Recent key shifts in macroeconomic indicators could significantly impact both aluminum and steel prices. Historically, the best way for companies to protect themselves during times of uncertainty is to change buying strategies.
Most commodities have traded in a bull market for the past one and a half years. This has allowed companies of all sizes to see where their supply chains face the greatest gaps. Still, anecdotal evidence suggests that the fear of rising steel prices and ongoing supply chain constraints have caused buying organizations to “stock up” on materials. This has not only helped build inventory but also shore up supply. Now, many companies are seeing their orders slowing down.
For instance, last month, the ISM Manufacturing Report or PMI continued its expansion. However, one troubling reading came from the new orders subindex, which dropped from 61.7% in February to 53.8% in March. According to MetalMiner, that data, along with falling durable goods orders and other key macroeconomic indicators, suggests a slowing economy.
To see our take on macroeconomic indicators, subscribe to the free MetalMiner Weekly update email. This week, the newsletter covers the three main macroeconomic drivers while analyzing their likely impact on metal prices.
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It’s common knowledge that buyers are recovering from more than a year of supply woes and shipping constraints. Still, should the US economy slow, these organizations will need to reevaluate their sourcing tactics. Of course, the same would be true if we were to enter a recession.
Luckily, these companies can adapt using a wide range of buying strategies. Many of these can then mitigate holding high priced inventory during a slower or recessionary business cycle.
No matter what the future has in store for the marketplace, there will always be opportunities to save and make money. In the end, it always comes down to preparedness, know-how, and a little willingness to innovate.
MetalMiner CEO Lisa Reisman and VP of Business Solutions Don Hauser will be offering up additional insights during a Wed, May 4 workshop. To learn even more strategies for dealing with a slowing economy, sign up to attend here.
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