Unlike the carbon side of the steel industry, stainless service centers are keeping tight reins on inventory, though mills aren’t limiting production. Executives at the stainless service centers say they’re keeping a smaller inventory than normal. The smaller inventories are not because of a lack of demand, but the surcharge cost. Centers say keeping too much inventory on hand can be dangerous to the bottom line if nickel prices take a dive and the metal can’t be sold for as much as it was purchased. Right now, mangers are buying what they need and are not taking on any long positions.

The stainless mills’ December surcharges jumped about 10 cents a pound as a result of an increase in the cost of nickel.

American Metal Market. November 9, 2006.