An increased focus on inventories, transparency and planning will be key to softening the blow of any further supply chain disruptions brought on by continuing macroeconomic and geopolitical uncertainties, delegates at this week's Minor Metals Trade Association (MMTA) conference in Sheffield heard.
"Consumers have to build inventory," Maritime House's director James Peer said during a panel discussion, adding that "if [consumers] want security of supply then someone has to pay for inventory [and] you have to take some ownership of it".
"The supply chain should be prepared to share the cash burden," Advanced Alloys' managing director Stephen Hall said. Metals is a cash-intensive industry and with raw material prices rising sharply, "cash flow is going to be critical", he added.
Simon Boon, vice president of Sovereign International Metals & Alloys, and Joel Nields, director of sales for Exotech USA, called on consumers to be more transparent about their demand levels to allow suppliers to more easily meet their needs. They also called on consumers to plan further forward in order to mitigate risks related to supply chain constraints.
"If you know that you're going to need material a few months from now, but you don't want to say it because it might impact the market, by the time you really need that material it might not be there," Exotech's Nields said. "Raw material flows are worrisome […] you'd better have it. Back-to-back [trading] is too precarious, especially for material coming from overseas," he added.
Their comments come amid growing concerns globally that minor metal supply chains could face further supply and demand disruption stemming from the political and economic fallout from the Russia-Ukraine conflict, as well as ongoing logistical issues, the growing threat of tighter Covid-19 restrictions in China, and soaring inflation rates.
Most attendees at the conference were quite upbeat about the long-term recovery of metal demand after the worst throes of the pandemic, but they are wary of major headwinds in the coming months as the Ukraine conflict could still cause significant disruptions, particularly on the demand side.
"Over the past two years, we've normalised the disruptions we've seen in the market, but Covid-19 isn't over by a mile, Shanghai is out… there's a land war in Europe," Maritime House's Peer said. "What happens if Germany cuts off Russian gas and starts rationing energy? What will that do to downstream demand?"
