STEEL MOOD: HOPEFUL BUT WARY
Published By: NYT, March 3, 1983, Agis Salpukas

Steelmakers may be emerging from one of their darkest periods since the Depression, but they are having trouble believing that the trials of their battered industry are at an end.

The elements of a recovery are beginning to fall into place. Orders for flat-rolled steel have rebounded sharply, discounting is moderating and a recent price increase seems to be sticking. In addition, imports have dropped significantly - down 44 percent in January from the level of a year before. And European steelmakers have agreed to cut their shipments to this country.

In the latest good news, local leaders of the United Steelworkers of America have overwhelmingly approved these major concessions: a cut in wages of $1.25 an hour and a freeze on cost-of-living payments until July 1984 as well as reduced vacation time.

The contract, which will run from next Aug. 1 until July 31, 1986, is likely to increase the cost of employment by only 11 percent, far less than the 41 percent increase over the course of the last contract. Those Idle Blast Furnaces

But the steel industry is still running scared. Pete Love, chairman of the National Steel Corporation, said in an interview yesterday that his company would soon restart one of its five banked blast furnaces because of the pickup in orders. But he added, '''We're being very cautious about it.''

Mr. Love said, ''Geez, you light one of these up and begin to call people back - it's important that we fully realize that we are in a sustained type of recovery.''

One reason for all the caution is the sharp and unexpected drop in steel shipments last year. After both analysts and industry executives had predicted 80 million to 90 million tons, the steel mills wound up shipping only 60 million tons.

''The poor results of '82 tend to make you overly cautious,'' said Peter Anker, steel analyst for the First Boston Corporation. Indeed, some steel companies are continuing to operate their plants at only 50 percent of capacity while orders pour in at a rate that would justify using 90 percent of capacity.

''The order entry rate in the past month has been at a 90-millionton annual shipment rate,'' said Peter Marcus, steel analyst at Paine, Webber, Mitchell Hutchins. ''Yet the industry is still producing at a 57-million-ton shipment rate.'' Demand From Basic Sectors

The surge in ordering has come from basic industries such as autos and appliances as they benefit from the beginning of a general economic recovery. But Mr. Marcus said the steelmakers ''all fear it's temporary.''

If the recovery continues, however, analysts and some steel executives agree that the steel companies, whose losses from steelmaking operations totaled $3.3 billion last year, could benefit greatly from the new labor agreement and the cost-cutting and phasing out of old plants accomplished during the downturn.

Mr. Love said the new labor contract represented ''a milestone type of settlement'' that could allow his company to show a profit by the second quarter if the recovery runs strong. National Steel had an operating loss of $53 million from steel operations in the fourth quarter, and he said it would have a loss in the first quarter as well.

He also said that, if the orders warrant, National and other steelmakers would be able to increase output with fewer workers than would have been required in the past because of productivity achievements. Personnel Patterns Noted

''We've got the plants leaned out so they will support more volume without incurring more fixed costs,'' he said.

Mr. Anker of First Boston said that in 1981 the steel industry had 361,000 workers - 258,000 steelworkers and 103,000 salaried employees. By the end of 1982, layoffs and permanent cuts had reduced the total to 235,000, of which 156,000 were steelworkers and 79,000 were salaried employees.

''The companies will not put as many people back to work,'' he said, even if shipments go back to the levels of 1981. The industry shipped 87 million tons of steel that year.

Joseph Wyman, steel analyst for Shearson/American Express, said in an interview that the contract concessions might enable many steel companies to return to profitability by this year's second quarter rather than the third quarter, as he had projected earlier. He estimated that the labor concessions could bring a 3 percent reduction in production costs.

Analysts and steel executives remain conservative in their estimates of shipments for 1983, with most predicting a range of 71 million tons to 75 million tons. A Projection of Shipments

Mr. Marcus of Paine, Webber, for example, predicts that the industry will ship 71 million tons and that imports will amount to about 14.5 million tons. This would compare with the 60 million tons shipped last year, when imports totaled 16.6 million tons.

He predicted that the demand for flat roll would fall off later this year, since the underlying demand was not as high as current rates indicate.

Meanwhile, the demand for steel products from the capital goods sector remains sluggish. At large integrated producers, such as the United States Steel Corporation, the capital goods sector accounts for three of every four tons of steel shipped.

But Mr. Marcus projected that, even with only a modest recovery, operating losses for the steel industry would be cut significantly this year, to about $900 million.

Despite the industry's hesitance, there is general agreement that it could recover much faster than was expected a few months ago, when the threat of a steel strike stirred fears that major domestic customers might turn to foreign producers. ''I'm more optimistic about the opportunities now,'' Mr. Love said.