Methodology In this section the relative steelmaking costs of the United States and the original six members of the European Community (EC)...
Methodology In this section the relative steelmaking costs of the United States and the original six members of the European Community (EC) are examined. The cost of delivering three steel products, cold rolled carbon sheet (CRS), hot rolled carbon sheet (HRS) and wire rod (WR), to the United States were estimated. HRS and CRS were selected because they are representative of flat rolled products generally produced by -125- major steel mills and because together they account for onethird of net industry shipments. WR was chosen because it is representative of the non-flat type product which minimills are capable of producing. The basic methodology used was to compute
, for each product, the average revenue per ton realized by United States and EC steel producers in their home areas, and then to subtract from that a factor reflecting the average rate of return on sales for each group o~.producers. To the ~_... value thus obtained for the EC, a figure was added to reflect the cost of transporting steel to the United States, including tar iff. One problem with this method of cost estimation is that profit rates are not available on a product by product basis and over all industry rate of return must be used. 11/ Estimates for some products in some years may not be meaningful due to estimation errors caused by this and other factors. As with the United States/Japanese comparisons, however, the figures should accurately reflect long-run trends.
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