Good day, and welcome to the Steel Dynamics’ First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s remarks, we will conduct a question-and-answer session, and instructions will follow at that time. Please be advised this call is being recorded today, April 21, 2015, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect. At this time, I would like to turn the conference over to Miss Marlene Owen, Director of Investor Relations. Please go ahead, Miss Owen.

Thank you, Manny. Good morning, everyone, and welcome to Steel Dynamics’ first quarter 2015 financial results conference call. As a reminder, today’s call is being recorded and will be available on the company’s website for replay later today. Leading today’s call are Mark Millett, President and Chief Executive Officer of Steel Dynamics and Theresa Wagler, Executive Vice President and Chief Financial Officer. We also have our leaders from the company’s operating platforms, including Dick Teets, President and Chief Operating Officer for our Steel Operations, Russ Rinn, President and Chief Operating Officer for our Metals Recycling Operations and Chris Graham, President of our Fabrications Operations. Please be advised that certain comments made today may involve forward-looking statements that by their nature are predictive. These are intended to be covered by the safe harbor protections of the Private Securities Litigation Reform Act of 1995. Such statements, however, speak only as of this date, today, April 21, 2015, and involve risks and uncertainties related to our metals business or to general business and economic conditions, which may cause actual results to turn out differently. More detailed information about such risks and uncertainties may be found at the Investor Center Advisory Information tab on our Steel Dynamics website, in our Form 10-K Annual Report, under the captions Forward-Looking Statements and Risk Factors, or as applicable in subsequently filed Form 10-Q filed with the Securities and Exchange Commission. And now, I’m pleased to turn the call over to Mark.

Well, thank you Marlene. Good morning, everyone. Thank you for joining us today. It’s certainly been an interesting first quarter of 2015, some significant industry shifts have taken place that were fundamental for the domestic steel community, and I believe others are still occurring. With that, I’ll turn the call over to Theresa, for a few comments, before providing thoughts on these industry and market dynamics, and how Steel Dynamics is positioned for both near and longer term opportunities within the landscape.

Thank you, Mark. Good morning everyone. To begin, just a quick note regarding the format of our supplemental data this quarter, based on questions concerning the reconciliation of operating income and the calculation of adjusted EBITDA, we’ve modified the format for clarifications and additional transparency. You should be able to still find all of the data previously provided. Our first quarter results were negatively impacted by the continuing challenges related to excessive steel in the quarter, and significant scrap price volatility, which were the meaningful decreases in domestic steel pricing and shipments. Excluding $17 million or $0.04 per diluted share call premium and other finance expenses associated with the March senior note repayment, our first quarter 2015 adjusted net income was $40 million or $0.17 per diluted share, which is above our adjusted guidance of between $0.12 and $0.16. This compares to sequential adjusted fourth quarter 2014 net income of $97 million or $0.40 per diluted share. Including the finance charges, first quarter reported GAAP net income was $31 million or $0.13 per diluted share. First quarter 2015 consolidated revenues were $2 billion, 19% lower than the sequential fourth quarter. As a result, operating income was $100 million compared to adjusted fourth quarter results of $179 million, a decline of 44%. Decreased steel volume and pricing drove the decrease in operating income, most impactful within our flat roll group. Steel imports and scrap price volatility created a challenging operating environment. For the third quarter, steel shipments decreased 381,000 tons to 1.9 million tons, a 16% decrease compared to the fourth quarter. Metal spread also contracted as the cost of scrap used in the first quarter declined $34 per ton, while our average steel sales price fell $43 per ton. The full benefit of lower scrap prices was not fully realized…

Super. Thanks, Theresa. Well, nothing is more important than creating and maintaining a safe work environment. Safety is at the forefront at Steel Dynamics, same thing goes to everything we do, so it’s also where we’ll start our conversation today. Our safety performance continues to be better than industry averages. Our goal remains squarely as zero safety incident work environment. Our companywide recordable incident rate improved in the first quarter with 70% of our locations having no recordable incidents. I congratulate all those that work in those divisions. We continued implementing new initiatives and reinforcing others to drive toward our goal. In that regard, we’re excited about the creation of a companywide core safety group to enhance our grand philosophy, to that expectations and ensure best practices are being implemented across all our work groups. We’ve high expectations. We’ve positive impact from an even greater collaborative safety effort. Operationally, the team has performed well in a very challenging environment. As predicted in January, steel input levels remained high, the lower scrap and raw material prices led to steel product pricing to decline to globally competitive levels, which we believe will result in decreased steel import activity in the coming months. Sustained first quarter 2015, steel import levels combined with an existing customer inventory overhang drove domestic steel mill utilization to less than 70%. Our steel operations operated at [indiscernible] of utilization, still ahead of the industry as shipments declined 16%. Flat roll is definitely the hardest hit, and our flat roll shipments declining 20% in the quarter. While our company wide exposure to the energy sector approximates only 8%, it is higher to our recently acquired Columbus flat rolls steel mill, which was particularly impacted by both imports and reduced energy sector steel consumption. In 2014, approximately 40% of Columbus’s…

Thank you. [Operator Instructions] And the first question is from Luke Folta of Jefferies. Please go ahead.

Nice work this quarter.

Good morning, Luke. Thank you.

I think first question, I was hoping to discuss Mesabi a bit. You had, you talked about the cost structure being in the $340, $350 range as you had said previously. If we operate under the assumption that iron ore prices stay where they are for a while and pig iron prices stay below $300 a ton and ultimately the project becomes uneconomical. I mean from a longer term perspective I guess how important is it to have a scrap substitute source, to the extent, I mean there’s likely things you could do to improve Mesabi, but if we just assume for a second there is an, do we - should we expect later on that you might be making investment perhaps into your iron, and something that could bring you an internal source?

Well, I think, Luke our perspective on DRI in particular is one that still, we have problem returning or having a good return through the cycle that there will be good times perhaps, but it’s not a technology that we want to invest in. Yeah, it may give you iron units at the current market price, but it’s not, I don’t believe, it’s going to return you a great deal of money on your investment. Regarding the Mesabi nugget, selling with the recent drop in iron ore costs along with the strengthening dollar, pig iron pricing decreased significantly recently. It’s only pierced the level of the price support for the last several years, 360, probably 380 has been a floor for pig iron. And it certainly has pierced that and currently they ran about 260, 270, 275 in the Netherlands, but certainly below our cash cost nugget. The sourcing has changed although for Brazil, it’s been our principal importing partner so to speak. But that has changed, Russia seems to be the predominant supplier today. And I’m not so sure how long that will last, obviously the valuation of the Ruble, and then iron ore costs is - makes it very attractive for them to bring it in today. But we’re just accessing the longevity of the current pricing environment. And as I said, we continue to review, discuss it at our board meeting in May. And I’m sure we’ll make the prudent decision as we go forward.

Luke, I would add that, I wouldn’t want you to forget that we do have Iron Dynamics, which has been producing around 250,000 metric tons of pig iron for the Flat Roll Division in Butler, which is very important to their productivity. So, we do have an additional iron source as well.

If you wanted to keep Mesabi on a long-term idle to maybe a couple year idle, if that’s the way it turned out and perhaps turned out at a later point, if needed. Is that something that you could do?

Certainly, yes, obviously- this spectrum of options, we’re evaluating them all.

Okay. Great. Thank you.

Thank you. The next question is from Tony Rizzuto of Cowen and Company. Please go ahead.

Thanks, very much. Hi, everyone.

Good morning.

Hi, Mark. I got a couple questions here. First, on the service center side, would service centers support a price cycle right now in your opinion?

I believe that there is opportunity for upward price movement as inventories subside. Obviously, the - you’ve got a period of excess inventory overhang today. I do believe pricing has overcorrected as mills have struggled to retain an adequate backlog. The import discount today is significantly below the $100 to $150 per ton, but it has taken for customers to take a speculative risk for import volume. So, I think naturally, as the inventory level does subside, and I think it is - if you look at our order profile, people are coming to us with large orders today, and they are prompt orders. Those are signs we’ve seen in the past that inventories are sort of are getting holes, and becoming more imbalanced. As that inventory level subsides, I expect naturally the market can absorb a price increase.

Okay. So just to confirm, you guys are seeing improving orders, so inquiries clearly picking up, orders picking up, where would you see your lead times? Have they begun to extend then at this point?

Well, they are extending from some pretty horrific levels.

Right.

But nonetheless, the order input rate at both Butler and Columbus picked up quite significantly.

Yeah. We had - at Columbus, we had the two best weeks since September and we see it continuing, we believe.

Yeah. Obviously pricing still is under pressure, but it’s the first time.

Okay. Good, good. And just a quick follow-up on the Mesabi, then one other question with me. On Mesabi, are you - is it totally written down now at this stage?

So, we’ve valued the Minnesota operations, Tony together. And at the end of December, we felt like we had it down to the fair value, and I would suggest that the nugget facility itself has been written down substantively.

Okay. All right, great. And just on Columbus, so the recent uptick in oil price, has that benefited you guys there? And if you can bring us up to-date with the mix shift in synergies, if you could provide some granularity, perhaps percentage improvement based on what you’re kind of targeting in terms of goals there for the mix shift and synergies?

Yeah. I think the recent uptick in oil price is certainly directionally the right thing to have in first. Again, in that space, you’ve got a massive inventory overhang that needs to dissipate, and you also have a considerable input volume. But with time we’ll turn that market around, and I think later in the year, and it’s going to take some time for that inventory to dissipate down.

To very much, to very much so. You’re right.

Okay.

Again, to try to give you a little granularity, it’s difficult to do, because we’ve really been pushing new products, we’ve been pushing expansion into automotive and into other applications and which are new for SDI, but we’re begun under the Severstal [ph] reign and now being developed in a more fully fashion. So it’s a pretty much across the board, we’re very pleased with the receptance, we’ve improved the pickling performance, as well as coal rolling and galvanizing, and those in turn are giving us opportunities to go back to customers that we may have failed in the past. And so those aren’t necessarily new products, but they are headway into a market that we’ve been absent from for a little while.

Could you guys give us any sense of where you were operating Columbus at during the quarter?

Yeah, so from a year-to-date perspective Columbus was just under the 70%.

Okay. All right, Theresa. Thanks very much. That’s all my questions. Thank you.

Oh, just Tony just, you did ask about the synergy update?

Oh, yeah, yes, please. Thank you.

I would suggest that they are working quite well on the cost compression. Certainly, just recently, I think the team renegotiate with the power contract down there that will bring savings, and on the customer front diversifying the product mix, a new steel team, I think has done incredibly good job penetrating BMW, BW and the Ford, late to pick up potential opportunity there.

And I guess, all I’d say is that, I think we’ve turn the corner in the beginning of the reestablishing our relationships with our customers that are down in the region, but there’ve been customer of Butler, and not being fully utilized from a Columbus perspective, and those relationships are being warmed up, and hopefully bearing fruit.

We still have an incredible excitement there. Yeah again as I said earlier, it’s really unfortunate that the energy in market didn’t last a year, but they - we’ve been challenged before, and we’ll survive this one too.

Sounds like a good progress is being made. Thank you very much.

Thank you. The next question is from Evan Kurtz of Morgan Stanley. Please go ahead.

Hey good morning, guys.

Good morning, Evan.

There is a question on the metal spreads. You mentioned that in February, we have this big scrap move down, but you’re not really going to see any of the benefit of that until we get into the second quarter here just given the inventories, and in the FIFO accounting. So, how should we think about the second quarter, steel prices have also edged down a bit over the past couple of months obviously. So, would you actually expect at this point to see FIFO metal margin expansion in the second quarter or flat or how should we think about that?

I think, Evan, it’s a little too early to tell because again lead times are or backlogs aren’t stretched out into May or June as yet. We’ll certainly see on the sheet side the benefit of scrap move as that inventory, high priced inventory got consumed in March and April and lower price stuff gets consumed later in the quarter. I would suggest that our fine values, particularly with Butler they have been historically, have been above the general market. And again, that pricing has come off as we come closer to market and maintain a backlog. So, we anticipate some margin expansion, it’s difficult to quantify like this one.

Okay. That’s helpful. Thanks. And then I know you guys don’t drive the bus on these things, but any thoughts on the Potential Trade Case and we keep reading about potential timing there?

Dick?

Yeah. Okay. I guess I’d say that everyone recognizes and hence why the conversation is there that I think between 2013 and 2014 imports increased much under 40% and year-over-year in the first quarter and many products increased another 30% or more. And hence that’s why the focus has been on it. But the industry including SDI continues research on trade cases and we’ll file the cases when the industry’s Legal Counsel believes the timing is right, when there is unfair trade in the form of both dumping and or subsidies can be demonstrated. And so we’re - we’re working on things, we have our counsels communicating amongst interested parties of participation. And we’re - we’re focused on.

Okay. And then maybe just one last one, you kind of hinted at or didn’t hint, you mentioned that you got a new power contract on Columbus. Just given the weak energy markets out there, could you maybe try to quantify a little bit, what sort of benefit you might see this year from not just Columbus, but your power costs as cost of spectrum?

Well, I guess that’s - that’d be a tough one to quantify that the contract that Mark was referring to is really a follow up to the original contract that Columbus had under prior owners and some of the programs were coming to a completion here this spring. And so what we negotiated, it was a not an extension, a new power contract, but with slightly better performance, but it’s slightly, it’s not going to make a huge impact, but it’s still that we look for every of opportunity to be executed on. As far as other energies meaning natural gas, that we consume around that company we have hedges in place just about everywhere, again varying levels based on the strength of their backlogs and order books. One or two locations that do not have hedging opportunities based on their tariff and the contract arrangements. But we’re comfortable at each of those that they’re, they’re constantly looking at energy efficiency opportunity. So I think it’d be very hard to quantify.

And then just as a reminder, natural gas is about 3% to 4% of our manufacturing costs and then electricity tends to be closer to 67%.

Great. That’s helpful. Okay. I’ll hand it over guys. Thanks so much.

Thanks.

Thank you. The next question is from Gordon Johnson of Wolfe Research. Please go ahead.

Thanks for taking my question guys. I just wanted to piggy back on the trade case comment. We’ve had some recent discussions with people in Washington and they told us that there’s two different dynamics being discussed now. One is overall legislation with respect to getting, I guess, awaited the ITC and the DOC looks at the trade case and then as the official trade case. And what heard is that, I guess attacking both of those things at the same time could be somewhat tough. So the different legal I guess entities looking at these are looking to wait to increase the strength of the trade case. Can you guys comment on that? And then I have another follow-up.

Well, I guess all I say is that needless to say current legislation as it moves through Congress is being watched whether it would be TPA or TPP. I guess we are independently pursuing lobbying in a manner that is a responsible through our elected officials on those issues. And we’re also supportive of potential legislation whether it would be through an independent move or an addendum to another build that’s there for the modifications of the injury calculations. Again tragically it takes a catastrophic collapse on industry’s part whether it’d be steel or any to really do the terminations and so we’re looking for different definitions to be used from an injury calculation standpoint but I can assure you that we are not resting on our laurels looking at filing trade cases on many other different products that are being under siege in the steel community.

Okay. That’s helpful. And then, lastly just again on the trade case, we’ve heard that from some industry specialist said steel companies - certain steel companies need to report two quarters of losses. This doesn’t seem to be a static rule but have you guys heard these same comments and do you think that’s accurate or do you think now a trade case could be filed? And thanks again for the questions.

Well, as I said no timetable has been determined. I don’t know that there’s a written rule that’s talk about two quarters of losses. It has to do with performance needless to say negative performance is - what is looked at and the magnitude of that. And so, sometimes it occurs in a longer period and sometimes it’s very quick and dynamic. And so, each and everyone has looked at independently.

Thanks again.

Thank you.

Thank you. The next question is from Matt Murphy of UBS. Please go ahead.

Good morning. Theresa, you mentioned the potential that some growth opportunities could be considered that push up your CapEx this year. Just wondering if you can provide some thoughts on what some of the considerations are?

Well, there’s several different projects that we have that we’re looking at internally and will announce those and talk about those when we get to a point in price where we’re ready to execute but I just think it could possibly push up the CapEx later this year as this projects get approved.

Okay. And I guess on the fabrication segment, it’s good to see such a strong result in Q1, and I was a bit surprised how much, how well you did on pricing, just wondering how sustainable that price is? And is that something moved up as steel prices recover or it will be determined just based on demand within fabrication?

Thanks for the question. I think that the demand capacity relationship is such that, there is no flow that’s going to fall off from under us, if steel prices increase, I believe we’ve been able to move those along through the supply chain. Things are just very well positioned at the moment in our industry. And we should be able to react to, whichever direction things are at.

Okay. Thanks a lot.

Thank you. The next question is from Jorge Beristain of Deutsche Bank. Please go ahead.

Hi, good morning guys.

Good morning.

I just wanted to get back to the cost, input cost, and just again are you guys currently profitable at your other raw material supply in terms of iron ore?

I guess we - the only iron facility we have were Iron Dynamics.

Yes, Iron Dynamics, right. Are you guys currently profitable there, I’m just trying to understand, Theresa had mentioned that you’re still getting supply there about few hundred thousand tons a year. And so, is that sort of an independent profit making unit right now or is that indirectly also being subsidized?

Well, it’s certainly not being subsidized, the transfer pricing is based on pig iron pricing essentially. You also have to remember that - pig iron go into the electric arc furnace which adds substantial both the cost and productivity advantage. So iron dynamics is integral into the productivity, and the cost structure of Butler, but under itself, it’s still a profitable entity.

Okay. And then at Mesabi, could you comment if, you said, you’re going to have a board review decision there. But roughly assuming current iron ore prices hold flat, and you’re able to import, you said from Russia, it sounds like below that operating cost. If you were to idle that facility for a longer term or do a full shut down there, what kind of EBITDA cost savings would that generate and versus the current market environment on an annual basis?

Yeah, I’d prefer to wait until we have that review in May, and make a final decision and we’ll let you know the details.

Okay. Thanks.

Thank you. Our next question is from Timna Tanners of Bank of America. Please go ahead.

Yeah. Hey, good morning everyone.

Good morning, Timna.

Both Theresa and Mark talked about the capacity, and the balance sheet to pursue opportunities ahead. And so, I just wanted to get your latest thinking on M&A opportunities in the space. So I know it’s probably a broad question, but to be a little more specific. There is a lot of financially stressed scrap companies or shredders and may be some fabricators and service centers, so just wanted to get your broad comments on kind of where, what end markets or what products, what type of opportunities you might start to look at?

Okay. Well, as we discussed, and I think, as you look into our results, we had an incredible quarter even as challenging as it was and kind of cash generation was quite dramatic and again sort of a testament to our operating model, a low cost structure, highly variable cost and the team is just doing a phenomenal job. And we expect that strong cash generation to continue in any event in any market. You saw that we increased our dividend 20% in the first quarter, again I think that’s testament to, where we see the future of that cash generation, certainly the confidence, I am more confident in our performance and continued performance. So far as sort of cash allocation beyond that, we do feel that there are some small organic projects that we can still leverage and then also as you indicated, there’re going to be acquisition opportunities, I think going forward. Our focus, I would suggest is not in scrap in any great way. Obviously, that industry, as we’ve suggested in the last 12 months is about to go into a shakeout and I think we’re on the doorstep of that - there is a lot of financial stress throughout scrap organizations everywhere we look. I don’t believe that we will be in part of that shake out in a larger way. I think our focus seems to be downstream, and still make inside of our business, for sure, where we can get a value-add opportunity and increase the quality of our margin. And now, New Millennium is executed on its growth path, done an incredible job. I think it was a couple of years ago, Chris when we -- after we both see, we repositioned that business, had a lot of management sort of change to fill that up. His charge - his teams charge was to go execute, that they done so. And I believe there might be opportunities that we can also give them support.

Okay. That’s helpful. I just want to also ask a little bit a general question about, it’s been the best times, the worst of times in terms of flat roll pricing over the last 12 months where we had a really steady price level about $200 a ton higher in current spot market, now we’re at these depths that you say you know we’re creating a over corrected. But do you think that as prices recovered, do you think the mills are going to be more mindful of the import offers, given the strong dollar going forward or do you think they’re just going to look at the domestic market in their lead time still independent of the import environment?

Well, and I do would say yes. They would be mindful of the relative pricing between domestic and global markets. The human nature and capitalism tends to get away from here - from time-to-time. I don’t believe, we will see pricing spreads get up to the $200, I think it was $230 a ton that back in -- look forward over the last year. I think there’s every opportunities to expand margin though. Again, I do believe pricing is over corrected as mills have chased the backlog. The spread between domestic global pricing has dissipated dramatically today, it’s certainly way below the $100 and $150 premium that or discount that attracts an inflow of ton. And I also think that the whole utilization obviously there has been less fixed cost absorption at the mills. So, as we go forward, as pricing sort of rebalances, as we pick up more volume, the fixed cost per ton will increase. And so, there is certainly margin expansion opportunity with a stable scrap market.

Okay. Thanks for your answer.

Thank you. The next question is from Matthew Korn of Barclays. Please go ahead.

Hey, good morning. Thanks very much for taking my question. It looks like we’re all waiting for the same inflection point right now, but beyond this turn in the cycle, should we be bridged, should we expect to return to this kind of challenging quarter regularly until we see substantial capacity largely in China taking offline, with scrap lower, iron ore lower, coking coal taking a leg down. Do you have concern that another turn of lower input costs spins the wheel again until it reached the point where there has been enough pain to bring the global supply demand into better balance, maybe that’s happening now, I don’t know, I’m looking for your thoughts there?

Well, it’s difficult to see that raw material costs go much lower with oil pricing like it’s come up a little bit here in the last week or two. But $50, $55, I would suggest is certainly - certainly a flow. And scrap pricing, I believe has reached to the flow, and level of stability. As Russ indicated in the last call, that the reset button has certainly been pushed and I believe the scrap arena, the recycling world is realizing that we are doing a new level now. The flow - absolute flow has started to come back as brokers and dealers recognize that it’s not just a [indiscernible]. So I think there is opportunity as previously discussed for the market to pick up, pricing to pick up and margin to pick up through the end of the year. We’re a cyclical business. Those un-relations will continue to be there - the rest of our lives more likely. We endeavor to try and mitigate or mute those cycles to a small degree. Again our focus is in a very broad product diversification. We see that the advantage there at Butler and in our other mills. We certainly see the Achilles’ heel when you don’t have that at Columbus right now. And I’m confident that the team over the next 12 months will diversify that mill such that we never see such a - some of the re-inversion again going forward. So, I think, yes, we see those in un-relations. I do believe you will. But they’re probably being more like those in 2012-2013 and not as precipitous is the one that we’ve seen.

All right. I appreciate the answer. Let me ask more particularly about the domestic market end-use demand. When you’re thinking about the big buckets; construction, auto, energy manufacturing, how would you say your reads change relative to when you reported at the end last year. Is auto looking worse, is construction looking better, isn’t overall maybe slight contraction for the U.S. and total demand for steel, is that a fair forecast today?

I believe that underlying demand, our picture of the underlying demand remains relatively intact with the exception of across in energy, it depends on when you say at the end of the year, but you go back to the September, October, our energy thoughts were perhaps a little different than that’s of today. Automotive remains incredibly strong, manufacturing appears solid to us and we do believe construction is, continues to recover. The performance at New Millennium is just outstanding. I think it gives us a window into the recovery. Unfortunately the beam market isn’t necessary seeing that same shift, as we’re fighting with same issues of the sheet. Inventory overhang there, you got a pretty large amount of inflow steel that came in at the end of last year in that last couple of months and that needs to dissipate. As the weather changes, that inventory dissipates there, I think our structure business will pick up, back up.

So, I would say, I don’t see a massive changes in underlying demand. Our major headwind as an industry, certainly I think probably only one that concerns me is the SDI - is the input pressure.

Appreciated. Best of luck for the rest to you.

Thank you.

Thank you. The next question is from Michael Gambardella of JP Morgan. Please go ahead.

Good morning everyone.

Good morning, Michael.

Question mark on, if you could talk a little bit about the timing lags that you see in that will impact your metal spread particularly in the sheet market, your sheet market business, you had the scrap prices usually lead steel prices down and you had to reverse this time scrap held up, and now you’ve seen scrap come down. Can you talk about, how you see the timing lags on both your steel price realizations and particularly on the sheet business, and the scrap cost going down. How that’s going to impact with the second quarters and the third quarters going forward?

Well, I think the -- on the scrap raw material side, it’s not much different than we’ve reported previously. We carried about four weeks or five weeks typically of a - the typical production the month at steel mills. So, the -- you got two of it, one, the industry fell through, which would typically suggest that you’re going to see the lower raw material level hit in sort of April, essentially May timeframe. That extends a little bit, because the production levels have been down in April. So we should see sometime in May, June, our own material cost come down. On the timing of pricing - our product pricing on the sheet side of our business, we can’t lag the CRU index of the market, I would say buyback [indiscernible].

Mike, just to be clear - the drop that you would have seen in the quarter called scrap taken in February - so for the February buy. We typically would have seen most of that in March where we’re not able to see that in March. We’re going to see that more in April. This timeframe we can just slow our production. And so as Mark talked about [indiscernible]. So we’re still - we’re going to see some of that benefit earlier in the second quarter.

How do you balance these lower scrap costs filtering-in because you have the higher variable cost versus up two thirds of your competitors domestically are more fixed price - fixed cost with iron ore or integrated producers. How do you balance your new lower cost structure with taking share and the ability to take share from two-thirds of the market domestically and putting more pressure on pricing?

I don’t think we will - there’s a need to put full pressure - look when you say pressure on pricing, I assume, downward pressure. I don’t believe that there’s any need for further downward price structure. I think we’re going to see that we’ve hit a bottom. See things, again you got a couple things happening like as you know, inquiries have no doubt coming down, we’re seeing it as I said in the order profile that our customers have given us. You also have some blast furnaces that are out so the demand is - demand, capacity generally has ebbed little bit. So I don’t see a need for downward pricing pressure, I think we’ve bottomed, the spread between domestic pricing and global pricing has eroded to a point where at least if I was a customer or consumer, I’ve got no idea why you would take a speculative risk, the quality risk, the claim risk, and everything else associated with an import done today. So, import levels should naturally start ebbing, and then take any pressure from.

Do you feel you are currently gaining share in the sheet market?

Well, we’re certainly seeing a significant increase in order rate.

Yeah. I think, it needless to say, as you just mentioned blast furnace outages, as they run through their slab inventories and so forth. There’s maintenance outages, we think advantageously took our maintenance outages early, and have those behind us, and are prepared to take advantage of the opportunities going forward, and that would needless to say translate into a slightly higher share, may not be sustainable in the real long-term when flat furnaces come back in the market, but our mission will be to hold on to with and play for more.

Okay. Thank you very much.

Thank you. The next question is from Justine Fisher of Goldman Sachs. Please go ahead.

Good morning.

Good morning.

I just have one other question that’s a steel price environment, sorry to kick the dead horse here, but the question to you guys is can the steel prices increase meaningfully if a dollar doesn’t weaken, or is the dollar even strengthened?

I think is the price, well, the dollar does two things. I guess, it creates the import pressure, which puts pricing pressure to our market, and it produces the operating costs of strong competition, which gives them a greater ability to reduce cost. I think that the principal headwind as I said to both the utilization and the product pricing is the level of import.

Okay. So basically, because when I think - I think if people look at where steel prices have gone, they can - you can bifurcate it into the raw materials question and the dollar question. So on the raw material side, it definitely seems as though, the consensus is that they can go much lower. But on the currency side, I mean could that continue to be a headwind to prices going meaningfully higher as a lot in the market seemed to expect in 2Q and 3Q?

It depends, it depends where you see the dollar go, is it going to strengthen significantly more than we see today. I think our perspective is that this is going to be a pretty stable. It certainly not going to weaken in the near-term for sure. It certainly will create that the input [indiscernible] competition to bring materially, the price of up handle and put up and today. I think it is 400ish per ton. By that time you get that to a Midwest location, probably run about at 450, 460 and lo and behold that’s where the market price is today.

Okay. Thanks for that. And another question I have is just on the kind of high level view of what the engagements for this scrap industry now, someone had asked if you guys were interested in acquisition in scraping and you said no, but how does it end, I mean assuming the dollar just stays even stable so the export market is not great so the U.S. scrap industry remained under pressure. I mean, does if we think about liquidations of smaller scrap, I mean does that put significant pressure on the scrap reservoir, and then prices go up? Or does it just mean that the remaining yards collect the same amount of scrap so we shouldn’t expect the scrap pricing necessarily go up because of a shortage? Is it just a matter of who is collecting it of who is collecting it as opposed to how much scrap there is? I mean, should we be think about there being like a much higher scrap market in the next two years if there is a meaningful shake out in the industry or is a just a game of shuffling the cards in terms of ownership.

I think it’s a lot of - let roughly expand and let’s what it is more of the shuffling of the cards, the scrap reservoir actually is good, the prime generation is phenomenal, right now. Again because the old model seems so strong, that’s why you’re seeing the kind of the inversion of the prime obsolete premium. I think as the industry goes through a shake, the impact is not necessarily on the price of scrap, the market price of scrap to the mill, it’s a matter of what the scrap industry pays for its obsolete scrap. Obviously today there’s fierce competition between all the players, and there’s a lot of them, and that changes. So will there be competition for those units? Russell.

Yeah I would agree [indiscernible], I think again the amount of scrap which is generated in the U.S. not going to move down significantly, not going to change significantly, I don’t think even in the long term. So I think, what you’re going to have is fewer players collecting the same amount of scrap.

Okay. Thanks so much.

Thank you. The next question is from Andrew Lane of Morningstar. Please go ahead.

Hi, there good morning.

Good morning.

Really just - really just one big picture question from me. We’ve always appreciated Steel Dynamics low cost position in the market, but just take a step back and look at the bigger picture. Given local cost deflation in major steel producing countries like Brazil and Russia and significantly lower seaborne raw material costs for previously high cost operators in China. Has Steel Dynamics positioning on the global cost curve changed at all over the last couple quarters?

Well, our cost structure given that the price of scrap coming down is obviously dropped. And I would suggest that relatively as others come down, that’s where we change our relative position. But they’ve come down closer to us, and we remain as effective and as efficient as anyone. I think, the recent scrap move is certainly reestablished the industry and the states to be at somewhat on a hard metal cost basis, attractive, whereas the integrated mill have a advantage there for a few months.

The other thing, I’d just pass you to remember is that, we treat 85% to 90% of all our cost are actually variable in the nature, which is something that most of these are these other operations can’t really approach that level which is a big benefit on the competitive side as well.

Great. Thanks and congratulations on a resilient quarter.

Thank you.

Thank you.

Thank you. The next question from Brian Yu of Citi. Please go ahead.

Thanks. Good morning.

Good morning, Brian.

Hi, Mark. That the flat roll does get a lot of attention likely so, but the loan products markets and merchant bar, rebar tends to fly in the radar a bit. And if I’m looking at the numbers correctly, you got no margins that are actually expanding premiums versus import tend to be remaining high. Is there something fundamentally different here versus the role, in terms of, how imports can respond to one of these pricing dynamics?

Well, I think it tends to be more established sort of the trade roots in the relationships on the sheet side of the business. And just the physical nature of the [indiscernible] versus the structural tends to make it more meaningful to import. Structural quarter-over-quarter has seen a slow, but continue to increase in the import level for sure. I think that may have anticipated a little bit, here recently, because the industry readjusted it’s pricing. What was that though…

[Indiscernible]

Yeah. And again that adjusted the domestic level spread again.

Okay. Second question is, I’m not sure, if I miss this, Mesabi Nugget what’s the ongoing idling cost associated with it?

You didn’t miss it Brian, we didn’t said that.

Okay. Is that something you can tell us...?

I don’t mean to be positioned, but we’re - after our May board meeting or review, I think we have clarity for you all to what that might be?

All right, maybe try a different one, the fabrication backlog and your shipments in the core, I think were up about 19% year-on-year. What is - is there anything you can gain from your backlog in terms of you have the fabrication volumes might unfold for the year. Are we - is it strong - so strong that we’d be looking at that double-digit growth rates for your fab business?

Well, the indicators we watch, if you look at the typical order life cycle for us, Brian it’s about 12 weeks, 13 weeks. So you’re about at the quarter. Code activities are stiff, remained strong, so we believe that that’s indicative at least through the next quarter. We see continued strength in the architectural billing index. We see bookings year-over-year as the industry still in double-digits. So, we don’t have any cold water to pull on it at the moment. We only have that to go by, and right now, our customers are fairly bullish. The one thing, we don’t face quite to the extent of our other product lines is the import pressures. Most of our imports that we compete with come from are limited in North America. And so, we are really sensitive to what the domestic markets doing, and how our industry is aligned to serve that market and both remained healthy at the moment.

Brian, from what we can see right now, I don’t think, it’s unreasonable, we’ve think that double-digit growth in shipment is possible based on market expectations in our current market share.

Okay. Great. Thanks, it’s helpful. I appreciate it.

Thank you. The next question is from Phil Gibbs of KeyBanc. Please go ahead.

Thanks. Good morning. I just had a question on the supply demand dynamics [indiscernible] and a long products markets, and how that might be a bit different relative to what you are seeing on the flat roll side? Or imports - have imports been as big of an issue there for you.

Well, needless to say with our product diversification, by mill we don’t have as a large of a concentration as some of our domestic competitors doing a long products arena, but rebar remains under attack even with the successful or partially successful trade case that was a result on rebar. I will tell you that we’ve tried to remove our self from the rebar market as much as possible, serving our longtime loyal customers and so forth, but just reducing the amount of exposure that we are attempting to turn on from an inventory cycles perspective. Another long products, I’d tell you that we’re doing extremely well, Steel of West Virginia running flat out basically a 100% utilization of their time. They’ve brought on 12 new sections of [indiscernible] flats and so that’s product differentiation there is no other domestic competitor. Those are used in ship building and marine applications and we’re getting tremendous reception from the marine architects and fabricators and so forth. So we’re excited about that, but it is a different dynamic than the flat roll, the product by product again we developed a new product in Pittsboro, a threaded rod. We’re going to trial three inch threaded rod this quarter and that just stands to again be another success to us. So we have a little bit greater opportunity to push out and into other arenas in the long products. They are all demanding but we are very proud of the efforts that have been made today.

Okay. Terrific. And then a question on Columbus if I could, any update you could provide us on the synergies there and maybe some progress moving more toward utilizing the downstream assets?

Well, I just say that we continue to explore our synergies on a weekly basis, we have employees going both directions, in all the arenas, whether it would be melting, casting or hot rolling. And then finishing as you pointed out that we have a great opportunity we just put a manager and galvanizing, he comes out of the Butler operations. We deployed the existing galvanizing manager into the engineering arena. And so there has been a management shift to try to bring maybe faster acceleration of the integration and the synergy recognition between them. But I don’t have a dollar, I can’t dollarize it for you, but I would tell you that both teams are serious about it. Butler is gaining knowledge from the way Columbus has done things in the past. And Columbus is I think reaping the benefits and will continue to of the integration process and the realization of those synergies as we go forward here.

Yeah, I think to put a number on it, we’re probably around $12 million $15 million by the end of the year.

The outside of any product mix shift et cetera. So more [indiscernible] we talked about.

I mean one point again, we’ve introduced different ways of thinking about stuff and I think there actually their head count is down by 45 people. And again not because they’re put into any distressed mode so forth. It’s actually just a different methodology, we had different programs. We’re still going to implement order entry systems that for that we’ve developed over the years and that will help them streamline opportunities we’re not - we’re not done.

Thanks so much.

Thank you. The next question is from Charles Bradford of Bradford Research. Please go ahead.

Good morning.

Good morning, Charles.

Hi. As we all know U.S. Steel has announced that they’re going to put in an electric furnace into Fairfield, Alabama. It’d seem like that furnace isn’t enough for them to continue their current mix and they may very well be going at a flat rolls deal. Are you seeing any of their customers beginning to gravitate towards you and Columbus? Because that would be sort of like the natural progression of things.

I don’t think we have, Charles. Not yet. It’s probably a little premature. But certainly if that does happen, I think it would certainly help Columbus in a great way. I think they’ve got a doubling line down there, doubling lines, which will help dramatically.

But I think needless to say they have options, they’ve have other facilities in which they supply slabs. And so it would be I think a little bit premature for us to determine what U.S. Steel’s thinking is going to be as far as total asset utilizations.

I think that customers are beginning to think about supply?

Sure. They’re thinking it. Needless to say we’re thinking about the customer from the scrap side and so it’s cuts both way there.

Thank you very much.

Thank you, Chuck.

Thank you. The next question is from Nathan Littlewood of Credit Suisse. Please go ahead.

Thanks guys. And I appreciate all your time here this morning, being so generous with it. I just had a couple of questions on trade cases. I guess if we distill the situation down, there is fundamentally two parts. One is the demonstration or proving if you will of material injury then there is the existence or otherwise of anti-dumping or dumping and the countervailing duties or subsidies. So I guess if we think about it in the context of those two parts, are you able to kind of or tell us whether in your opinion you believe that the material injury had all has already been met. And if so, does the absence of the trade case today imply that given things like currency and fuel prices and freight rights, somewhat not, it is actually pretty hard to prove there is dumping actually taking place at the moment?

Well, I think, I can tell you that again each of us in the steel industry look at who we believe the targets of our - of our cases should be, we divide up those and work on them independently. Everyone who is participating in a possible trade case will bear a share of responsibilities to go into the home markets of those countries, determine what the market, home market prices are for the products in question. And we also then do research on subsidy potential because as you pointed out that the account bearing duties are really to address the subsidy issue and antidumping of course is the unfair trade practices of selling in our market at a number as lower than our market or other markets that they serve. And so, I can tell you that there is some tremendously large percentage of damages, potential damages that we believe are being exploited improperly, illegally and those would be the subject of any case. But even a question earlier about the strengthening dollar, and whether that would influence from a pricing, as the dollar is moving in single digit percentages, I’m talking double digit and triple digit damage being done here, in some cases or in some products, and so, it could be, we’re not worried about the changing dollar to really affect the trade case issues.

Okay. But I guess that’s certainly useful background, but is it stand today, do you feel like you’ve proven the material injury, and that hurdle has been passed. And that therefore we’re at the point now, where it sort of made about whether or not there is a reason kind of [indiscernible] and dumping going on?

Well, again I cannot speak for - I only deal with my trade council, and I can’t talk about as I don’t know about any of our competitors, and their material injury, needless to say their products where as an industry we’re under attack and yet SDI still makes a profit. So, therefore we had to wait until all the trade councils communicate on those issues, and then that of course would affect the timing.

Okay, got it. Okay, thanks very much guys. I appreciate the information there.

You’re welcome.

Thanks, Nathan.

Thank you. The next question is from Curt Woodworth of Nomura. Please go ahead.

Hi, good morning.

Good morning.

Just want to get back to the metal spread question, Mark. Obviously since the last mid-quarter update you’ve seen fair amount of incremental pressure there with flat roll down about $30 to $35 a ton in scrap. Seems to be that bouncing somewhat in the U.S., so lot more in Europe. So, I just want to get your take on, on how that should flow through to you guys given, it seems like you are talking about four to five week lag mechanisms, because thus far metal [indiscernible] pretty resilient for you guys, I mean you are only down slightly year-on-year and about $16 this quarter relative to your average yet. If I look at total numbers for this year on a spot basis, spreads were about 190 versus last year they seemed to be averaging about 270, so is there - is there some offset on a long side, or is this a lag - a lag this year that we need to think about?

I’ll let you conclude at that, but I would suggest, and I’ve not looked in detail, not just recently quantifying the difference between this year, last year, and any other year. But sequentially, again as we suggested earlier, the - on the upside of business we should see the benefit of scrap that was sold in the second quarter flowing in. As Chris alluded to and I alluded to, yeah, she thinks that it will little soon and I with six weeks to eight weeks after February. We put the full benefit there, obviously the market pricing on the sheet is under pressure at the second, but as that inventory dissipates we truly believe, we’ll see an uptick in pricing because of the that the I don’t say priority, but the erosion of domestic level pricing. So, generally we should see margin expansion in to some degree not massively in the second quarter, something we’ll see it through the second half of the year.

Got it, okay, thanks.

Thank you. Our next question is coming from Aldo Mazzaferro of Macquarie. Please go ahead.

Hi, good morning, Mark.

Good morning, Aldo.

I wanted to congratulate on the earnings you’ve reported and the balance sheet improvement and the free cash flow and dividend in - such a tough quarter. I’m wondering, do you see further scope for the reduction of working capital going forward or do we think we saw most of it in the first quarter?

Aldo, I think do we still have an opportunity for some working capital reduction - that working capital reduction that you witness in the first quarter was largely related to value versus there are still opportunity on the volume side. So I still think there is some opportunity for some working capital funding into the second quarter.

Great. My next question is on the scrap business. I was amazed that how you minimize the damage from this volume and pricing. And I’m just wondering Russ, maybe can you tell us how you did it? Was it early in the quarter, you just clampdown on the scale pricing, and sold your inventory early. I don’t know, I just wondered, if you could just explain a little bit how you managed to come out with such a minimal loss on it, such a bad quarter for scrap?

It’s just a magic, Aldo. It’s just a magic. No, it’s just again, it’s good and top team, and the depth and the talent of our scrap team. They - again manage their business very well, they did a good job of controlling their inflows and maximizing their outflows, and it’s just as simple as that. Again knowing that that we saw that’s coming, and since that coming that we managed our business quarterly and again it contributes to the team.

So we saw - if you saw prices flat from here for the second quarter, do you think you’ve any change in your metal spread or roughly stable?

Well, it’s - if we say - if we see top prices flat from here to the quarter.

Yeah.

I would say, it’s still bad luck there, although there is still awful lot of competition out there as we talk about earlier. So, again we’ve got a still lot of orders, so we’ve got - we’ve got to participate at whatever level. So, ideally when the script selling price goes down, the buying price ought to go down in accordance or more, that’s always what we try to do, whether we’re successful at it, I guess we’ll have to wait to see in June or in July.

Thanks. And then I just finally kind of a similar question on the steel side. I think the pricing ended the quarter at the low point, when I gathered. So, going forward, if we stay at flat pricing, we’re probably going to see lower average pricing in the second quarter, and yet you are picking up some benefits in a FIFO basis from the step class, declining. Theresa, when you say your metal spreads in second quarter would be improvement from here assuming flat pricing? I mean assuming flat pricing from the end of the quarter?

Yeah. I think we stated out of that -- too soon to know, but we’re going to get the scrap benefit. Order backlogs are not substantial. So you don’t know really where the May, June pricing will end-up. What we do feel that there’ll be a slight margin expansion are.

Great. Well, thanks Mark. Congratulations.

Thank you.

Thank you the next question is from Phil Gibbs with KeyBanc. Please go ahead.

Just a quick follow-up here. You said your utilization in Q1 I think was around 73%. Any range that you can provide us for the second quarter?

Again Phil, without transparency into May and June it would be hypothetical at this moment in time. I would say though that it’s up, again Butler and the - and Columbus in particular have had strong bookings and there is no reason to think that as inventory dissipates, that should change.

Thank you.

Thank you. That concludes our question-and-answer session. I would like to turn the call back over to Mr. Millett for any closing remarks.

Well, thank you, everyone. I don’t know if anyone still on the call after we beat that dead horse and then in times on spread, and market. But I just would like to emphasize the differentiation of our team, and our company, and our business model. I think we’re continued to be well positioned, a low-high variable cost structure, the low fixed costs coupled with the highly diversified product mix, will continue to generate a very, very strong cash flow through the cycle. And as things, pickup, it should pick up also. We certainly clearly differentiated ourselves, I think consistently outperformed our peer group. And we got a passionate team and have a wonderful customer base to support that. Our organic initiatives, engineered bar and rail are proving to - continue to prove our abilities there. New Millennium Building Systems, I mean continues to shine and so I think we’re well positioned to going forward, so I appreciate your continued support of our company. And to our customers, thank you for your support also. To our employees, sincere thanks; your passion for excellence, hard work and dedication is backbone of our company and just as we all say each and every day, each and every minute we say, thank you all.

Once again ladies and gentleman that concludes today’s call. Thank you for your participation and have a great and safe day.