AT EATON STEEL BAR COMPANY, INVENTORY ISN'T A BAD WORD!!!

Posted on Oct 15, 2012

In the aftermath of the market crash in October of 2008 and ensuing recessionary trends in 2009, the SBQ steel bar market experienced a change in the business model that had been the status quo. Many companies became very risk adverse to carrying large inventories and proceeded to reduce inventories. “Turning and Earning” became the model they chose to implement while other companies were unable to withstand the economic downturn and closed their doors.

As 2012 comes to a close, we again are faced with uncertain economic conditions. The SBQ market has seen a flood of imports, particularly in large diameter bars. There is planned additional capacity coming from many of the North American SBQ Bar mills in the upcoming year. China continues to be a question mark as they lower their production rates as their economy falls towards recession. Europe continues to struggle with their economic woes and the United States economy, one of the few bright spots globally, has stagnated with the looming election in November leading to economic uncertainty. All of these conditions point to a softening of the market.

All of this uncertainty leads to the same thought process that led to the change in business models during the recovery from 2008-2009. No one wants to be caught on the wrong side of the fence if the market were to collapse again. We have already seen prices compress and is a concern throughout the supply chain. The issue this time around is that most indications point to the potential recovery and strengthening of the market starting in 2013. So the million dollar question becomes when do I buy and how much inventory do I put on the ground?

At ESBC, our core competency is inventory management. We work closely with our customers to ensure we have the right amount of inventory, at the right price, at the right time.

General George Patton said, “Take calculated risks. That is quite different from being rash.”

At ESBC, we do not believe in being rash, but we are willing to take that calculated risk by working with our business partners to ensure that we give our customers continued supply at a competitive price through both the highs and lows of the market.