What are steel inventories?
Steel inventory is the total amount of supply available for sale at the service center level. This steel will eventually be used to produce finished goods. Service center inventories also directly relate to steel mill utilization rates and lead times.
How they affect the market?
Steel inventories help maintain market balance. Typically healthy levels equates to 4.0 months of supply. When inventories are balanced, demand is manageable, supply chains can operate smoothly, and pricing is level. When inventories start to decline and mill level production is being out paced by demand, it can cause prices to increase. This can ultimately put strain on various parts of the supply chain as products become limited or unavailable.
What should you do?
Keep an eye on “days/months of supply”, “material on order”, and “shipments per day” to understand the supply situation and service center inventories levels. Knowing where the market stands is important to ensure you can manage your steel needs. Majestic’s CORE Report follows supply and inventory availability; along with other indicators every week to see where the market stands.