Steel Sheathing is a special resouce that can be obtained after unlocking your Trading Post in the Road Raid. 
It helps players upgrade buildings in the town after they've set up their own Trading Posts.

To unlock Road Raid make sure to upgrade of your buildings in the Town.

Note that you can collect stored sheathing and gold from your Trading Posts by going to your map option where you'll see the ability to collect. 

Make sure to check up on this from time to time, so that your storage limit isn't reached and resources keep flowing.