Edward Lehner: Sure. I’ll take a first cut at it. So you’re right, Phil. I mean we’ve — certainly, you and I have known each other for a long time, have talked about sort of the phases, the oscillations in the industry, especially when you have a program book of business and you’ve got a spot transactional book of business. Spot transactional business is usually more responsive as replacement cost changes relative to the average cost of inventory that you have. So you see more positive effects at that inflection in turn in that spot book. And then, of course, your program book takes longer to adjust. So for us, it’s probably — it looks like a tailwind really from mid-Q2 right now if you project through, you would see contract price improve on that lag while transactional margins continue to improve.
So based on our 50-50 split book of business, it’s a good tailwind for us, assuming that this mini cycle extends and prices continue to move higher or at least maintain their present levels.
Operator: . And our next question comes from Katja Jancic from BMO Capital Markets.
Katja Jancic: Can you talk a little bit about the stainless side, specifically, I know the prices are increasing, but how are the inventories and what are you seeing right now?
Edward Lehner: Yes, I’m going to have Mike Burbach give me a healthy assist here in just a moment. What I would tell you about stainless and it was really — it was puzzling in this way. And stainless market was so tight for really, I’d say, 12 to 15 months was extraordinarily tight. It was very much an availability market if you really track through the first quarter of 2021 probably through April and May of 2022. And then you started to see inventories accumulate and imports were very, very high, particularly from Taiwan, for example. And the channel got glutted. The channel really got glutted. I mean, we haven’t seen stainless industry inventories above 5 months. As a matter of fact, in all my time in the industry, I haven’t seen industry stainless inventories above 5 months.
And so there was certainly a glut and you had import prices that were firmly in the market. So even as stainless inflected, even as nickel inflected and molybdenum is tight, even though the underlying cost drivers of the product were improving, you still had to clear this major inventory overhang against demand that was falling, particularly on the consumer side, where now we’ve started to see some rebounds and some positive inflections in the market, both on the price side and on the demand side. Q4 certainly saw all those things come home to roost at one time until you could kind of clear that and rebalance the market for stainless, which is still in progress, but showing signs for turning to some reasonable help. Mike?
Michael Burbach: Thanks, Eddie. Yes, I think you hit it pretty good. Although the biggest issue that hit us really, really in Q3, Q4, second half of the year was that import piece. There was a pretty decent bubble that came in after months and months of a very tight supply. So we went from the situation of very little channel inventory to far too much. And so fast forward to today, the import piece seems to have normalized considerably and the amount of imports coming in are back to historical levels, if not lower than normal as things have been correcting themselves. So we’re seeing overall inventories in the industry start to tick back down. Activity so far in Q1 in the stainless side is ticking back up. And so that normalization is starting, but it still has a few months to go.
Katja Jancic: Okay. And maybe just on your cash conversion cycle, it has been ticking up. Can you talk a little bit about that? And how should we look at it going forward?
