If most buyers buy ahead like Mr Smith, then the liquidity in the spot market can dry up, especially in times of supply constraint.
Mr Smith and many people like him might happily sell on his steel for 10x the price he paid for it to someone desperate for some steel.
Yet, as things stand now, whenever there is severe market disruption, you frequently find goods aren't available for any price. Thats simply because Mr Smith and people like him continue to take delivery of the steel he ordered 6 months ago, and doesn't actually need right now, because he isn't aware of the guy down the street who really reeds it right away and will pay a lot.
If all goods are always 'for sale', then goods can be allocated efficiently to whoever needs them most.
Mr Smith and many people like him might happily sell on his steel for 10x the price he paid for it to someone desperate for some steel.
Yet, as things stand now, whenever there is severe market disruption, you frequently find goods aren't available for any price. Thats simply because Mr Smith and people like him continue to take delivery of the steel he ordered 6 months ago, and doesn't actually need right now, because he isn't aware of the guy down the street who really reeds it right away and will pay a lot.
If all goods are always 'for sale', then goods can be allocated efficiently to whoever needs them most.