76
$5.90
$4.04
11.60
$5.58
Notes: (1) See Exhibits V-8, V-10 and V-ll.
(2) Costs as provided by Datagraphics, Inc. through the EPA. (See Exhibit V-8.)
(3) Column (1) x Column (3).
(4) Column (I) x Column (4).
(5) [(Column (4) x [Crf (101, 10 years) - 0.16275]) / (Column (3) x appropriate percentage)!
Column (5)
•xl
TO Pd
o
hh
N5
W
M
Hi
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BAT TOTAL INVESTMENT COSTS AND TOTAL ANNUAL COSTS
PER SHIP TON FOR SIC 3312
Industry Segment
Large Flat Products
Without Cupola
Large Flat Products
With Cupola
Small Flat Products
Large Section Products
Medium Section Products
Small Section Products -
Rolled
Small Section Products -
Forged
Total* and Composites
Number
of Real
Establish-
ments in
Segment
2
1
4
7
4
2
_5
12=
Model BAT Costs <2>
Model Capacities Total
R.S.T.
(103 NT)
750
1.250
80
150
50
15
12.5
Ship- Invest-
ments (1) ment ,
(103 NT) ($ x UP)
553 $ 7,064
708 10.502
63 1,712
99 2,996
37 942
9.7 620
9 371
Total
Operating
($/NT
Ship)
$0.59
0.85
0.51
0.97
0.38
'
0.72
0.56
Total
Segment
Ship
Capacity
<105 NT)<3)
1,106
708
252
693
148
19.4
45
2.971.4
Industry Segment
Total
Invest-
mentlj)
($ x 103)
$14,128
10.502
6.848
20,972
3,768
1.240
1,855
359,313
Costs
Total Annual Cost/Ship Ton (S/NTH5)
60Z
Ship
Capacity
$4.05
4.87
7.88
9.18
7.29
18.06
11.74
$6.14
75Z
Ship
Capacity
$3.36
4.07
6.41
7.54
5.90
14.59
9.51
$5.06
90* 100Z
Ship Ship
Capacity Capacity
$2.90 $2.67
3.53
5.42
6.44
4.98
12.28
8.01
$4.33
3.26
4.93
5.90
4.52
11.12
7.27
$3.97
-6, V-7 J
Notes: (I) See Exhibits V-6, V-7
-------
VI - IMPACT ANALYSIS
A - BASELINE INDUSTRY FORECAST
A baseline forecast has been developed to assist in deter-
mining the economic impact of the proposed effluent guidelines
on the specialty steel industry. This forecast assesses indus-
try conditions in the absence of environmental controls, allow-
ing the impacts arising from the enforcement of the effluent
guidelines to be measured against this base.
MARKET
CONDITIONS
The key influences on market conditions facing domestic
specialty steel producers are end-user demand for specialty
steel products, the availability of competing imports, and trends
in exports.
(a) End-User
Demand
The major end-use markets for specialty steel products were
identified in Chapter I. Growth projections for these industries,
published by Chase Econometrics, Predicasts, tho U.S. Industrial
Outlook, and the U.S. Department of Labor's "The Structure of
the U.S. Economy in 1980 and 1985," were surveyed and assessed.
Major variances exist between the forecasts emanating from these
diverse sources; therefore, a relatively low level of confidence
should be placed in the growth projections.
-------
VI - 2
The industries using each of the three grades of specialty
steel are highly cyclical in nature, experiencing major year-to-
year swings in output. Therefore, projected growth rates for
these industries may be strongly influenced by the particular
years used as the base and final years of the forecast period.
In forming its own growth projections, Kearney has used the
1972-1974 three-year output averages as a base in order to re-
duce cyclical effects.
Table VI-1 below summarizes the long-range growth rates
projected for each of the major markets for stainless steel,
and the resulting weighted average growth rate projected for
all end-using industries.
Table VI^l
Projected Long-Term Growth of Industries
Which Are End-Users of Stainless Steel -
1972-1985
Market
Industrial Machinery,
Equipment and Tools
Automotive
Domestic and Commer-
cial Equipment
Construction and
Equipment
Appliances, Cutlery
and Utensils
Others
Estimated Percent of
Total End-Use Consumption
of Stainless Steel
(1972-1974 Average)
26.5%
13.5
11.5
11.0
11.0
26.5
Projected Average Annual
Growth in Output (Percent-
1972-1974
Average to 1980 1980 to
6.0%
4.0
7.5
4.0
5.0
4.0
3.5%
4.0
5.0
5.0
5.0
3.5
Average (approximately)
100.0%
5.0%
4.0%
-------
VI - 3
The quantity of stainless steel required for a given level
of end-users' output is projected to decline by about 1% per
year between the 1972-1974 average and 1980, and about 1/2% be-
tween 1980 and 1985, reflecting historical and projected steel
market trends, technological improvements, and probable impacts
of governmental regulations other than the proposed effluent
guidelines. Thus, the long-term average growth rate in domestic
stainless steel consumption demand is projected at about 4%
annually between the base period and 1980, and about 3-1/2%
annually between 1980 and 1985.
The end-use industries requiring tool steel have shown
little or no growth since the mid-1960's, and apparent tool
steel consumption in the U.S. has declined slightly during this
period. However, most forecasters anticipate strong growth in
the near future in the industrial equipment markets which ac-
count for roughly 70% of end-use consumption of tool steels,
based on a widely anticipated capital boom in the late 1970's.
Average long-term growth for industries which are end-users of
tool steel is therefore projected at 5-1/2% annually between the
base period (1972-1974 average) and 1980, and at 3% annually be-
tween 1980 and 1985. The resulting long-term average growth rate
in tool steel consumption demand is projected at about 4-1/2%
annually between the base period and 1980, and about 2-1/2%
annually between 1980 and 1985.
The end-users of high alloy steel are largely- industries
-------
VI - 4
with sophisticated technology, which are considered likely to
exhibit above average growth in the near future. Electrical
(including nuclear) power generating equipment and the petroleum
industry are also important users of high alloy steels; thus, the
industry is expected to derive substantial benefits from efforts
to expand domestic energy sources. Finally the aircraft and
aerospace industry, which is also a major market for high alloy
steels, is expected to show a considerable recovery in the late
1970's from its depressed position of recent years. As a re-
sult of these trends, industries which are end-users of high
alloy steels are expected to grow at a long-term average annual
rate of 7% between the base period and 1980, and at a 3% rate
between 1980 and 1985.
b) Level of
Imports
Business cycle swings in this country and, more critically,
overseas strongly affect the significance of imports in relation
to total domestic consumption of specialty steels. These cycli-
cal variations partially obscure basic long-term trends in spe-
cialty steel imports. Viewed from the perspective of 1975, a
deep recession year throughout the world, imports appear to be
increasing at a rapid pace. They appear extremely threatening
to the market position of U.S. producers in the absence of quotas
or other restrictions. During the price control and "shortage"
years of 1973 and 1974, however, imports appeared to be on a
declining trend for several years, and were not significantly
-------
VI - 5
higher than in 1964 and 1965. Even in 1975, stainless steel
imports as a percent of apparent U.S. consumption are estimated
to be no higher than during the 1970-1971 recession period.
Prevailing thought among observers of the industry holds
that, on average over the next several years, specialty steel
production costs will rise more rapidly abroad than in the U.S.,
resuming a trend displayed between 1971 and 1974. Both energy
and available local labor are rapidly becoming continually more
scarce in the industrial nations of Western Europe and Japan,
and these are major inputs to specialty steel production. It
is also believed likely that growth in foreign damand for these
steels, over the longer-term, will more than keep pace with
foreign capacity increases. This will allow generally profitable
price levels for producers and limit the supply available for
export to the U.S. under normal pricing conditions. This general
scenario has been incorporated into the baseline forecast for the
longer term, though it is recognized that, during weak periods
of the business cycle, import competition will intensify and
imports will temporarily gain a larger share of the U.S. market.
While this study was being prepared, a petition for relief
from import competition, raised by U.S. producers under the
Foreign Trade Act of 1974, was approved by the International
Trade Commission and awaits Presidential action.
The baseline growth of specialty steel imports will be sig-
nificantly affected by the final decision as to whether and
-------
VI
what form of relief is granted. Moreover, the policy adopted
regarding import limitations will also strongly influence the
impact of the proposed effluent guidelines on domestic shipments
and prices. Therefore,, two alternative cases are considereds
1. A.^e cnativ®_h_» Following anticipated U.S. Interna-
tional Trad® Cormiii.s3.io*". r. Q(,'i;iam®.vidg\tlous, it.iportd through 1980
are assumed to be reai:t i^taci by quota to the 1974 levels of
175,000 tons o:: stainless steel and 16,000 tons of tool steel.
Thereafter, import quotas are assumed to be lifted gradually
over a two-year period. Imports ave assumed to reach the unre-
stricted levels of Alternative B by 190?. „
2> ^:\^£rBftJ^AZ£...®" Imports are assumed to be unre-
stricted throughout the period,, but to gradually decline by 1978
to their 1972 market share of about 16% of domestic specialty
steel consumption. Thereafter, imports are expected to rise on
a long-term basis, reaching about 18-1/2% of specialty steel
consumption by 1983-
In both alternative cases, high alloy steel imports are
assumed to remain negligible because of their extremely special-
ized applications.
Significant difficulties for U.S. producers could occur
in the unlikely case of compound negative developments in world
markets. A low-profit baseline situation could arise if chroni-
cally deficient foreign demand and a reversal of favorable trends
in U.S. production costs relative to those overseas were combined
-------
VI - 7
with the absence of any trade protection for U.S. producers.
During the first two or three years of 1970's, industry profits
were quite low—after tax margins averaged well under 3%. Net
capital investment was also very low, even in terms of dollar
book value, and may in fact have been negative after the effects
of inflation on plant and equipment replacement costs are con-
sidered .
It appears highly likely that if the domestic industry faces
chronic duress due to an adverse competitive position with res-
pect to foreign producers, some form of import quota system or
"voluntary" import restrictions will eventually be adopted on a
long-term basis. The likelihood of such quotas in the event of
highly adverse long-term trade developments is incorporated into
the baseline conditions of the study.
(c) Export
Trends
Exports of stainless steel as a percentage of U.S. producers'
net shipments declined on average between the mid-1960's and the
mid-1970's. However, the more rapid rise projected for labor and
raw materials costs abroad than in the U.S., and the enhanced
competitive position of U.S. products resulting from the dollar
devaluations of the early 1970's, are expected to halt this de-
cline. Exports as a percentage of U.S. consumption are projected
to fluctuate cyclically but to average about 8-1/2% during the
1976-1983 period. This equals the weighted average which pre-
vailed during the 1970-1974 period.
-------
VI - 8
Tool steel exports have increased markedly relative to do-
mestic producers' total shipments in recent years. Price con-
trols during the 1972-1974 period were undoubtedly responsible
for much of this increase, but partial 1975 data indicate a con-
tinuing rise in the export percentage of total shipments. The
same factors which will maintain stainless steel exports during
the next eight years should also stimulate tool steel exports.
Tool .steel exports as a percent of domestic consumption are fore-
cast to decline by 1978 from the very high 8-1/2% level posted
in 1975 to the 6% weighted average which prevailed during the
1971-1975 period. Thereafter this percentage is projected to rise
1/2% per year, regaining the 8-1/2$ level by 1983.
High alloy steel exports are projected to remain negligible
throughout the forecast period.
BASELINE
FORECAST
The assumptions and projections of the preceding sections
hav® been utilized to develop a forecast of domestic consumption,
imports, exports, and producers' shipments under the two alter-
native import cages. Th© shipments forecast is then used to
project trends in industry capacity, number of establishments,
and employment.
(&) Shipments
Table VI-2 presents projections of U.S. producers' spe-
cialty steel shipments by category for the years 1976 through
-------
VI - 9
1983 for import Alternatives A and B. Greater forecast detail
for stainless and tool steels under the two alternative cases,
including domestic consumption, imports, and exports, is provided
in Exhibits VI-1 and VI-2. A cyclical pattern has been built
into these projections in order to provide a general picture
of the durations and magnitudes anticipated in future specialty
steel cycles. The projections should not be viewed as being
precise on a year-by-year basis.
Table Vl>2
Forecast of Net
Shipments
Specialty Steel
- 1976-1983
(Thousands of Tons)
Stainless
Alternative
"A"
855
1,134
1,345
745
920
1,110
1,310
1,435
1,510
1,185
1,280
1,535
(b) Industry
Capacity
Steel
Alternative
11 B"
910
1,085
1,265
1,370
1,425
1,140
1,280
1,535
Tool
Alternative
"A"
94
117
140
145
- 150
120
130
150
Steel
Alternative
"B"
90
111
113
73
87
108
130
135
140
110
130
ISO
High Alloy
Year "A" "B" "A" "B" Steel
1972 855 90 49.8
1973 1,134 111 64.6
1974 1,345 113 73.0
1975 745 73 55.0
1976 920 910 94 87 62.0
1977 1,110 1,085 117 108 75.0
1978 1,310 1,265 140 130 85.0
1979 1,435 1,370 145 135 90.0
1980 1,510 1,425 - 150 140 94.0
1981 1,185 1,140 120 110 80.0
1982 1,280 1,280 130 130 88.0
1983 1,535 1,535 150 ISO 103.0
On the basis of its industry survey and industry testimony
to the U.S. Foreign Trade Commission, Kearney estimates the in-
dustry's net shipment capacity for stainless plus tool steels
in 1975 at about 1.7 million tons. An additional 150,000 tons
of basic steel capacity is scheduled to be on-line by 1977 or
-------
VI - 1C
1978, Present capacity is more than adequate to meet the pro-
jected 1977 level of shipments. Present capacity, plus scheduled
additions, ara sufficient to support projected shipment levels
through 1982 iife utilisation rates of less than 90%. In 1983, a
very modest 50,000 to 100,000 tons of additional specialty steel
refining capacity would be required to hold industry operating
rates below 90%.
(c) Number of Firms
and Establishments
in th^
Kearney's :,ndustry survey identified one firm which recent-
ly entered the s'tainless tube and pipe market. Based on the ton-
nages projected in Table VI-2, no new firms are expected to enter
the specialty stsel industry in the foreseeable future, except
through the acquisition of existing facilities.
Although 1915 has been a difficult year for many firms in
the specialty steel business,, no firms with establishments pri-
marily devoted to specialty steel production are expected to close.
Economic recovery, a generally improved competitive position with
respect to foreign producers, and a probable measure of protection
against imports, if needed, are expected to boost shipment tonnages
from their current depressed levels, and to considerably improve
profitability levels in the industry. Moreover, potential down-
ward adjustments in capacity devoted to particular product forms
(such as stainless steel wire) are most likely to occur through
-------
VI - 11
one or both of the following means:
1. Integrated establishments giving up specific prod-
uct lines.
2. Establishments having only minor specialty steel
production relative to total plant output shifting facilities
usage to carbon steel products.
In addition to the stainless steel pipe and tube plant just
completed by the recent entrant to the market, the construction
of two new stainless steel pipe and tube plants by firms with
existing establishments is currently under way, and a third
firm is also considering adding a new pipe and tube plant. Some
integrated producer firms were planning to expand capacity at
existing establishments, but no plans were uncovered for the
construction of entirely new establishments in the near future.
No plans were uncovered for new establishments processing special-
ty wire or cold rolled sheet, strip, and bars.
Most specialty steel companies have not yet finalized their
facilities planning for 1983. However, industry sources indicated
that under market conditions currently projected for the inter-
vening period, their most likely response to potential new ca-
pacity requirements will be to increase capacity at present fa-
cilities. On this basis, the projected number of establishments
primarily devoted to specialty steel production between 1977 and
1983 should include the four additional pipe and tube processing
plants described previously, but otherwise remain the same as
in 1975. Table VI-3 summarizes this projection.
-------
vi - i:
Table VI-3
Projected Number of Establishments Where
Specialty Steel Accounts for Over 50%
of Total Plant Output - 1977 and 1983
Projected Number of
Establishment in
Type o;! Establishment 1977 and 1983
Integrated Producers
Flat Roliad Products 8
Section Products 17
Firms Which Purchase Semi-Finished
Specialty Steel and Convert
Wire Processors 14
Cold Rolled Sheet, Strip, and
Bar Processors 6
Pipe and Tube Processors £6_
66
Total 91
(d) Employment
Steel tonnage shipments: per employee have increased an aver-
age of 3% to 3.53 annuall}' over the last 20 years, and these
gains have accelerated to an average increase of over 4% in
recent years. Gains in terras of tonnage shipments per produc-
tion worker have been even more rapid. On the basis of project-
ed productivity g.iins in the specialty steel industry, the fore-
cast increases in tonnage shipments through 1980 are expected
to be achieved without any substantial changes in industry employ-
ment from 1974 levels. In the period between 1980 and 1983,
the projected slower average growth in industry shipments may
well cause a 0.5% yearly decline in specialty steel employment.
-------
VI - 13
Table VI-4 presents projected 1977 and 1983 employment in estab-
lishments where specialty steel comprises over 50% of total
plant production.
Table VI-4
Forecast Employment in Establishments Where
Specialty Steel Accounts for Over 50% of Plant Output -
1977 and 1983
Type of Establishment
Integrated Producers
Specialty Wire Processors
Specialty Cold Rolled Sheet
Strip and Bar Processors
Specialty Pipe and Tube
Processors
Total
Estimated
1974
35,700
3,200
1,700
6,400
47,000
Employment
Proj
1977
35,400
3,000
1,600
7,000
47,000
ected
1983
34,000
2,700
1,500
6,800
45,000
—.-..-.-i.iii. ,.„,.
MARKET
ASSUMPTIONS
Several important assumptions made in developing the fore-
casts in this section are summarized as follows:
1. The U.S. economy is expected to continue to pro-
vide a generally stable growth environment, and no extreme changes
in the organization or ownership of industry are anticipated.
2. No major technological breakthroughs which would
sharply enhance the use of products competitive with specialty
steels or otherwise undermine their market position are antici-
pated.
-------
VI - 14
3. Capital investment in the U.S. is expected to show
relatively strong growth in the late 1970's.
4. U.S. and foreign business cycles will be closely
timed. The import environment will be as discussed earlier in
this section.
5, Major new types of. environmental, health, energy,
labor, or other governmental economic regulation, which would
cause special hardship to the specialty steel industry or severely
restrict customers' ability tc use upecinlty steels, will not be
adopted unless they are presently near or in the implementation
stage.
PRICE
DETERMINATION
Pricing in the specialty steel market is discussed in
Chapter III of this study. The essential features of price de-
termination in the market are summarized as follows:
1. The domestic market is competitive because of the
large number and variety of producers and customers, and the
ability of diversified steel producers to vary production
of the less customized specialty steel items in response to
price incentives.
2. A major secondary market is provided by steel
service centers and warehouse distributors.
3, The supply of imports to the U.S. specialty steel
market is probably quite elastic in response to significant cost
differentials between U.S. and foreign producers, and import
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VI - 15
competition has an important impact on U.S. industry pricing.
However, import restrictions are quite possible for the next
several years, and both rapidly increasing foreign variable
costs and increased foreign demand relative to capacity is ex-
pected to limit competition from imports in the long run.
4. Price differentials between producers exist for
the more highly customized products, and this segment of the
market is significantly less competitive than the industry as
a whole. It is also believed to be largely insulated from import
competition.
5. The specialty steel market is characterized by
substantial fluctuations in demand, resulting from the cycli-
cality of the industries which use these steels, imposed upon a
relatively stable short-term industry supply.
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VI - 16
ECONOMIC IMPACT
MARKET PRICE
ADJUSTMENT TO
BPT GUIDELINES
Additional 'Jtric cosv,fs arising from the proposed effluent
guidelines will amount to y, relatively small fraction of present
industry price? ^nd avvz&oz. cores, Any cost p&ss-throughs to
customers woultf b« averaged C^-M: the cycle, and would be sig-
nificantly lower than t.^«? :,ypical ysa.;r~ i;o~year price swings for
most standard specification pcoducti.on items,
Nations,! policies adopted with respect to imports will be
important, in determining the s>;tent to 5d»ich the minimum added
costs arising from tho r^vivlations uill be passed on to custo-
mers. Most for sign producers do not presently face similar
pollution abatement controls- ancj in the short run will not ex-
perience siiruJ.cU t'ost. increases- It is likely, however, that
many foreign, governments \-ii\l eventually require pollution con-
trol measures, i?i:e interest m-any of these nations have shown in
promoting specialty st3el exports suggests thnt, in some cases,
part of these foreign producers' pollution abatement costs may
be offset through general export subsidies. However, specific
foreign government assistance to offset pollution control costs
is unlikelyc Thus, in the long runp foreign producers are not
expected to gsi.r? any decisive cost advantage vis-a-vis U.S.
producers due tc «nvif:oninental regulations in and of themselves.
In the event that foreign trade in specialty steels remains
-------
VI - 17
unrestricted, a fairly elastic supply of imported standard
specification items will probably cause temporary absorption
of much of the direct costs of effluent controls by domestic
producers, although the pressure from imports will be less than
would be the case if foreign producers gained cost advantages
for an extended time period. The processing establishments would
absorb at most a fraction of the indirect costs associated with
semifinished steel, since this input material potentially could
be imported. The prices of the more customized "made to order"
products, however, are likely to rise to reflect at least the
pollution abatement costs attributable to their own tonnage. It
is also possible that some of the costs actually attributable to
the noncustomized items will be passed through to customers via
the prices of "made-to-order" products.
In the highly probable event that imports are limited by
quota for at least the next five years, domestic producers
should be able to pass through to customers the full level of
added costs incurred due to the regulations. Although the im-
ports permitted under the quota might not share these added
costs, these imports would be fixed at a low level. The incre-
mental production required to adjust supply to domestic demand
would necessarily come from domestic sources, and prices would
reflect at least the level of emissions control costs common to
all U.S. specialty steel industry segments.
The cost increases experienced by establishments primarily
devoted to specialty steel operations would probably impact
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VI - 18
prices of all U.S. specialty steal. Many plants primarily de-
voted to carbon steel production also produce specialty steels,
and hold a signifieant share of the market. Hypothetically,
these establishments could attempt to pass through all of their
effluent controls costs in carbon steel, ratner than specialty
steel prices, However, this possibility is unlikely due to
the substantially greater pcoportional impact of overall pollution
control regulations on carbon steel costs, and the probable absence
of import protection for carbon steels comparable to that likely
to be given to specialty steels. Mo Trover, to the extent that com-
petitive forces operate in the carbon steel industry, the presence
of several firms with no significant specialty steel operations
will tend to prevent any cost increase actually attributable to
these steels from affecting carbon steel prices. Therefore, it
is assumed that no significant cost advantages will accrue to
carbon steel producing establishments having minor specialty
steel operations.
In the event of limited import competition, integrated pro-
ducers' incremental costs associated with each of the "finished"
specialty steel product form types will be roughly the same as
those incurred by the larger processors (SIC's 3315-17). The
costs associated with the semifinished product will be incurred
directly by the integrated producers, and indirectly by the pro-
cessors, through increased material input prices. The incre-
mental treatment costs arising from the finishing processes,
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VI - 19
except for economies of scale, are the same for both groups of
producers. The cost differentials arising from these economices
of scale are minor relative to the composite selling prices of
each of the product form types.
Moreover, the cost differentials between large and small
processors are also minor relative to composite selling prices,
except in the case of wire processors. As a result, the price
increases arising in each of the product form type categories
would approximately equal the cost increases incurred by the
larger processors.
The smaller wire processors probably would find it necessary
to absorb a major portion of their direct pollution control costs
in their standard specification product lines. Such cost absorp-
tion might be reduced if they were able to raise their "made-to-
order" product prices by more than the costs actually attribu-
table on a tonnage basis to these customized products (i.e., if
market conditions permit this), or they were able to increase
the importance of customized products relative to their total
output.
ESTIMATED BPT
COST FACTORS
AND MARKET
PRICE INCREASES
The specific costs incurred in meeting the effluent guide-
lines are depreciation, capital charges, and equipment operating
expenses. These costs are discussed in Section V. The cost
-------
VI - 20
estimates utilised in this study were devaJ.r.pod several years
prior to the final preparation of the report. These costs were
originally develog.«>d on fciie basis of 1971 systems engineering
and equipment costs,, but hm?a been adjusted to reflect December
1975 construction rests «n<3 1975 operating costs. Investment
costs were adjusted n3J.no; the ^r^£~''03L?rJJ£!P Mevis Record Construc-
tion Gust ;.,PC€^: i .'.913 * IOC), while the Department of Labor's
Wholesale Price '^nc1** (19(57 " 100) and Unit Labor Cost Index
(1967 •» 100) htsve b^er- to r>J-j?:^;: operating costs.
Table VA-'- op tb PJent sir:-® for establishments
where specialty -Jt&.jl accounts I7or ovcc 503 of total output. A
10% cost of cap.>.al baaed on tho average required investment has
been assuraw ir '.he css^culation? - P^r ton costs are computed on
the basis of a 75% operating ra';or which is approximately equal
to the industry ^/ern-ge ov<££ a no-raal business cycle, and also
on the basis oL full c^p'-.c.'tv operation?? A more detailed cost
analysis appears in Exhibit V~9.
An indirect xvst of ?3cOQ to $9.00 per ton must be added
to the proccessimj f'rm3' dj.i-'sot pollution abatement costs shown
in Table VI-S,, in '-.he case of Import limitation (Alternative A).
This cost represents the increased prices paid by these pro-
cessors for their semifinished specialty steel product inputs.
In the case of unrestricted imports,- any increase in semifinished
specialty steel input coats is likely to be minor.
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VI - 21
Table VI-5
Estimated BPT Costs by Establishment Size
and Industry Segment - 1975 Prices
Industry Number of
Senent Establishments
3312
Flat Rolled - Large
with Cupola
Flat Rolled - Smell
Section - Large
Section - Medium
Section - Snail (Rolled)
Section - Small (Forged)
1311
Large
Small
3316
Large
Small
3317
Large
Small
M
2
I
4
7
4
2
5
14
5
9
_6
2
4
42
8
M
Total Capital
Investment
($ Millions)
$123.8
$ 30.6
17.9
27.0
39.6
6.0
1.1
1.6
$ S.7
$ 3.7
2.0
$ 7.3
$ 3.6
3.7
$ 4.4
$ 2.4
2.0
Cost
Operating
Coat per
Shipped Ton
$4.02
4.02
3.43
1.62
0.95
0.82
0.44
$3.92
4.00
$2.87
2.90
$0.73
1.11
for Model Segment
Total Annual Cost/Shipped Ton
At m. Capacity
Utilization
$12.22
$10.03
9.31
26.70
14.01
9.70
12.92
8.23
$29.39
$24.44
52.17
$ 6.90
$ 6.13
8.04
j 7.16
$ 3.14
15.09
AE Full Capacity
Utilization
$ 9.96
$ 8.53
8.14
20.88
10.91
7.51
9.90
6.30
$23.17
$19.31
40.13
$ 5.90
$ 5.33
6.76
$ 5.58
$ 4.04
11.60
Total, All Plants 21
Source: Exhibit V-9.
Composite 1974 industry selling prices, estimated on the
basis of a weighted average unit value of shipments to other
companies, were $1,630 per ton of stainless steel and $2,660
per ton of tool steel. Midyear 1975 prices are estimated to
have been about 15% above these levels, or $1,870 per ton of
stainless steel and $3,060 per ton of tool steel. High alloy
steel prices are estimated to have been in the range of $12,000
per ton. The average effluent control costs, including indirect
costs to processors, at 75% operating rates, are in the range of
0.6% to 0.8% of these composite market prices, except in the case
of processed wire. The higher costs of the four small, integrated
flat rolled product plants are associated with specialized pro-
duction of stainless steel plate, and are not projected to impact
general industry prices.
-------
VI - 22
The size related additional unit abatement costs of small
pipe and tube processors and cold rolled processors average
about 0,4$ of existing industry selling pricas for these
products, and should b® barely detectable in industry pricing.
Additional per ton abatement costs of small wire processors
are more substantial,- amounting to abcu.t 1.5% of composite
prices*
Table VI -6 summarises the percentage range of market price
increases projected to occur for various specialty steel products
due to BPT guidelines. Import Alternatives A and B, respectively
involving a five-year quota and unrestricted imports, are discussed
earlier in this section,
Forecast Percentage JFrice Increases for
Specialty Steel Products Attributable
to BPT Guidelines
Projected Range of
Percent Price Increases
Import Alternate: ve A
Non-Customized Processed Wire 1.5-2.5
Other Non-Customized Finished Products 0.6-1.2
Semifinished Products 0.3-0.5
Customized Processed Wire 2.0-3.5
Other Customized Finished Products 0.7-1.5
Import Alternative 3
Non-Customizec Processed Wire 0.5-1.5
Other Non-Customized Finished Products 0.3-0.5
Semi-Finished Products 0.2-0.4
Customized Processed Wire 1.5-3.0
Other Customized Finished Products 0.6-1.0
-------
VI - 23
BAT COST FACTORS AND
MARKET PRICE ADJUSTMENTS
Additional direct costs will be incurred by integrated pro-
ducers in meeting the BAT requirements of the effluent guide-
lines. Table VI-7 summarizes these BAT costs by size and product
group for the impacted producers. The price and cost of capital
assumptions are the same as those employed in computing the BPT
costs. Per ton costs are again presented both for a 75%
operating factor and for full capacity operations. A more de-
tailed cost analysis appears in Exhibit V-10.
Table VI-7
Estimated BAT Costs by Establishment Size
and Industry Segment - 1975 Prices
Industry Segment
3312
Flat Rolled - Large
with Cupola
Flat Rolled - Small
Section - Large
Section - Medium
Section - Small (Rolled)
(Forged)
Number of
Establishments
2
1
4
7
4
2
_5
Cost
Total Capital
Investment
(S Millions)
$14.1
10.5
6.8
21.0
3.8
1.2
1.9
for Model
Operating
Cost per
Shipped Ton
$0.59
0.85
0.51
0.97
0.39
0.72
0.56
Segment
Total Annual Goat
At 751 Capacity A
Utilization
$ 3.36
4.07
6.41
7.54
5.90
14.59
9.51
/Shipped Ton
t Full Capacity
Utilization
$ 2.67
3.26
4.93
5.90
4.52
11.12
7.27
$59.3
$ 5.06
$ 3.97
Source: Exhibit V-10.
As indicated in Table VI-7, the additional anit costs aris-
ing from the BAT guidelines are very small in relation to the
estimated 1975 composite industry selling prices of stainless
and tool steels, which were $1,870 per ton and $3,060 per ton
respectively. The costs average less than 0.3% of average sel-
ling prices and are less than 0.8% of prices for all industry
segments. Since this percentage increment is well below the typical
-------
VI - 24
year-to-year variation in real (inflation-adjusted) industry
prices, and since the industry will have several years over
which to schedule any potential cost pass-throughs, the impact
of the BAT costs is expected to be hardly noticeable in industry
price changes occurring in the particular year compliance is
achieved.
It is likely that by the mid-1980's most foreign specialty
steel producers will also face environmental regulations, leaving
them with no decisive cost advantages over U.S. producers as a
result of the effluent regulations„ Thus, competition from foreign
suppliers is not projected to pravent long-term price increses
resulting from :he combined incremental costs of the BPT and
BAT effluent guidelines, except duTing periods of severe recession
abroad. This ccst pass-through is projected to be realized even
under the assumption that imports will be unrestricted by quota
after 1980. However, in possible future periods of cyclically
related weakness in foreign steel demand, import competition could
create a general market environment in which U.S. specialty steel
producers could have temporary difficulties in successfully im-
plementing market price increases regardless of cause.
Under import Alternative A, which assumed the imposition
of quotas between 1976 and 1980, the BPT cost pass-through would
occur around the year of compliance, and the additional BAT cost
pass-through would probably impact gradually between the years of
BPT and BAT compliance.
-------
VI - 25
Many producers are expected to make the required capital
investment for BAT at the time of BPT compliance, while others
may act to raise prices in advance in order to set aside funds
for the BAT investment.
Under import Alternative B, which assumed unrestricted im-
ports throughout the period, much of the BPT cost pass-through
probably could not be effected immediately. The price increases
resulting from both the BPT and BAT effluent guidelines would
tend to occur gradually during the period through the mid-1980's,
as foreign producers incurred pollution control costs and as rising
relative costs abroad and foreign demand pressures on capacity
improved the competitive position of U.S. producers. Once again,
domestic price increases would be difficult to implement for general
competitive reasons during periods of weak foreign specialty
steel demand, but domestic producers would be able to pass through
pollution controls costs on average over the business cycle.
Table VI-8 summarizes the overall addition to specialty
steel producers' unit costs resulting from both the BAT and BPT
guidelines at 75% establishment and industry capacity utilization
rates. The average unit costs associated with the semifinished
product have been added to the specialty processors direct unit
costs. These costs, which are estimated at $11.00 to $14.00 per
ton, are assumed to be reflected in the prices of the semifinished
steel they purchase.
-------
VI - 26
Estimated Overall Addition to Unit Coeta Arising
from 8PT and BAT Guidelines by Specialty Steel
Establishment Size and Industry Segment - 1975 Prices
Oii'GOt Coteo/Shtpped Ton
Number o€ «<; 73X C»OlfO(fln« JCHiMr
O-'in-U Additional
Ca jer /ShlpfMid Ton
at 75X Indutery,. .
SW •«•>«*> 4 •••• PaiHa>__f 1 1
3312 js SMiiX js.go "UJLtZfi
flat Rolled - i.arf« Tl ST5T03 33740 fflj.39
with Cupola
riet Rolled
Section - La
Section - He
- S-ell
dli.
Section - SMll (RoU«d)
L*r«e
Se«ll
tirte
Seall
Lart*
SMll
(Torged)
1
A
I
2
3
4
9
4
4
14
9.31
26. /O
-9'7?
fi.ili
$$£$
'i^.'/7
ffcff
P.Wi
?Siw
4.U7
0.41
r.5^
5.90
1*.39
9. Si
13.38
33.11
21.55
13.60
27.31
17. 7«
$Mr$
(*'.67
lr&$
20^34
Ug.tj
$17. M
27.39
Notei (1) PrtK»»«oi»' overall coatf ite eeiumed to Unolucin n-i IntilrocC: coat of $11.00 to
$14.OO e*r too, *emi-(ini*hed product. 'lt
-------
VI - 27
1. Prices of semifinished specialty steels and non-
processed products are projected to rise within a percentage
range centered on the median unit cost increase attributable to
these products at 75% operating rates. This median unit cost
increase is about $12.50 per ton.
2. Prices of standard specification cold rolled sheet
strip and bars are projected to rise within a percentage range
centered on the median unit cost increases of large integrated
producers and SIC code 3316 processors at 75% operating rates.
There is little difference among the average unit costs projected
for the various industry process and size segments in this market
3. Prices of standard specification pipe and tube
products are projected to rise within a percentage range centered
on the unit cost increase estimated for the smaller establish-
ments in this process segment at 75% operating rates. The
smaller processors play a major role in this market and are as-
sumed to be decisive in market pricing.
4. Prices of standard specification processed wire
products are projected to rise within a percentage range bounded
by the estimated unit cost increases of the large and small wire
processing segments at 75% operating rates. Foreign producers,
however, have been very active in this market, and could serve
to restrict cost pass-throughs on a long-term basis if their own
unit pollution control costs are significantly below those of
domestic processors. Therefore, the projected price increase in
processed wire must be viewed as a high side estimate.
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VI - 28
5. Customized "made-to-order" products are projected
to rise to cover at least the additional unit pollution control
costs of the supplying industry segments. To the extent that
market conditions permit, these custom products may rise in
price by even more than unit costs for some products, since
higher cost producers may attempt to recover some of the costs
they may be lequired to absorb in their "standard specification"
product lines.
Table VI-9 below, presents the overall percentage price in-
crease projected for various specialty steel items as a result of
compliance with both the BPT and BAT guidelines.
Table VI-9
Projected Overall Percentage
Pr ice Increases for Specialty Steel
Products Due to BPT/BAT Guidelines
Projected Percentage
Price Increase (1)
Type of Product
Processed Wire
Processed Cold Rolled
Sheet, Strip and
Bars
Processed Pipe and
Tube
Semi-Finished
Products
Non-Customized Customized
"Standard Specification" "Made-to-Order"
Items Items
1.8-3.4
0.6-1.2
1.0-1.5
0.5-0.8
2.0-4.0
0.9-1.2
1.2-2.0
Note: (1) Price increases due to effluent guidelines only.
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VI - 29
ELASTICITY
OF DEMAND
The impact of the projected price increases on industry
volume depends upon the elasticity of demand for specialty
steel products. No published estimates of the price elasticity
of demand for specialty steel have been identified. Moreover,
it is extremely difficult to obtain a reliable estimate of this
elasticity from empirical market data. As has been discussed
in Chapter III, the specialty steel market is characterized
by strong short-term fluctuations in demand, resulting from
sharp cyclical swings in the demand for the durable goods in
which specialty steels are used. Therefore, when price and
volume coordinates for several years or quarters are mapped
out, they tend to rise and fall together, revealing the market's
relatively stable supply conditions, rather than its unstable
demand function. This phenomenon obscures the actual relation-
ship for any given level of demand resulting from unchanged end-
use requirements for these steels, where a rise in prices should
tend to reduce the tonnage sold to users.
An order of magnitude estimate of the price elasticity of
demand for specialty steels may be developed by an evaluation
of the following two factors:
1. Availability of Substitutes. As was noted in
Chapter I, feasible substitutes for stainless steel and tool steel
are available in some applications but, in general, substitution
-------
VI - 30
of alternative inputs is difficult. High alloy steels have no
viable substitutes in most applications. The substitution of
other products for specialty steels, as a group, in response to
price increases of less than major proportions, is therefore
likely to be quite limited.
2. Impact of Specialty Steel Costs on End-Use Product
Costs. The end-use markets for specialty steels were detailed
in Chapter I. For the most part these steels are inputs to large,
high valued machinery, transportation equipment, construction,
and durable goods. Specialty steel costs typically account for
only a small fraction of the overall cost of the products in which
they are used, and therefore increases in specialty steel prices
have little impact on the prices of most of the end-products in
which they are used.
These factors tend to make the demand for specialty steel
inelastic. Because specialty steel costs typically constitute
only a small fraction of total end-use product costs, and sub-
stitutes are not readily available, there is little incentive
for users to sharply reduce consumption as a result of specialty
steel price increases. Moreover, the limited role that specialty
steel costs play in overall end-use product cost reduces the
importance of possible price elasticity in the demand for the
end-use products, since an increase in specialty steel prices is
likely to have little impact on end-product prices. Hence, an
-------
VI - 31
increase in specialty steel prices should result in no substantial
reduction in the consumption of the end-products, and little re-
duction in the specialty steel tonnage used in making these products
The demand for specialty steels is not believed to be
extremely inelastic, however, since substitutes are available in
some applications and specialty steels form an important fraction
of total product costs in a few end-use markets (such as cutlery).
The price elasticity of demand is assumed to be in the range of
-0.5 to -1.0.
A comparison of specialty steel prices and tonnage shipments
in two years of similar business cycle conditions, 1968 and 1973,
when specialty steel demand conditions also may be presumed to
have been similar, lends some modest support to this inferred
demand elasticity range. Between 1968 and 1973, composite stain-
less steel prices (adjusted for general price inflation as measured
by the Implicit Price Deflator for Gross National Product) de-
clined about 8-1/2%, while apparent U.S. consumption of stainless
steel (adjusted for trend expansion of the economy as a whole as
measured by growth in real Gross National Product) rose by about
8-1/2%. Thus, a price elasticity of demand of about -1.0 was
indicated. However the fraction of real GNP devoted to private
nonresidential construction, investment in producers' durable
goods, and consumers' durable goods production—the chief end-use
markets for specialty steels—was greater in 1973. This indicates
-------
VI - 32
that demand conditions for these steels may in fact have been
somewhat more favorble in 1973, and the -1.0 figure would over-
state the actual elasticity of demand. The assumed range of
-0.5 to -loOft appears reasonable in the context of this limited
test.
VOLUME IMPACT
(a) Import Effects on
Domestic Producers' Demand
The price elasticity of demand faced by domestic specialty
steel producers will be greater than the overall elasticity of
consumption den.and for specialty steel products if foreign
producers' costs do not move together with those of domestic
producers. In the case of import Alternative B (unrestricted
imports during .1976-1980) foreign producers may gain some tem-
porary cost advantages due to U,3~ SPT effluent regulations, and
hence U.S. producers may face a shoct-term demand for their own
output which is nore elastic than the consumption demand for
specialty steels.
For reasons noted in Chapter II, a precise estimate of the
price elasticity of supply of imports to the U.S. market was not
attempted in this study. Howevere ^he impact of the effluent
guidelines on U.S. prices and U,S. producers' shipment volumes
in this case may be assessed .in an imprecise way by utilizing
crude assumptions about the foreign supply of and demand for
specialty steels and computing the size of the net import flows
and the specific percentage increase in worldwide prices which
would restore balance to worldwide supply and demand.
-------
VI - 33
As noted in Chapter III, the elasticity of the overall
foreign supply of specialty steels is thought to be considerably
lower than the 2.5 median value estimated for the U.S. A value
of 1.5 may be viewed as a relatively high estimate. The elas-
ticity of foreign demand for specialty steels may be taken to
be no higher than the upper bound -1.0 estimate of the U.S.
elasticity of consumption demand. The baseline forecast of
this section projects imports at about 16% of the U.S. market
during the 1976-1980 period, and U.S. exports at about 8-1/2% of
the domestic specialty steel market. Further, the U.S. share
of overall world consumption is estimated to be at least 25%.
Given these estimates of supply and demand elasticities
and base shares of imports and exports in the U.S. market, and
a uniform unit cost increase (at any output volume) of about
0.85% of base prices due to the BPT regulations, an average
increase in world prices of between 0.15% and 0.2% would be
required to restore balance to overall world supply and demand.
A price increase of this magnitude would result in an increase
of about 10% to 15% in U.S. net imports, that is from about
7.5% to about 8.5% to 9% of the domestic market. The shipments
of domestic producers would decline under these circumstances
by about 1.5% to 2%.
The assumptions upon which these calculations were based
were selected to result in low side estimates of the average
-------
VI - 34
price irier«as«8 which would "©suit ftotn the increased unit coats
incurred by U.S. producers, and to yield high side estimates of
domestic producers' volume reductions resulting from these in-
creased costs. Moreoverr rigiditites and imperfections in world
pricing relationships and supply networks would allow slightly
higher increases for U.S. producers than would be predicted by
the purely competitive mod
-------
VI - 35
as the overall elasticity of demand for specialty steel con-
(1)
sumption, or less (in absolute value) than -1.0.
(b) Industry Ability to
Absorb Price and
Volume Impacts
Since the domestic supply of stainless steel is less than
fully elastic at a particular market price, the reduction in
volume increases from the baseline growth trend should lead to
a slightly lower realized market price (after the imposition of
the controls guidelines) than would be obtained merely by adding
the incremental cost increases to the baseline price. However,
since the short-term elasticity of supply has been estimated
to be quite high, and because of the large margin of error pos-
sible in both the elasticity and unit effluent control cost
estimates, the new price level was projected to equal the full
value of this sum, except in the case where import competition
prevented a full cost pass-through. The consequent reduction
from baseline growth in the volume of shipments of standard
(1) Technically, it could be somewhat higher (in absolute value)
because the shipments base against which the volume change
is measured is lower (by the percentage of net imports in
domestic consumption) than the consumption base against
which the overall price elasticity of demand was measured.
This factor would tend to raise the actual elasticity of
demand for domestically produced specialty steel by 10%
to 20%, which is of minor importance given the large range
of uncertainty in the elasticity estimates. Moreover, the
probability that the domestic producers' supply elasticity
is greater than that of foreign producers, would tend to
reduce U.S. net imports somewhat, thus tending to reduce
the demand elasticity faced by U.S. producers.
-------
VI - 36
specification itema other than processed wire is projected to
be in the range of 0.3% to 1.0% due to the BPT guidelines under
import Alternative A. The volume reduction from baseline growth
due to the combined impact of the BPT and BAT regulations is
projected to average slightly less than 1%.
The baseline industry forecast assumes consumption demand
growth rates during the late 1970's (using the 1972-1974 average
level of shipments as a base) averaging about 4% annually for
stainless steels, 4-1/2% annually for tool steels, and 6%
annually for high alloy steels. It is also assumed that, even
in the case of unrestricted imports, continued growth in over-
seas steel demand and the rise in labor and raw materials costs
of Japanese and European producers will lead to at most a small
increase in the import share of the U.S. market from the average
levels of the early 1970's. By 1980, total domestic producers'
shipments are expected to exceed their extremely high 1974
levels by about 10%, and to rise further by 1983. Under these
circumstances, the total volume impact resulting from the BAT/
BPT guidelines will probably average less than one-fourth of
the average year-to-year increase in specialty steel shipments
during the late 1970's. Taken in isolation, they are expected
to be absorbed by the industry as a whole without difficulty.
An alternative baseline forecast could be hypothesized in
which a generally stagnant U.S. economy, chronically deficient
foreign demand, and the absence of any import protection for the
-------
VI - 37
U.S. producers would create a market environment in which the
industry would be unable to recover any part of the effluent con-
trols costs through price increases, except by accepting sub-
stantial volume reductions. In this unlikely case, industry
after-tax profit margins would appear to decline by as much
as 25% from their average 1973-1974 levels. However, this decline
would actually be attributable to a worsening in the baseline
industry conditions rather than to the impact of the effluent
guidelines themselves. Under these circumstances, it is probable
that, in the absence of the effluent controls, the industry
would experience a decline in prices with similar effects on
average profitability of firms.
The marked cyclicality of the specialty steel industry could
also lead to some relatively minor shorter-term difficulties
for producers in the case of unrestricted imports. Price in-
creases to cover the increased costs resulting from the BPT
guidelines could probably be effected only gradually under this
assumption. The temporary impact of a 0.6 or 0.7% cost increase,
with no compensating increase in prices, could spell the dif-
ference between a small after-tax operating profit and a small
loss in a year of adverse business conditions.
CAPITAL INVESTMENT
AND FINANCING
The need to finance pollution control investments poses a
problem in several industries. The total BPT and BAT capital
-------
VI - 38
cost requirements ;:or the various model plants for the different
size and process form segments of the specialty steel industry
are detailed in Exhibits V-5 and V-6, respectively.
(a) Total Capital
^ Co j]ts
Total capital costs associated with the BPT regulations are
estimated at :U41o2 million, of which $123.8 million will fall
upon the integrated producer establishments. Total capital costs
associated with the BAT regulations are estimated at $59.3 mil-
lion, all of wnich will fall upon integrated producer firms.
The actual expenditures required for at least the BAT investment
may be stretched out over a period of several years, as can be
the cash accumulations required to finance these investments.
Moreover, many firms in the industry are operating under permits
which have several years to run, and which postpone the date upon
which compliance with the BPT regulations must be achieved. This
allows them a greater time period over which to finance these
more immediate investment needs. The integrated producer firms
as a group will probably have the option of financing their re-
quired investments with pollution control revenue bonds, thus
taking advantage of lower-than-competitive rates of interest.
(b) Debt
Financing
With only a few exceptions, the producer firms for which
financial statistics are available, as listed in Exhibit II-l,
-------
VI - 39
meet the institutionally established criteria for borrowers,
provided prospects for industry profitability and cash flow are
considered reasonably attractive. These firms should be able to
resort to traditional debt finance. The few firms with relatively
high debt-equity ratios are fairly large in terms of sales and
have earned above average profits in the past. They should be
able to utilize the credit markets if they choose to do so.
As was noted in Chapter II, financial statistics are unavail-
able for many of the smaller firms in the industry, and their
policies with regard to funding investments cannot be determined.
It is presumed, however, that many of these firms will be able
to obtain loans, possibly with SBA assistance, for the small in-
vestment sums they require.
(c) Internal
Financing
Assuming a continuing improvement in economic conditions
during the next two or three years, many of the firms in the
industry should also be able to finance the BPT investment
from internal sources. The total investment requirements due
to the BPT regulations are generally less than half the earnings
of reporting firms with integrated establishments in a good
profits year like 1974, and are far lower for the reporting
firms with nonintegrated processing establishments. In years
of more typical earnings performance, integrated producing firms
would still find it possible to finance the entire BPT investment
costs from less than one year's profits.
-------
VI
40
Exhibit VI-3 indicates the 1974 profits and the BPT and BAT
capital coats of reporting specialty steel producing companies
by firm? and expresses the ratio of these investment costs to
profits. Table VI-10 below summarizes these profits, costs,
and ratios i?or all reporting firms in the major industry segments.
Table VI-1Q
Estimated BPT and BAT Costs in Relation
to 1974 Pre-Tax Profits for Reporting Firms in the
Steel Industry, by Firm SIC
330
mr
IS 74
Pea-Ton
tJimtosr tfittbur o£ ProCleo
318 8
W J6' JR.M1.6
9 S> *fVS . 2
-1 -1 760.7
fowl J1 36 A&J&US.
-T(.,BfT., Srer.s
Uaat
XLaJSil
OIW.4
4.5
1.3
M3AU
.flScaps
Ao PoroonC
9& Pgofiitq
11. 314
1.0
JW
BAT
Coct
W ,1 i0*
$92,0
<1)
JJLL.
992.0
Invaoenont
. Aa Foment
') of Profits
4.61
(1)
iil
Total Ii
Cost
M K 10«)
5181.4
4.6
LI
4l«» 1
iwastBMt
At F*ro*nt
13. n
1.0
JL1
s.re
Necatt
Ho Inaraoane*! BAT Cost.
0« th« flyo SIS 331ft flnm. Jooff aro inaltrfod In SIC 3312. Tho ftfth doaa not report.
Sou re n: Eithlblt VI-3.
Profits data are not, available for most of the smaller re-
porting firms IT the industry, However, virtually all of these
firms maintain only a single wire or pipe and tube processing
establishment. The total required capital expenditure for
pollution control is only about $200,000 for the small wire
processors and about $60fOOO for the pipe processors. Financing
from internal sources is thought to be feasible for most of these
f irms..
-------
VI - 41
(d) BPT/BAT Investment in
Relation to Historical
Capital Expenditures
Exhibit II-4 details historical capital expenditures
statistics for four large, integrated specialty steel producing
firms between 1964 and 1974. Table VI-11 summarizes the recent
capital outlays of three of these firms in relation to their
required investment to meet the 1977 BPT and 1983 BAT guide-
(2)
lines.
Table VI-11
Major Producers' Historical Capital Expenditures
Compared with BPT/BAT Requirements
Company
Allegheny-Ludlum
Carpenter Technology
Corporation
Cyclops
(Millions of Dollars)
Historical Capital
Expenditures
Estimated Pollution
Control Capital
Expenditures
1974 1973
$28.8 $20.7
12.7
19.9
9.6
12.3
1970-74 Average
$23.1
9.9
15.0
BPT
BAT
Total
$26.8 $14.1 $40.9
11.9
7.5
6.0
3.0
17.9
10.5
Source: Exhibits II-4 and VI-3.
(2)
The fourth firm, the Latrobe Steel Co., was generally un-
profitable between 1971 and 1973, but has recently been
acquired by the Timken Corporation. Its past capital
expenditures history is therefore not believed to be a
good indicator of its ability to make new investments.
-------
VI - 42
Table VI-11 indicates that, for two of the three firms,
total capital expenditures for pollution control will amount
to somewhat less than two years' expenditures on new plant
and equipment at recent average levels. An investment of
this size is substantial, and may result in temporary
setbacks to plant expansion, moderization and other im-
provements by these firms. However, it is likely that the
pollution control outlays may be financed over a period of
several years, mitigating the investment burden in any
particular year.
A more fundamental question in the larger firms' capital
expenditure decision-making process than the mere availability of
funds is whether they will choose to allocate these additional
funds to the specialty steel industry. This question must be
answered by the firms' convictions about the basic future
profitability of the industry. The price and volume analysis
of this section suggests that in general pollution control costs
will be a minor factor in the determination of industry profit-
ability levels. In the probable baseline case of improved industry
profitability, no closures are expected as a result of a lack of
capital with which to finance the pollution controls expenditures.
MICRO IMPACTS AND
CLOSURE ANALYSIS
The price and volume analysis detailed earlier in this
section indicated that the specialty steel industry as a whole
-------
VI - 43
is projected to suffer only minor adverse impacts as a result of
the costs arising from the effluent limitations guidelines. The
impact on individual establishments or industry segments is more
difficult to assess because of a general lack of precise infor-
mation about plant costs, output composition, potential markets,
and profitability for individual firms. Potential closures for
site-specific reasons are a possibility, but are not considered
in the scope of this analysis.
Table VI-8 details the overall increase in unit costs (at
a 75% operating factor) estimated to occur in each industry
segment as a result of the effluent limitations guidelines.
These costs include the increase in semifinished steel prices
projected to be passed on to processors by the integrated producer
firms. The cost relationships exhibited in this table, along
with the projected product price increases presented in Table
VI-9, indicate only two industry segments which could poten-
tially experience substantially greater adverse impact than the
industry as a whole.
1. Small, Integrated Producers of Flat Rolled Products.
These smaller firms are estimated to experience unit pollution
control costs about $20 per ton higher than the larger integrated
firms producing flat rolled products, an incremental cost equal
to about 1% of the estimated composite 1975 industry selling
price. However, most of these additional costs arise from
specialization in the production of stainless steel plate, and
should be passed through to consumers of this product. Of
-------
VI - 44
the four establishments in this group, two are presently earning
profit margins for specialty steel operations which are above
the average for integrated producers. A third establishment
is a specialized manufacturer of tool steels as well as plate.
The fourth establishment is a major operation of a parent firm
which is considerably more profitable than the establishment
itself. Tho plant accounts for over 35% of total corporate
sales and is a specialized producer of armored plate. None
of these four establishments is viewed as likely to close be-
cause of the cost absorption projected as a result of the BPT
or BAT regulations.
2. Specialty Steel Wire__Proce.33ors. This entire segment
is estimated to experience unit pollution control costs comprising
a considerably J.arger fraction of product selling prices than
the industry as a whole.
The crucial determinant of the severity of the adverse
economic impact of the regulations on wire processors is the
future role of imports in this market. This industry segment
has been highly vulnerable to import competition in the past,
and may be expected to suffer significant adverse impacts if:
(a) foreign demand for specialty steel is slow in recovering from
the effects of recession and foreign production costs rise more
slowly than anticipated, (b) foreign producers do not experience
similar unit costs of pollution control over the long term, and
(c) imports remain unrestrained by quota. At the present time
-------
VI - 45
it appears highly likely that import quotas, effective for a
five-year period, will be adopted for specialty steel wire
products. In subsequent years, it is believed that increasing
foreign demand, and an improved competitive position for U.S. pro-
ducers, will enable the establishments in this segment to maintain
reasonable profitability levels, as indeed they experienced in
1974. The continued viability of establishments in this segment
may also be enhanced by an increased emphasis on "made-to-order"
products, which are less exposed to import competition, and which
already form a major part of the product line of the smaller firms.
Finally, the total capital investment requirements for the larger
establishments are an extremely small percentage of parent com-
pany profits, and no closures are expected to occur among plants
in this size group.
In the probable event that the wire processors do gain
a degree of insulation from foreign competition, or if foreign
producers experience similar cost increases, they are projected
to be able to have no -major difficulty in passing through to their
customers the 2% to 3% cost increases resulting from the BPT/BAT
guidelines. There is insufficient evidence available about the
particular elasticity of consumption demand for these products to
predict the consequent volume reduction with any precision. How-
ever, assuming a demand elasticity approximately equal to that for
specialty steel products as a whole, the volume impacts should be
absorbed by this segment without great difficulty, given the annual
demand growth rates projected in the baseline forecast.
-------
VI - 46
The smaller firms in this segment will experience unit
cost increases between 1.0% and 1.5% higher than those of the
larger processors. Given their orientation toward customized
"made-to-order" products, however, they are believed to be capable
of passing on most of these higher costs to their customers. The
capital investment requirements for smaller establishments in this
industry segmsnt are quite small in absolute dollar amounts. The
best projection at this time is that all of the firms operating
small establishments in this segment will make the small invest-
ments necessary to meet the effluent control guidelines and that
no closures will occur among these plants.
It is recognized, however, that if baseline conditions are
substantially less favorable than anticipated, the smaller wire
processors could face a long-term low profitability situation.
In this case, the probable absorption of part of their estimated
pollution control costs could have a decisively adverse impact,
leading to significant potential for closures. However, the total
employment of these nine firms is barely over 1,000, and they are
scattered across the Northeastern states, so that any employment
effects would be minor.
IMPACT ON CUSTOMERS
AND SUPPLIERS
As has been discussed in previous sections of this study,
the specialty steel industry typically plays a small role in
-------
VI - 47
the cost structure of its customers and in the raw materials,
equipment, and other markets in which it is a buyer. Since the
impact of the guidelines on the specialty steel industry itself
is quite small, the impact on these customers and suppliers is
projected to be negligible.
OTHER IMPACTS
(a) Local and
Regional Impacts
Any possible closures resulting from the costs associated
with the effluent guidelines are expected to effect well under
1,000 employees, scattered over the Northeastern states. Con-
sequently, no important local or regional impacts are projected.
(b) Balance of
Trade Impacts
The volume impact analysis of this section indicated that,
assuming unrestricted imports between 1976 and 1980, net imports
of specialty steel could rise 10-15%. Using the Alternative B
baseline forecasts of imports in 1980, and estimated 1975 composite
industry selling prices (since price increases due to the regulations
would be inconsequential in this case), the stainless steel deficit
would increase by less than $30 million, and the tool steel deficit
(3)
would rise by less than $7 million. These sums are minor in
(3)
These composite industry selling prices would considerably
overstate the unit value of imports, thereby overestimating
the negative balance of payments effects.
-------
VI - 48
relation to either the overall U.S. balance of trade surpluses
of 1973 and 1975 or the balance of trade deficits of 1974, 1972,
and earlier years.
In the alternative case of restricted imports between 1976
and 1980, and in the analysis of price and volume effects subsequent
to the BAT regulations, no appreciable change in import and export
tonnages was projected. Any balance of trade impacts would result
from the 0.5% to 1.5% projected increases in specialty steel prices
and would be in the order of magnitude of $2 to $3 million.
TOTAL ANNUAL
COST
The total annual costs incurred by the entire industry seg-
ment were calculated for each segment represented by a model
plant. As previously discussed in Chapter V-B, annual costs are
comprised of fixed costs and direct costs which vary directly
with operating levels. Thus, total annual costs were, in each
case, calculated for the same four capacity utilizations used
in Chapter V-B, namely 60%, 75%, 90% and 100%, The total annual
cost in each case, defined by industry segment and utilization,
was calculated by multiplying the annual shipments by the appro-
priate total annual cost per ship ton, as developed in Exhibits
V-9 and V-10. The BPT and BAT total annual costs so computed
are shown in detail in Exhibits VI-4 and VI-5 respectively.
-------
VI - 49
Table VI-12 summarizes these exhibits.
Table VI-12
Incremental SIC Total Annual Cost as a
Function of Capacity Utilization
(Millions of Dollars)
SIC Description 60% 75% 90% 100%
3312
3312
3312
3315
3316
3317
Integrated Producers - BPT
Integrated Producers - BAT
Integrated Producers -
BPT and BAT
Wire Drawers
Sheet, Strip
Processors
Pipe and Tube
BPT and BAT
Specialty Steel
Total - BPT
Specialty Steel
- BPT and BAT
and Bar
- BPT and BAT
Makers -
Industry
Industry
Total - BPT and BAT
$25
10
36
1
1
0
$29
$40
.8
.9
.7
.0
.9
.8
.5
.4
$27.
11.
38.
1.
2.
0.
$31.
$42.
2
3
5
1
0
8
1
4
$28
11
40
1
2
0
$32
$44
.7
.6
.3
.1
.2
.8
.8
.4
$29
11
41
1
2
0
$33
$45
.6
.8
.4
.1
.3
.8
.8
.6
Sources: Exhibits VI-4 and VI-5.
These total annual costs measure the resources society
must expend to exact compliance by the specialty steel industry
with the effluent limitations, and will be incurred irrespective
of who ultimately pays them. To the extent that these costs
are passed on by means of increased prices, consumers of the end-
products produced from this industry's output will ultimately
pay the price of compliance. To the extent that the total an-
nual costs are not passed on via price increases, the owners of
establishments will underwrite them.
-------
VI - 50
The costs detailed above would overstate the actual costs
to society of the regulations if several plants were to close
rather than incur the investment costs associated with the
controls regulations. However, since the only significant
potential for closure was limited to the wire drawers, this
overstatement would be less than $1 million annually.
-------
ENVIRONMENTAL PROTECTION AGENCY
FORECAST STAINLESS STEEL PRODUCTION, CONSUMPTION,
IMPORTS AND EXPORTS - 1976-1983
Alternative "A"
Net Domestic
Year
1972(2)
1973(2)
1974(2)
19750)
1976
1977
1978
1979
1980
1981
1982
1983
Notes :
Consumption
Demand (1)
941.6
1,166.4
1,383.6
897.7
1,030
1,185
1,360
1,470
1,530
1,300
1,430
1,695
(1) Apparent
and thus
Tonna
149.
128.
176.
192.
175
175
175
175
175
210
255
315
domestic
includes
(2) Actual data from
(3) Import,
Imports Exports
Percent of
Percent of
ge Consumption Tonnage Shipments
1 15.8 62.5
3 11.0 95.7
1 12.7 137.2
0 21.4 39.0
17 65
15 100
13 125
12 140
11.5 155
16 95
18 105
18.5 155
7.3
8.4
10.2
5.2
7
9
9.5
10.5
10.5
8
8
10
consumption equals domestic producers
net additions to stocks
American Iron and Steel
export, and shipments figures are
t
(Thousands of Net Tons)
Domestic
Alternative "B"
Net Domestic Imports
Producers' Net Consumption
Shipments
855.0
1,133.8
1,344.7
744.7
920
1,110
1,310
1,435
1,510
1,185
1,280
1,535
Demand (1)
941.6
1,166.4
1,383.6
897.7
1,030
1,185
1,360
1,470
1,530
1,300
1,430
1,695
1 shipments minus exports plus
Institute, Annual Statistical
annual rates
based on first
Reports.
Exports
Percent of
Tonnage Consumption
149.1
128.3
176.1
172.0
185
200
220
240
260
255
255
315
import a ,
15.8
11.0
12.7
21.4
18
17
16
16.5
17
19.5
18
18.5
Tonnage
62.5
95.7
137.2
39.0
65
100
125
140
155
95
105
155
Percent of
Shipments
7.3
8.4
10.2
5.2
7
9
9.5
10.5
10.5
8
8
10
Domestic
Producers' Net
Shipments
855.0
1,133.8
1,344.7
744.7
910
1,085
1,265
1,370
1,425
1,140
1,280
1,535
seven months data, as reported
-------
EHVIBMMEHTAl FROTECTIOM ACEHCY
FORFEAST TOOL STEEL PRODUCTION, CONSUMPTION,
IMPORTS. AM) EXPORTS - 1976-1983
Alternative "A"
Het Domestic Uports
Con suction
Year Decaad(l) Tonnage
1972(2)
1973(2)
1974(2)
19750)
1976
1977
1978
1977
1980
1981
1982
1983
•totes- <1)
(21
\*-f
(3)
99.0 11.9
119.6 15.0
120.8 16.0
92.0 21.0
105 16
125 16
145 16
150 16
155 16
130 20
145 26
165 30
Apparent dcsestic cc
Percent
Exports
Ot
Percent
(Thousands of Net Tons)
•xxaestic
Alternative "B"
Net Dcaescic Iaix>vi:s
of Producers' wet Coosuaptioc f*
CcniuBpti-QQ T&tms?,^ SUijj&eSits 5£i".DiBer-J /»jl»? Ti-nm
laport, export, and efaApBent?
&U4ii Steel. «.
figures ore
« ri T .-
Anruual Star 1 fi£i£±il
£icjiii_i r^tes based on first
Reports*
sevaa months dace, a» repcrtea
I
ro
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BPT AND BAT INVESTMENT COSTS COMPARED WITH PROFITS
FOR REPORTING SPECIALTY STEEL FIRMS
SIC 3312 Firms
Firm (Dlv.)
Establishment
SIC Location
Allegheny Ludlum Ind., Inc.
3312 Blackenrldge/Natrona/W. Leechburg,
3312 Watervllet/Dunkirk, N. Y.
3312 New Hartford, N. Y.
3316 Wellington, Conn.
3316 New Castle, Ind.
Armco Steel Corp.
3312 Butler, Pa.
3312 Baltimore, Md.
3317 Wlldwood, Fla.
3317 Houston, Tex.
Athlone Ind. (Jessop Steel) - 3312 Washington, Pa
Borg Warner Corp. - 3312 New Castle, Ind.
Cabot Corp. (Stelllte Dlv.) - 3312 Kokoroo
Carpenter Technology
3312 Bridgeport, Ct.
3312 Reading, Pa.
3317 Union, N. J.
3317 El Cajon, Cal.
3317 Jamesburg, N. J.
Colt Ind. (Crucible Dlv.)
3312 Midland, Pa.
3317 East Troy, Wls. (Trent Tubes)
3317 Carrollton, Ga. (Trent Tubes)
3317 Fullerton, Ga. (Trent Tubes)
Continental Copper & Steel (Braeburn)
3312 Braeburn, Pa.
Cyclops
3312 Brldgevllle, Pa.
3316 Coshocton, Ohio
Eastmet Corp. - 3312 Baltimore, Hd.
(Millions of Dollars)
1974 Firm
Pre-Tax
Profit
(2) ? 76'5
;, Pa.
319.3
n, Pa. 26.3
72.7
[nd. 41.2
31.5
136.8
10.9
35.9
BPT Investment
Cost<1) of
$26.8
17.9
5.7
0.5
1.8
0.9
21.2
15.3
5.7
0.1
0.1
6.8
6.8
1.5
11.9
5.7
5.7
0.3
0.1
0.1
15.8
15.3
0.3
0.1
0.1
0.3
7.5
5.7
1.8
Percent
Profit
35.0%
9.7
25.9
9.4
3.6
37.8
11.5
2.8
20.9
BAT
CostO)
$14.1
10.5
3.0
0.6
-
10.1
7.1
3.0
_
-
1.7
1.7
0.9
6.0
3.0
3.0
_
-
7.1
7.1
_
^
-
0.4
3.0
3.0
-
Investment
As Percent
of Profit
18.4%
4.6
6.5
2.3
2,2
19.0
5.2
3.7
8.4
Total
cost a )
$40.9
28.4
8.7
1.1
1.8
0.9
31.3
22.4
8.7
0.1
O.I
8.5
8.5
2.4
17.9
8.7
8.7
0.3
0.1
0.1
22.9
22.4
0.3
O.I
0.1
0.7
10.5
8.7
1.8
Investment
As Percent
of Profit
53.5%
14.3
32.3
11.7
5.8
56.8
16.7
6.4
29.2
6.9
6.8
98.6
1.7
24.6
8.5
123.2
90 !H
(D
C0
3
•P- i
-------
INCREMENTAL BPT AND BAT INVESTMENT COSTS COMPARED WITH PROFITS
FOR REPORTING SPECIALTY STEEL FIRMS
SIC 3312 Firms
Firm (Div.)
Establishment
SIC Location
I.T.T. (Harper Dlv.) - 3312 Morton Crowe, 111.
Jones and Laughlln***
3312 Warren, Mich.
3316 Louisville, Oh.
Joslyn Mfg. and Supply Co. - 3312 Fort Wayne, Ind.
La t robe Steel<5> - 3312 La t robe, Pa.
Teledyne
3312 La t robe, Pa.
3312 Monaca, Pa.
3312 Monroe, N. C.
3316 New Bedford, Mass.
3317 Elkhart, Ind.
Wallace Murray (Simmonda) - 3312 Lockport, N. Y.
Washington Steel - 3312 Washington, Pa.
3312 Firms - Totals
Percent s
3312 Firms - Totals ^
(Millions of Dollars)
1974 Firm BPT Investment
Pre-Tax
Profit
1,045.5
268.1
10.4
5.4
65.0
22.1
12.6
$2.ie;.i
SI. 141. 6
Costd)
0.5
6.6
5.7
0.9
1.5
5.7
1.9
0.3
0.3
0.3
0.9
0.1
1.5
_&J
$129.9
$129.4
As Percent
of Profit
(3)
2.5
14.4
105.6
2.9
6.8
54.0
5.9
11.3
BAT Investment
Cost*1)
0.6
3.0
3.0
0.9
3.0
1.2
0.4
0.4
0.4
0.9
_LJ
$52.6
$11^
As Percent
of Profit
(3)
1.1
8.7
55.6
1.8
4.1
13.5
2,4
4.6
Total Investment
Costd)
1.1
9.6
8.7
0.9
2.4
8.7
3.1
0.7
0.7
0.7
0.9
0.1
2.4
_SLS
$182.5
$181 -4
As' Percent
of Profit
0.1
3.6
23.1
161.1
4.8
10.9
67.5
8.3
15.9
Percents(6)
Boies to Investment Cost as Percent *>2 Profit Table.
mW ,3 part o2 f« .
Investoent costiJ wauld increase by k% for BPT and 27i for BAT.
(3) Less than .05Z.
?4) Subsidiary of LTV.
(6) Thts"totIls£andT^rcStage3 coit valyas for 117, Harper Dlv., as it is definitely aa outlier.
Sources: Exhibits 11-1, V-9 and V-10.
. I! cow'Jsred sedately, the
00
to
o
Ms
3
I
co
-------
INCREMENTAL BPT AND BAT INVESTMENT COSTS
COMPARED WITH PROFITS FOR REPORTING SPECIALTY STEEL FIRMS
(Millions
SIC 3315 Firms
Firm (Div.) Location
ACS Industries - Woonsocket, R.I.
Armada Corp. (Brookfield Wire) -
Brookfield, Mass.
Driver-Harris Co. - Harrison, N. J.
Eaton Corp. _ Cleveland, Ohio
General Cable Corp. - New York, N. Y.
GTE Sylvania - Warren, Pa.
Howmet Corp. - Northampton, Mass.
National Standard Co. _ Niles, Mich.
H. K. Porter Co. _ Somerville, Mass.
3315 Firms - Totals
Percent
Notes: (1) No Incremental BAT Costs.
(2) Appropriate Model Plant Costs.
Sources: Exhibits II-l and V-12.
of Dollars)
1974 Firm
Pre-Tax
Profits
$ 1.2
4.9
1.9
172.7
75.1
122.2
46.1
26.2
33.9
$484.2
BPT
(2^
Costs ^
$0.22
0.22
0.75
0.75
0.75
0.22
0.22
0.75
0.75
$4.63
Investment^ '
L As Percent
of Profits
18.3%
4.8
39.5
0.4
1.0
0.2
0.5
2.9
2.2
1.070
EXHIBIT
Page 3 <
o
Hi
I
OJ
-------
INCREMENTAL BPT AND BAT INVESTMENT COSTS
COMPARED WITH PROFITS FOR REPORTING SPECIALTY STEEL FIRMS
(Millions
SIC 3317 Firms
of Dollars)
1974
Firm
Pre-Tax
Firm (Div.) Location
Emerson Electric (Greenville Tube) -
Greenville, Pa.
Clarksville, Ariz.
Handy & Harmon Tube Co. - Norristown, Pa3
Phillips Petroleum (Wall Tube & Metal
Prods.) - Newport, Tenns
Sharon Steel (Damascus Tubular Prods.) -
Greenville, Pa.
Synalloy (Bristol Metal Prods 0) -
Bristol, Tenn.
U.O.P. (Flexomics) - Bartlett, 111.
Whittaker Corp (Bishop Tube) - Frazer, Pa.
Lee Wilson Engineering Co., Inc. - Lorain,
Ohio
3317 Firms - Totals
Percent
Notes: (1) No Incremental BAT Costs.
(2) Appropriate Model Plant Costs.
Sources: Exhibits II-l and V-9.
Profits
$158
26
429
84
1
33
35
$768
.2
.0
.8
.3
.8
.2
.0
.4
.7.
BPT
*• n. ^
Cost^
0
0
0
0
0
0
0
0
0
0
$1
s^s
.36
.30
.06
.06
.30
.06
.06
.30
.06
.06
.26
! lm_f
Investment^
-)
As Percent
of Profits
0 270
v • *• /O
0.
0.
0.
3.
0.
0.
15.
0.
2
1
1
3
9
2
0
2%
t_
*T
OQ
ft
4>
O
l-t
^
W
B
M
&
M
H
<
I
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BPT TOTAL ANNUAL
COSTS FOR SIC 3312
Total Annual Cost
Model Plant/
Industry Segment
Large Flat Products
Without Cupola
Large Flat Products
With Cupola
Small Flat Products
Large Section Products
Medium Section Products
Small Section Products -
Rolled
Small Section Products -
Forged
Totals
Number of
Establish-
ments
2
1
4
7
4
2
5
25
Total
Ship
Capacity
(103 NT)
1,106
708
252
693
148
19.4
45
2,971.4
607o of
Ship
Capacity
r$ x IO3)
$ 7,658
4,622
4,916
7,114
1,056
186
275
$25,827
757o of 907o of 10070 of
Ship Ship Ship
r$ x io3) r$ x io3) ($ x io3)
$ 8,320
5,050
5,046
7,282
1,077
188
278
$27,241
$ 8,988
5,480
5,176
7,453
1,098
190
281
$28,666
$ 9,434
5,763
5,262
7,561
1,111
192
284
$29,607
JB
OQ
Source: Exhibit V-9.
O
t-h
N>
M
H
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BPT TOTAL ANNUAL COSTS FOR SIC's 3315-7
SIC
3315
3315
3315
3316
3316
3316
3317
3317
3317
Source
Number of
Model Plant/ Establish-
Ir.^stry Segmsrit mertLo
Large Wire Drawers 5
Small Wire Drawers 9
Totals M
Large Sheet, Strip
and Bar Processors 2
Small Sheet, Strip
and Bar Processors 4
Totals _§.
Large Pipe and Tube
Makers 8
Small Pipe and Tube
Makers 34
Totals 42
: Exhibit V-9.
Total Annual Cost
Total 60% of 751 oF" 90t of 100% of
Ship Ship Ship Ship Ship
Capaci^v C«p«icicy CaDacifv Capacity Capacity
(163 NT; ($".10J)" {$'.I03)' ($",103) ($,103)
39-5 S 701 $ 724 $ 747 $ 763
9.0 " 347 352 358 361
48,5 $1,048 $1,076 $19105 $1,124
236 $ 98S $1,089 $1,192 $1,258
156 873 941 1,008 1,055
332. $LJjLL $2,030 $2,200 $2.313
120.0 $ 450 $ 463 $ 476 $ 485
30.6 341 346 351 355
150.6 $ 791 $ 809 $ 827 $ 840
OQ
(t>
N3
©
-------
ENVIRONMENTAL PROTECTION AGENCY
INCREMENTAL BAT TOTAL ANNUAL
COSTS FOR SIC 3312
Total Annual Cost
Model Plant/
Industry Segment
Large Flat Products
Without Cupola
Large Flat Products
With Cupola
Small Flat Products
Large Section Products
Medium Section Products
Small Section Products -
Rolled
Small Section Products -
Forged
Totals
Number of
Establish-
ments
2
1
4
7
4
2
5
25
Total
Ship
Capacity
(103 NT)
1,106
708
252
693
148
19.4
45
2,971.4
607, of
Ship
Capacity
($ x 103)
$ 2,688
2,069
1,191
3,817
647
210
317
$10,939
757o of
Ship
Capacity
($ x 103)
$ 2,787
2,161
1,211
3,919
655
212
321
$11,266
907o of
Ship
100% of
Ship
Capacity Capacity
($ x 103) ($ x 10 3)
$ 2,887
2,249
1,229
4,017
663
214
324
$11,583
$ 2,953
2,308
1,242
4,089
669
216
327
$11,804
Source: Exhibit V-10.
t-H
H
LTl
-------
APPENDIX
SPECIALTY STEEL PRODUCTION PROCESSES
Although the processes and equipment which are used to pro-
duce specialty steels are basically the same as those used for
carbon and low alloy steels, there are certain important dif-
ferences which are related to the high alloy content and special
properties of specialty steels, and the generally small batch
quantities in which these steels are made. Because stainless
steel production processes differ in many respects from tool steel
production processes, these will be discussed separately. Simi-
larly, because of the facilities and methods employed by inte-
grated producers by comparison with specialty converters and
processors, these two types of operations will be discussed
separately.
INTEGRATED
PRODUCERS
(a) Melting
1. Stainless Steel. Melting of stainless steel can be
carried out by any of the steel melting processes currently used
for carbon steels. However, practical considerations have limited
actual processes in use to electric arc furnace melting and basic
oxygen converter refining. Only one installation of the latter
process is known to be in use in the U.S., with all other stainless
steel melting being carried out in electric arc furnaces. In the
single basic oxygen converter installation, melting is performed
in a cupola, while the basic oxygen converter is used for refining.
-------
- 2 -
2. Too.! Steel and High Alloy Steel. Melting of tool
and high alloy steels is entirely accomplished in electric fur-
naces, with the majority of installations being electric arc fur-
naces, and a few small installations being electric induction
furnaces. ?or special purpose metals, electroslag consumable
electrode remelting is used for combined melting and casting.
(b) Degassing and
Decarburization
Three ot the installations for both stainless and tool
steels utilize vacuum degassing as a means of removing dissolved
gases from molten steel before casting. Other special techniques
include vacuum melting and argon-oxygen decarburization.
(c) Casting
Operations
1. Stainless Steel. All of the methods of casting
which are presently in general use are used for stainless steel.
These include three continuous slab casters, and three pressure
slab casters, with all of the remaining establishments casting
ingots.
2. Tool Steel. Tool and high alloy steels are almost
entirely cast irto ingots, with the exception of those special
metals which are both melted and cast by electroslag consumable
electrode remelting.
(d) Hot Rolling
Operations
1. 'Stainless Steel. Ingots are rolled to blooms or
-------
slabs on breakdown mills, either 2-Hi reversing or 3-Hi types.
After surface conditioning, slabs from primary rolling mills,
continuous casters or pressure casters are heated and rolled on
reversing mills or continuous mills to produce hot rolled plate
or strip. Blooms or billets from primary rolling mills are
rolled to bars or wire rod on continuous bar mills or on 3-Hi
bar mills.
2* Tool Steel. Tool steel ingots are usually surface
conditioned before breakdown. Primary hot working is performed in
presses in six installations, and in rolling mills in all other
cases, with the product almost always being billets. After sur-
face conditioning and reheating, the billets are rolled on
reversing mills or hand mills to produce bars and rods.
(e) Surface Conditioning
Operations
All stainless and tool steel hot rolling operations are
followed by surface conditioning operations in which the entire
surface of the slab or billet is removed by grinding, milling or
turning.
(f) Preparation for
Cold Working
1. Stainless Steel. Stainless steel hot rolled coils
are annealed in batch or continuous furnaces, after which they
are descaled by pickling in acid, or by alternative methods such
as shotblasting, kolene treatment or hydride treatment. Bars
are annealed, straightened and descaled by pickling. Wire rod is
-------
- 4 -
annealed and descaled by pickling.
2- Tool Steel. Tool steel is annealed and descaled by
shotblasting, grinding or pickling.
(g) Cold Working
__ Operations
Stainless Steel - Annealed, pickled hot rolled coils are cold
rolled to produce cold rolled strip on cold strip mills of one or
more stands. Where severe reductions are required, an annealing
operation may be necessary before final cold reduction is per-
formed. A final rolling operation may be performed on a temper
rolling mill if special properties, finish or flatness are required
Finished cold rolled coils are slit or sheared to desired width and
length. Cold drawn bars are produced by pulling annealed, pickled,
hot rolled bars through dies. Where severe reductions are re-
quired, the bars may be annealed before final reductions are
performed.
Appendix Elxhibits 1, 2 and 3 depict typical production flow
cycles for bar, strip and plate production.
FIRMS WHICH PURCHASE
AND CONVERT
SPECIALTY STEEL
Manufacturing processes used by firms which purchase and
convert specialty steel can best be presented by describing the
processes associated with the predominant product form types.
-------
(a) Specialty Wire
Processors
These establishments do not melt or hot roll specialty steels
They start their operation with what is known as hot rod in coils
or wire rod coils. Their cold finishing manufacturing process
is much the same as would be performed by an integrated producer.
Usually the purchased hot rod is coated for drawing and then
cold reduced in draw blocks. The maximum round size considered
as wire is one-half-inch diameter. Very fine wire down to the
third decimal place is available. Depending on the final size
desired, several cycles of drawing, annealing, cleaning (pickling)
and coating may be necessary.
Stainless steel and heat resistant wire may be shipped on
spools, paper wrapped strapped coils, or in straightened and cut
lengths. The method of packaging will depend on the customer's
specifications.
Very little tool steel wire is processed by nonintegrated
producers. There are several small tool manufacturers who buy
high speed tool steel in hot rod coils and further reduce it to
decimal sizes by hot drawing, but the quantities are minimal.
They find it necessary to do their own reducing because of the
relatively small amounts of many small decimal sizes required to
produce twist drills, taps, reamers, end mills, etc.
-------
- 6 -
(b) Specialty Cold Rolled
Sheet Strip and
Bar Processors
These establishments do not melt or hot roll specialty steels
The processors in this segment have the capability to cold reduce
hot rolled or partially cold reduce coils down to final sizes
which are sold for a myriad of applications. The processes may
involve cold rolling on a variety of cold rolling equipment,
followed by annealing, pickling and slitting. After final gauge
is attained on cold rolled sheets, the steel may be stretcher
leveled for extremely flat applications.
After final gauge is attained on strip coils the steel may
be slit to one of a number of widths and shipped in coils. Some
strip may also be shipped in leveled and sheared lengths.
There is relatively little stainless steel bar produced by
nonintegrated producers, Those that do participate in this
segment of the steel industry buy hot rolled bars in various
surface conditions. The bars that they buy may be simply hot
rolled and annealed, or they may be rough turned and annealed.
The producers in this segment of the industry can cold finish the
product they purchase by rough turning, by centerless grinding,
by cold drawing, or by some combination of all three methods.
Products necessarily require annealing and pickling or shot blast-
ing, prior to shipping.
-------
- 7 -
(c) Specialty Steel Pipe
and Tube Processors
These companies and/or plants do not melt specialty steels
although they may hot pierce or hot extrude tube hollows for
subsequent finishing.
Two distinct types of pipe and tubing are produced. They
are welded tubing and seamless tubing. The end-use for which the
product is purchased determines the method of production.
Specialty welded tubing processors buy stainless strip
either to exact gauge and width or to exact gauge and wide widths
which are slit as needed. After edge preparation to ensure a
good weld, the strip is cold formed and welded in continuous cold
forming and welding mills. Large size tubing may be formed from
plate on special presses and then welded.
The weld bead in the inside diameter of the tube may or may
not be removed depending on the end-use. After welding, the tube
may be annealed and pickled and straightened. Tubing may be
shipped in standard 20- to 22-foot lengths or in coils, depending
on the size and the use.
Seamless tubing originates with a round billet called a tube
round which is then pierced in a hot piercing mill, or hot ex-
truded in a press. The grade and analysis determine for the
most part whether piercing or extrusion will be used to put a
hole in the tube round. The resultant product is generally re-
ferred to as a tube hollow and is the beginning of a finished
-------
- 8 -
seamless tube. Usually the integrated steel plant produces the
tube hollow. A nonintegrated producer may then buy this product
and further cold reduce it to final size. Annealing and pickling
are necessary operations for completion of the product.
PRODUCTION
CAPACITY
Based on 1974 stainless steel ingot production data of the
American Iron and Steel Institute, and allowing for other specialty
steels, specialty steel production capacity is estimated to be
of the order of 2.75 million tons. This estimate of production
capacity would imply a ship capacity of approximately 1.6
million tons. Historically, specialty steel mills have op-
erated at full capacity only in times of national emergency.
However, the American Iron and Steel Institute reported record
stainless steel shipments of 1,133,886 net tons in 1973 and
1,344,694 net tons in 1974.
A compounding factor is that stainless producers slowed
expansion during the 1969-1972 period because of reduced demand
and a lack of capital for expansion purposes. Exhibit II-3 shows
1963-1972 capital expenditures as a percentage of gross plant for
four major specialty steel producers—Allegheny-Ludlum, Carpenter
Technology, Cyclops, and Latrobe. Capital expenditures were down
for most of these companies in 1970, 1971 and 1972.
-------
- 9 -
PRESENT SOURCES OF
WATER POLLUTION AND
CONTROL TECHNOLOGY
This section will discuss the present sources of water pollu-
tion and the control technology in terms of the specific steel-
making or finishing process. The processes chosen and the technical
discussion of them are based upon the Development Document dated
June 1975 prepared under contract to EPA by Datagraphics, Inc.
(a) EOF
In the EOF process, refining takes place when an oxygen lance
is lowered into the EOF vessel and the oxygen is admitted. A
violent reaction occurs and the resultant turbulence brings the
hot gases and the molten metal into intimate contact, causing the
impurities to burn off quickly. An oxygen "blow" of 18-22 minutes
is normally sufficient to refine the metal.
Wet scrubbers are commonly used to clean exhaust gases from
the EOF furnace. The principal water pollution problem comes from
the dust which is collected by the wet scrubber system.
The present methods of treating the effluent discharged are
passing it either through a classifier, cyclone separator to a
thickener or directly to the thickener. Flocculation polymers are
generally added to aid settling. The overflow from the thickener
may either be recirculated to the scrubber or gas washer or dis-
charged to the plant sewers. The underflow from the thickeners
is passed through filters with the filtrate being recirculated
-------
- 10 -
to the thickeners while the filter cake may be sent to the sinter
plant for recycling.
(b) Vacuum
Degassing
In the vacuum degassing process, steel is further refined
by subjecting the steel to a high vacuum in an enclosed, refractory
lined chamber. Oxygen, carbon, and some steel in the bath are
oxidized and are emitted as CO gas and iron oxide fumes. Because
alloys may also be added to the steel at this point, the gas
stream may also contain suspended solids of zinc, manganese, lead
and nitrates. Steam jet ejectors with barometric condensers are
used to draw the vacuum in this system. The condensate waste water
is either recycled after cooling or discharged directly to the
plant sewers.
(c) Continuous Casting
and Pressure
Slab Molding
In these processes, the steel is cooled by direct contact
spray water and the principal contaminant is suspended solids
from surface scele and/or mold lining. Additionally, oil from
machinery lubrication finds its way into the water effluent. The
waste water from this process is presently either being treated
by settling pits equipped with drag chain conveyors or flat-bed
filters with periodic blow-down. The clarified water is recir-
culated or sent to a receiving stream. The scale collected may
be recycled within the steel plant.
-------
- 11 -
(d) Primary Hot
Forming
Primary hot forming encompasses rolling done in blooming
and slabbing mills and the subsequent descaling and automatic
scarfing operations. Waste water results from mill equipment
cooling and high-pressure water descaling. Additionally, the
gases from automatic scarfing operations are sometimes passed
through high energy venturi scrubbers or precipitators.
The waste waters from descaling and mill equipment cooling
are generally discharged to in-ground settling chambers called
scale pits. The iron particles settle to the bottom and may be
removed periodically by mechanical means. The waters flow out
of the scale pits via underflow weirs equipped with launders
to trap grease and oil washed into the stream. The oils are
then removed by skimming devices and stored in waste-oil tanks
having capacities up to 10,000 gallons. The water may either be
recycled or discharged to plant sewers.
The waste waters from the scarfer may flow into the same
scale pit as waste water from the other mill equipment or it may
be routed into a separate pit. The slag settles out and may be
removed by mechanical means. The overflow water is generally
discharged to plant sewers.
Waste waters from the high-energy venturi scrubber blow-
down are usually directed to the scale pit. Wet precipitator
waste waters are generally discharged to a thickener with chemical
-------
- 12 -
coagulation. The clarified waters can be recycled back to the
precipitator systems or discharged to plant sewer systems.
(e) Hot Forming - Sections
or Flat Products
The equipment used to form sections or flat products consists
of a reheating furnace and several stands of driven rolls which
progressively form the desired shape. The waste waters produced,
other than the reheat furnace noncontact cooling water, are the
result of equipment cooling or high-pressure water descaling
systems. The mill equipment discharge and descaling waters are
discharged to scale pits. The present method of treatment for
these waters is the same as that described above for the primary
hot forming equipment.
(f) Acid Batch
Pickling
Most alloy and all stainless steels are pickled, i.e., cleaned
in solutions of acids to remove surface scale. In the sulphuric
acid batch system, a rack of steel, usually light gauge sheet, is
submerged in a sulfuric acid bath. Either the bath or the rack
of plate is agitated to distribute the pickling solution evenly.
After the sulfuric acid bath, the plate is rinsed with water.
These operations produce strong spent liquors and rinsewaters,
the latter havina generally the same constituents as the former
but with lesser quantities of contaminants and greater total volume,
Current control and treatment includes the use of contract
hauling of concentrated spent liquors for off-site treatment
-------
- 13 -
and/or disposal; combination of concentrated spent liquors and
rinse waters with alkaline wastes followed by four- to eight-
hour settling; and neutralization of acid and alkaline wastes
followed by mixing and long-term settling.
(g) Combination Acid
Pickling - Continuous
In the continuous method of pickling stainless steel or
alloy strip, the front end of the next strip is welded to the tail
of the coil which is just passing through the pickler. The
pickler itself consists of a long series of driven rolls which
carry the strip through a hydrochloric acid bath, a nitric acid-
hydrofluoric acid tank, a cold water rinse and a hot water rinse.
The strip is then air dried, sheared and recoiled. The major
by-products of this operation are contaminated rinse water and
two kinds of concentrated spent pickle liquors.
Current control and treatment technology includes the use
of either contract hauling of concentrated spent liquors for off-
site treatment and/or disposal; or neutralization with lime and
lagooning of the neutralized solutions; or neutralization with
lime and solids separation by vacuum filtration; or neutralization
with lime and clarification in a flocculator-clarifier; or neutra-
lization with evaporation to dryness. At the present time, there
is no clearly demonstrated technology for the recirculation and
reuse of combination acid pickling waste waters.
-------
- 14 -
(h) Combination Acid
Pickling - Batch
The production of stainless steel billets, bars and plate
typically involves a single pickling operation in a 10% sulfuric
acid solution followed by a 10% nitric-10% hydrofluoric acid bath
followed by rinsing.
The production of pipe, tube and wire involves essentially
the same type of pickling procedure, the difference being that
pickling will be done before each major redrawing operation.
Current control technology for these processes is similar to
that described above for the continuous combination acid pickling
treatment.
(i ) Kolene Scale
Removal
The kolene process utilises highly oxidizing salt baths at
temperatures between 371 and 482 C (700-900 F) . These salts react
far more aggressively with scale than with the base metal. The
typical treatment cycle consists of kolene treatment, water
quenching, water rinsing, acid dipping, and water rinsing. A
unique contaminant produced by this process is hexavalent chromium.
The spent liquor and the rinse water contain many of the same
metallic elements found in the liquor, principally chromium, nickel
and water from the acid pickling processes, and are highly alkaline.
Current control and treatment technology consists of com-
bining and equalizing all of the process water flow from the
-------
- 15 -
kolene scale removal process with that of the effluents from
acid pickling processes and treating the combined flows in ways
similar to those described for combination acid pickling waste
waters, with the addition of provisions for reduction of hexa-
valent chromium as necessary.
(j) Hydride Scale
Removal
Sodium hydride descaling depends upon the strong reducing
properties of sodium hydride carried at 1.5 to 2% by weight in
a fused caustic soda bath at 371 C (700 F). Most scaleforming
oxides are reduced to the base metal; oxides of metals that form
acid radicals are partly reduced. The hydride is formed in place
by the reaction of hydrogen and metallic sodium in open bottom
chambers partially immersed in the bath. Most commercial instal-
lations use dissolved ammonia as a source of hydrogen. The
typical treatment cycle consists of sodium hydride treatment,
water quenching, water rinsing, acid dipping, and water rinsing.
The principal contaminants present in the concentrated spent
liquor and rinse waters are cyanide and the same metallic elements
present in the alloy or stainless product being pickled. Ad-
ditionally, the waste waters are very alkaline.
Current control and treatment technology is similar to that
described for the kolene scale removal process waste water, with
the exception that provision is made for cyanide oxidation rather
than for chromium.
-------
- 16 -
CONTINUOUS ALKALINE
CLEANING
This method of cleaning strips of steel consists of an
uncoiler unit; a welding unit which welds the tail of one coil to
the beginning of the next; alkaline solution, watec quench, wat^ •
rinse, acid solution and water rinse tanks through which the
strip is carried on rolls; a strip shear; and a recoiler or ahoau
stacker mech.anism.
The principal metallic contaminants are cyanide and many of
the same metallic elements, principally chromium and nickej , which
are present in the alloy or stainless steel being processed..
The current control and treatment technology consists of
combining and equalizing the process water flow from the con-
tinuous alkaline cleaning process with that of the effluents from
acid pickling processes and treatment of the combined flews in
ways similar to those described for combination acic pickling
waste waters.
WIRE COATING
AND PICKLING
Rod for wire is produced in coils by the hot rolling mills
and constitutes the raw material for the wire mills. After a
heat treatment to achieve the desired microstructure and
mechanical properties, the wire is batch pickled.
Wire products are pickled with various acids and are fre-
quently coated with other metals such as copper, lead, and/or
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- 17 -
molybdenum. These coatings are often applied by electrolytic
deposition from solutions of the metal salts. Water is used to
rinse the products. The effluents from wire coating operations
contain, in addition to suspended solids and oil, copper, lead,
and zinc, depending upon the nature of the coating being applied.
Additionally, cyanide may be present in the waste from such
operations as copper cyanide coating baths.
Current control and treatment technology consists of the
combination of such wastes and treatment in ways as described
for combination acid pickling waste waters, with prior oxidation
of cyanide if necessary.
COLD ROLLING -
RECIRCULATION
Cold rolling of steel bar, plate and strip is divided into
two categories, the cold reduction mill and the temper pass or
skin pass mill. The cold reduction mills vary from tandem, four-
high mills for high-volume operations to the special, single-stand,
four-high reversing mills used for low-volume specialty products.
After cold reduction to the proper thickness, the product is
cleaned and annealed and may be sent through a "temper" or "skin"
mill which reduces the thickness only a few percent, but imparts
the desired mechanical and surface characteristics.
Cold reduction mills use water principally in oil emulsions
for flood lubrication of the rolls and the steel being worked, and
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- 18 -
for rinsing on the final stands. The principal contaminants are
oil and suspended solids.
The high cost of rolling oils and the regulations requiring
pollution control have prompted the industry to install closed-
loop systems with oil recovery devices. These devices range from
simple mechanical skimmers and separators to addition of chemicals
and flocculation agents to reduce the oil emulsions. Several plants
are mixing the acid waste waters from pickling operations to the
cold mill waste waters to aid reduction of the emulsions. The oil
recovered can be reused on the cold mills. The water may be re-
circulated back to the cold mills or to the gas cleaning systems.
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APPENDIX
EXHIBIT 1
ENVIRONMENTAL PROTECTION AGENCY
STAINLESS STEEL -
BAR PRODUCT PRODUCTION FLOW DIAGRAM
Melt in Electric Furnace
4
Roll on Primary Mill
BLOOMS OR BILLETS j
4-
4-
Completely Condition
4
Roll on Secondary Mill
4-
| BARS |
4-
(Round, Square
Hexagonal or Flat)
4-
Anneal
4-
Straighten
4-
Pickle
4-
Condition
4-
Inspect
4-
Ship
Note: (1) Capital letters enclosed in a box denote product
form types that result from production operations
Source: United States Steel Corporation, The Making,
Shaping, and Treating of Steel.
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EXHIBIT 2
ENVIRONMENTAL PROTECTION AGENCY
STAINLESS STEEL -
SHEET AND STRIP PRODUCTION FLOW DIAGRAM(1)
Melt in Electric Furnace
4-
Roll on Slab Mill
4-
[SLAB [
4-
Completely Condition
4-
Rolled, on a Continuous Hot-Strip Mill
4-
Pickle
L _ 4-
HOY lODTLLTSD COIL I
Continuous Anneal Batch Anneal
and Descale +
Scale Break
4-
Descale
4-
Cold Reduce Cold Reduce
Continuous Anneal Continuous Anneal
and Descale and Descale
X
Temper Roll
(If desired for flatness or finish)
Slit
4-
Shear
4-
Inspect
4-
Ship
Note: (1) Capital letters enclosed in a box denote product
form types that result from production operations
Source: United States Steel Corporation, The Making,
Shaping, and Treating of Steel.
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APPENDIX
EXHIBIT 3
ENVIRONMENTAL PROTECTION AGENCY
STAINLESS STEEL - n >.
SLAB AND PLATE PRODUCTION FLOW DIAGRAM^1'
Melt in Electric Furnace
4-
Hot Roll or"1' Slab Mill
Completely Condition
4-
Roll on Plate Mill
4-
4
Anneal
-!'
Flatten
4-
Pickle
jf
Inspect
\-
Ship
Note: (1) Capital letters enclosed in a box denote product
form types that result from production operations
Source: United States Steel Corocratiori, The Making,
Shaping, and Treating of Steel „
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