March 2004

With little challenge from imports , domestic steelmakers expect that

flat-roll supplies will tighten and prices will rise again this year , though

more modestly than in 2004.

Carbon

on a Roll

By Corinna C. Petry,

Managing Editor

Sidebars and Tables:

® All Eyes $ , ... - Steel

• Steelmakers' Results

® Steel Shipments, Selling Prices

Coming off a record year for shipments, revenues and earnings, U.S. and

Canadian steel producers say they are poised to meet the many challenges of

the steel market in 2005. The major players of the carbon flat-roll marketU.S. Steel Corp., Nucor Corp., International Steel Group, AK Steel Inc., Steel

Dynamics, Dofasco Inc. and Ipsco Inc.-all gave investors a positive outlook

for 2005 during recent year-end conference calls.

Demand trends

Based on their order books and customer comments, steelmakers are

confident that demand will regain its earlier strength, once the inventory glut

works it way through the supply chain.

"We continue to see good demand across virtually all end markets, and

inventory levels are being worked down," says U.S. Steel Corp. President and

CEO John Surma. "In the flat-roll segment, first-quarter shipments should be

3.6 million tons. We expect full-year flat-roll shipments of 15.4 million tons, a

slight decline from 2004 levels due to the reduced operating levels that we

expect during the No. 13 blast furnace reline."

Vice President and CFO Gretchen Haggerty adds that U.S. Steel's outlook

"reflects what we're seeing right now in terms of how material is shipping. We

are seeing strength across a wide range of our customers. We think the

inventory will clear out in the near term."

The inventory is mostly in the intermediate market-service centers and

converters , Surma notes . Most end-users-automotive, equipment and

appliance OEMs-are already providing solid shipment and order rates.

President and CEO Dan DiMicco and other executives at Nucor Corp. report

that last year's strong business conditions appear to be carrying over to 2005.

"We expect the second and third quarters to be stronger than the first

Page 1 of 7

http://www.metalcenternews . com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

Remains 

on a Roll 

arket 

With little challenge from imports, domestic steelmakers expect that 

flat-roll supplies will tighten and prices will rise again this year, though 

more modestly than in 2004. 

By Corinna C. Petry, 

Managing Editor 

Sidebars and Tables: 

e All on Mittal Steel 

e Steelmakgr:~' R~sults 

e Steel Shipments, Selling Prices 

Coming off a record year for shipments, revenues and earnings, U.S. and 

Canadian steel producers say they are poised to meet the many challenges of 

the steel market in 2005. The major players of the carbon flat-roll marketU.S. Steel Corp., Nucor Corp., International Steel Group, AK Steel Inc., Steel 

Dynamics, Dofasco Inc. and Ipsco Inc.-ali gave investors a positive outlook 

for 2005 during recent year-end conference calls. 

Demand trends 

Based on their order books and customer comments, steel makers are 

confident that demand will regain its earlier strength, once the inventory glut 

works it way through the supply chain. 

"We continue to see good demand across virtually all end markets, and 

inventory levels are being worked down," says U.S. Steel Corp. President and 

CEO John Surma. "In the flat-roll segment, first-quarter shipments should be 

3.6 million tons. We expect full-year flat-roll shipments of 15.4 million tons, a 

slight decline from 2004 levels due to the reduced operating levels that we 

expect during the No. 13 blast furnace reline." 

Vice President and CFO Gretchen Haggerty adds that U.S. Steel's outlook 

"reflects what we're seeing right now in terms of how material is shipping. We 

are seeing strength across a wide range of our customers. We think the 

inventory will clear out in the near term." 

The inventory is mostly in the intermediate market-service centers and 

converters, Surma notes. Most end-users-automotive, equipment and 

appliance OEMs-are already providing solid shipment and order rates. 

President and CEO Dan DiMicco and other executives at Nucor Corp. report 

that last year's strong business conditions appear to be carrying over to 2005. 

"We expect the second and third quarters to be stronger than the first 

http://www.metalcenternews.coml2005/March/MCN0503Flat-Roll.htm 

Page 1 of7 

8/8/2005 
March 2004 Page 2 of 7

quarter," says Terry Lisenby, Nucor's chief financial officer

J

oe Rutkowski, Nucor executive vice president-plate, says the plate market

remains very strong. "The heavy equipment OEMs are improving their outlook

in 2005," he adds, noting that Nucor was able to collect $30 per ton more on

January plate shipments.

"The coil plate market has been affected somewhat by the inventory overhang

of sheet products, but we are confident [orders in] the first quarter will fill up,

with additional strengthening in the next couple months," Rutkowski says.

For Nucor's sheet products, fourth-quarter softness continued into the first

quarter as a result of large customer inventories. Nevertheless, says John

Ferriola, executive vice president-sheet, "we expect to run full through the first

quarter, and we expect the second quarter to improve over the first. Increased

demand will result as the inventory reduction by our service center customers

is completed."

Strong end-use demand and the expected reduction in imports during the first

quarter "will add to the market tightening during the second quarter. We are

hearing reports of automotive gaining momentum and we expect construction

demand to increase in a typical seasonal economy," Ferriola says. "We have

high expectations for the remainder of 2005."

While 2004 treated AK Steel well, 2005 is shaping up "as a substantially

better year, one in which we begin to hit our stride as a company and regain

our winning form," says President and CEO James Wainscott. Markets remain

robust, he says, and the outlook for the U.S. economy and customer end

markets is upbeat.

"With prices for steel rising around the world, and imports declining, we expect

supply lines to tighten once again," he says. "We have already seen a pickup

in demand, especially for high-quality cold-rolled and automotive-quality

galvanized products."

Global demand for electrical steel products continues to outpace supply, with

prices heading in one direction: higher, Wainscott says. "Our production and

sales of electrical steel products during 2004 set all-time company records,

breaking marks that had stood for 30 years. The outlook for electrical steel

products looks even better for 2005."

The market for electrogalvanized automotive-grade coated products also

remains strong. "If we would open the order book, we would probably sell a

significant portion into the second quarter," Wainscott adds.

International Steel Group President and CEO Rodney Mott believes

underlying demand remains fairly strong in most market segments. "There

has been talk out there about automotive business slowing down, but we are

not seeing that in our facilities. We have increased our total volume with most

of our major automotive accounts. It seems to be holding up through the first

quarter."

Business from pipe and tube converters has started to pick up as well, Mott

adds, noting that the only down market early in the first quarter was service

center distribution.

For Steel Dynamics Inc., the first quarter is expected to resemble the fourth

quarter, but President and CEO Keith Busse forecasts a fairly strong first half

overall. "The second quarter will exceed the first quarter. The conditions in the

marketplace, coupled with the cost of resources and increased volume, will

probably give Steel Dynamics a pretty good year.

http://www.metaleenternews . com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

quarter," says Terry Lisenby, Nucor's chief financial officer 

J 

oe Rutkowski, Nucor executive vice president-plate, says the plate market 

remains very strong. 'The heavy equipment OEMs are improving their outlook 

in 2005," he adds, noting that Nucor was able to collect $30 per ton more on 

January plate shipments. 

'The coil plate market has been affected somewhat by the inventory overhang 

of sheet products, but we are confident [orders in] the first quarter will fill up, 

with additional strengthening in the next couple months," Rutkowski says. 

For Nucor's sheet products, fourth-quarter softness continued into the first 

quarter as a result of large customer inventories. Nevertheless, says John 

Ferriola, executive vice president-sheet, "we expect to run full through the first 

quarter, and we expect the second quarter to improve over the first. Increased 

demand will result as the inventory reduction by our service center customers 

is completed." 

Strong end-use demand and the expected reduction in imports during the first 

quarter "will add to the market tightening during the second quarter. We are 

hearing reports of automotive gaining momentum and we expect construction 

demand to increase in a typical seasonal economy," Ferriola says. "We have 

high expectations for the remainder of 2005." 

While 2004 treated AK Steel well, 2005 is shaping up "as a substantially 

better year, one in which we begin to hit our stride as a company and regain 

our winning form," says President and CEO James Wainscott. Markets remain 

robust, he says, and the outlook for the U.S. economy and customer end 

markets is upbeat. 

"With prices for steel rising around the world, and imports declining, we expect 

supply lines to tighten once again," he says. "We have already seen a pickup 

in demand, especially for high-quality cold-rolled and automotive-quality 

galvanized products." 

Global demand for electrical steel products continues to outpace supply, with 

prices heading in one direction: higher, Wainscott says. "Our production and 

sales of electrical steel products during 2004 set all-time company records, 

breaking marks that had stood for 30 years. The outlook for electrical steel 

products looks even better for 2005." 

The market for electrogalvanized automotive-grade coated products also 

remains strong. "If we would open the order book, we would probably sell a 

significant portion into the second quarter," Wainscott adds. 

International Steel Group President and CEO Rodney Mott believes 

underlying demand remains fairly strong in most market segments. "There 

has been talk out there about automotive business slowing down, but we are 

not seeing that in our facilities. We have increased our total volume with most 

of our major automotive accounts. It seems to be holding up through the first 

quarter." 

Business from pipe and tube converters has started to pick up as well, Mott 

adds, noting that the only down market early in the first quarter was service 

center distribution. 

For Steel Dynamics Inc., the first quarter is expected to resemble the fourth 

quarter, but President and CEO Keith Busse forecasts a fairly strong first half 

overall. "The second quarter will exceed the first quarter. The conditions in the 

marketplace, coupled with the cost of resources and increased volume, will 

probably give Steel Dynamics a pretty good year. 

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8/812005 
March 2004 Page 3 of 7

"Hot-rolled is in good shape , pickled and oiled is in good shape, painted

products, cold-rolled-we have decent order input in all of these . If there is a

softness in the market," Busse says , "it was related to coated products. That

market got soft with a lot of imports from India in the fourth quarter. [But] we

believe we're rebounding."

January 2005 was SDI's best booking month since April 2004, says John

Nolan, vice president of sales and marketing. "Admittedly, prices are a bit off

their peak in September, but you have to attribute that to the second-half

import surge. We see lead times moving out. Prices are firming up now and

moving up again for late first-quarter and early second-quarter deliveries."

He adds that first-quarter prime orders at SDI's Butler mill actually exceed the

plant's defined capacity.

If the North American market shows reasonable demand for the next several

months, he says, "I think we are going to get back to a 'what the market will

bear' pricing scenario. The floor is where you can buy an offshore product,

f.o.b. U.S. port of arrival."

He estimates that hot-band prices must be sustained here at 31 to 32.5 cents

per hundredweight ($620-$650 per ton) before the U.S. market will strongly

attract imports again.

Dofasco is tracking solid activity from buyers. "We are seeing relatively strong

demand across our end-users. But this inventory in the system has certainly

put a bit of mush into the overall demand... in Canada and the U.S. We could

see demand tighten [supplies] up again if imports are low, especially in the

second quarter," remarks President and CEO Don Pether.

First-quarter results at lpsco Inc. are expected to be lower than fourth-quarter

results, yet "the fundamentals of our business remain steady," says David

Sutherland, president and CEO. "With the January steel price increases [on

plate products] fully implemented and continued strength in first-quarter

bookings, lpsco is off to a good start in 2005."

Pricing trends-contract vs. spot

Spot prices have increased in major markets around the world, ISG's Mott

says. "As a result, the spread between domestic price and world export prices

has narrowed. Coupled with the relatively weak dollar, high ocean freight

rates and growing world demand for steel, this lull in steel imports should

keep domestic steel prices at relatively high levels for the foreseeable future."

The Jan. 1 price increase announced by many hot-rolled sheet producers did

not hold, however. U.S. Steel's Surma remarks: "We did not see price move

up during January. We are looking for what the market will offer. When you're

selling [in a market with] high inventory, it's a tough sell. There's a good chunk

of inventory in the system; it's taking some time to work out. We see fewer

import offerings and at relatively high prices, because of the value of the

dollar and other issues."

Surma adds that pricing in the European Union "has come in quite a bit

closer" to North American prices since last summer. Hot-roll imports are being

quoted in the $650 per ton range, he notes.

U.S. Steel achieved price increases in its supply contracts with major buyers

and boosted the tonnage covered in its contracts.

Ferriola says Nucor's sheet group ended the year with 65 percent of its

capacity under firm pricing contracts. "These provide us with a constant

margin while providing customers the benefit of decreasing transactional price

as raw material pricing unfolds."

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 EE-RM/STD-00-550 COMMENT 86

March 2004 

"Hot-rolled is in good shape, pickled and oiled is in good shape, painted 

products, cold-rolled-we have decent order input in all of these. If there is a 

softness in the market," Busse says, "it was related to coated products. That 

market got soft with a lot of imports from India in the fourth quarter. [But] we 

believe we're rebounding." 

January 2005 was SOl's best booking month since April 2004, says John 

Nolan, vice president of sales and marketing. "Admittedly, prices are a bit off 

their peak in September, but you have to attribute that to the second-half 

import surge. We see lead times moving out. Prices are firming up now and 

moving up again for late first-quarter and early second-quarter deliveries." 

He adds that first-quarter prime orders at SOl's Butler mill actually exceed the 

plant's defined capacity. 

If the North American market shows reasonable demand for the next several 

months, he says, "I think we are going to get back to a 'what the market will 

bear' pricing scenario. The floor is where you can buy an offshore product, 

f.o.b. U.S. port of arrival." 

He estimates that hot-band prices must be sustained here at 31 to 32.5 cents 

per hundredweight ($620-$650 per ton) before the U.S. market will strongly 

attract imports again. 

Dofasco is tracking solid activity from buyers. "We are seeing relatively strong 

demand across our end-users. But this inventory in the system has certainly 

put a bit of mush into the overall demand .. .in Canada and the U.S. We could 

see demand tighten [supplies] up again if imports are low, especially in the 

second quarter," remarks President and CEO Don Pether. 

First-quarter results at Ipsco Inc. are expected to be lower than fourth-quarter 

results, yet "the fundamentals of our business remain steady," says David 

Sutherland, president and CEO. "With the January steel price increases [on 

plate products] fully implemented and continued strength in first-quarter 

bookings, Ipsco is off to a good start in 2005." 

Pricing trends-contract vs. spot 

Spot prices have increased in major markets around the world, ISG's Mott 

says. "As a result, the spread between domestic price and world export prices 

has narrowed. Coupled with the relatively weak dollar, high ocean freight 

rates and growing world demand for steel, this lull in steel imports should 

keep domestic steel prices at relatively high levels for the foreseeable future." 

The Jan. 1 price increase announced by many hot-rolled sheet producers did 

not hold, however. U.S. Steel's Surma remarks: "We did not see price move 

up during January. We are looking for what the market will offer. When you're 

selling [in a market with] high inventory, it's a tough sell. There's a good chunk 

of inventory in the system; it's taking some time to work out. We see fewer 

import offerings and at relatively high prices, because of the value of the 

dollar and other issues." 

Surma adds that pricing in the European Union "has come in quite a bit 

closer" to North American prices since last summer. Hot-roll imports are being 

quoted in the $650 per ton range, he notes. 

U.S. Steel achieved price increases in its supply contracts with major buyers 

and boosted the tonnage covered in its contracts. 

Ferriola says Nucor's sheet group ended the year with 65 percent of its 

capacity under firm pricing contracts. "These provide us with a constant 

margin while providing customers the benefit of decreasing transactional price 

as raw material pricing unfolds." 

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8/812005 
March 2004 Page 4 of 7

AK Steel 's Wainscott is bullish about his company 's contract business this

year. "Nearly 90 percent of our 2005 contract sales will be at higher prices

than in 2004," he says. "On average , we achieved double-digit price

increases, which we expect will result in 2005 revenues that are at least $600

million higher than we generated in 2004."

International Steel Group's contract business will represent about 70 percent

of its total sales this year, Mott says.

SDI's Busse says orders and pricing for galvanized and painted products are

very good and "we will see pricing move ahead slightly late in the first quarter

or early in the second quarter. That, coupled with falling scrap costs in the

second quarter, will produce margin spreads better than we enjoyed more

recently."

Nolan adds that although SDI is seen primarily as a spot market player, it has

increased its long-term sales contracts to about 50 percent of all shipments.

Pether expects Dofasco's steel operations to remain strong through the first

quarter, but overall selling prices will remain flat. Although new-contract prices

increased by double digits , these will be offset somewhat by easing spot

market selling prices and the negative impact of exchange rates, he says.

Raw material costs, surcharge trends

At U.S. Steel, executives anticipate the negative effect of higher coking coal

costs, which will mostly offset the benefit of the company ' s reduced merchant

coke position. The company also hired consultants to work on scrap

optimization to get the most cost-effective blends to produce the proper

metallurgy. "We've had a big improvement in our cost position . On scrap

buying , there's no better way to do it," Surma says . The company is also

taking a longer position on natural gas and is hedging gas prices on the

futures market.

At AK Steel, Wainscott says that any negative in terms of the company's 2005

earnings and cash flow will "arise from the increased costs we will incur for

raw material purchases. But we have secured the necessary steelmaking

inputs for 2005, including coal, coke, iron ore , HBI, scrap and purchased

slabs."

Last year, he says, AK Steel paid iron ore price hikes of almost 25 percent.

"We expect that raw material prices will go up again. The process of

developing and implementing our long-term raw materials strategy is under

way-we are in talks with some of our current suppliers and a host of other

potential suppliers."

According to SDI's Busse, surcharges will move lower but base prices will be

adjusted to reflect market conditions. "Therefore , I don't see the price drifting

much further south. We could see some [upward] movement as soon as this

quarter."

Pether says surcharges "have come down to the $ 190 range and may drop

another $60 as we move into March , to about $130 . We are seeing scrap

come down . There is a lot of alternate material brought in by certain mills, and

we see fewer exports of scrap to places like China and Turkey. Of course,

iron ore is being watched closely."

He predicts the unit costs on coking coal are going to go up "probably in the

25 to 30 percent range from what they are today," depending on length of the

contract and the volume commitment.

lpsco Inc. lowered its scrap surcharge from $100 in December to $55 per ton

in February.

Capital projects in the works

http://www.metalcenternews.com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

AK Steel's Wainscott is bullish about his company's contract business this 

year. "Nearly 90 percent of our 2005 contract sales will be at higher prices 

than in 2004," he says. "On average, we achieved double-digit price 

increases, which we expect will result in 2005 revenues that are at least $600 

million higher than we generated in 2004." 

International Steel Group's contract business will represent about 70 percent 

of its total sales this year, Mott says. 

SOl's Busse says orders and pricing for galvanized and painted products are 

very good and "we will see pricing move ahead slightly late in the first quarter 

or early in the second quarter. That, coupled with falling scrap costs in the 

second quarter, will produce margin spreads better than we enjoyed more 

recently." 

Nolan adds that although SOl is seen primarily as a spot market player, it has 

increased its long-term sales contracts to about 50 percent of all shipments. 

Pether expects Oofasco's steel operations to remain strong through the first 

quarter, but overall selling prices will remain flat. Although new-contract prices 

increased by double digits, these will be offset somewhat by easing spot 

market selling prices and the negative impact of exchange rates, he says. 

Raw material costs, surcharge trends 

At U.S. Steel, executives anticipate the negative effect of higher coking coal 

costs, which will mostly offset the benefit of the company's reduced merchant 

coke position. The company also hired consultants to work on scrap 

optimization to get the most cost-effective blends to produce the proper 

metallurgy. "We've had a big improvement in our cost position. On scrap 

buying, there's no better way to do it," Surma says. The company is also 

taking a longer position on natural gas and is hedging gas prices on the 

futures market. 

At AK Steel, Wainscott says that any negative in terms of the company's 2005 

earnings and cash flow will "arise from the increased costs we will incur for 

raw material purchases. But we have secured the necessary steelmaking 

inputs for 2005, including coal, coke, iron ore, HBI, scrap and purchased 

slabs." 

Last year, he says, AK Steel paid iron ore price hikes of almost 25 percent. 

"We expect that raw material prices will go up again. The process of 

developing and implementing our long-term raw materials strategy is under 

way-we are in talks with some of our current suppliers and a host of other 

potential suppliers." 

According to SOl's Busse, surcharges will move lower but base prices will be 

adjusted to reflect market conditions. "Therefore, I don't see the price drifting 

much further south. We could see some [upward] movement as soon as this 

quarter." 

Pether says surcharges "have come down to the $190 range and may drop 

another $60 as we move into March, to about $130. We are seeing scrap 

come down. There is a lot of alternate material brought in by certain mills, and 

we see fewer exports of scrap to places like China and Turkey. Of course, 

iron ore is being watched closely." 

He predicts the unit costs on coking coal are going to go up "probably in the 

25 to 30 percent range from what they are today," depending on length of the 

contract and the volume commitment. 

Ipsco Inc. lowered its scrap surcharge from $100 in December to $55 per ton 

in February. 

Capital projects in the works 

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8/8/2005 
March 2004 Page 5 of 7

At Gary Works, U.S. Steel will shut down the No. 13 blast furnace for a major

rebuild during July and August. Nick Harper, manager of investor relations,

estimates the company will spend $475 million on capital projects

domestically. That includes the blast furnace reline, the acquisition of mobile

and mining equipment, and coke oven repairs at both Clairton and Gary

Works.

Nucor's Castrip team in Crawfordsville, Ind., has fully commercialized the

direct casting of sheet steel, DiMicco reports. "They have now proved the

technology is commercially and economically viable and can be successfully

sold in the market."

In fact, the process of selecting a location for Nucor's second Castrip

production facility in the United States is under way. The company estimates

that building a second plant-on the West Coast or in the South Central

states-will cost about $100 million.

Nucor's 2005 capital expenditure program of $415 million includes more than

$150 million for greenfield projects. At the program's core is a raw materials

strategy to control about one-third of the company's iron unit consumption.

Completing three separate projects this year and next should give Nucor

control of at least 2 million tons per year of high-quality scrap substitutes,

DiMicco says.

First is the Hlsmeltjoint venture with Rio Tinto and other partners in western

Australia. Cold commissioning of about 75 percent of the plant is in progress,

and production should start in the second quarter. The plant converts iron ore

fines and coal fines into liquid metal as both a blast furnace replacement

technology and as a metal source for electric arc furnaces. Annual capacity

initially will be 800,000 metric tons.

Second is the green pig joint venture with Brazil 's CVRD, called Ferro Gusa

Carajas, which will cultivate eucalyptus trees as a charcoal source. The first

module will use two conventional mini-blast furnaces to produce 380,000 tons

of pig iron per year. "Construction continues on the furnaces ," DiMicco says,

and iron production may begin in the third quarter.

Last September, Nucor purchased an idled direct reduced iron plant in

Louisiana, and is moving it to Trinidad-which has low-cost supplies of

natural gas and favorable logistics for receiving iron ore from Brazil and

shipping DRI to the United States. The DRI project's capital budget is about

$200 million; operations should start in the first quarter of 2006.

International Steel Group is ramping up its Cleveland West operations and

plans to add a 500,000 tons-per-year automotive-quality hot-dip galvanized

line there. Production is expected to begin in the fourth quarter.

ISG will also begin production, early in the second quarter, at its 110-inchwide plate mill at Burns Harbor, which has been idle since 2000.

Mark Millett, vice president at Steel Dynamics, says the company will spend

about $6.5 million on caster modifications, beginning late in 2005 and through

2006, to bring the capacity at Butler Works up to 2.7 million to 2.8 million tons

by 2007.

Iron Dynamics is negotiating a partnership through Mesabi Nugget LLC to

produce iron nuggets and is pursuing environmental permits in two states.

"We expect to begin construction this year and have an operating plant open

by next summer," Millett says.

Capital expenditures for Dofasco this year should total $450 million. "We are

revamping the pickling and cold-rolling lines, which will be completed in July,"

reports Walter W. Bilenki, vice president, finance. "We've started to revamp

http://www.metaleenternews. com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

At Gary Works, U.S. Steel will shut down the No. 13 blast furnace for a major 

rebuild during July and August. Nick Harper, manager of investor relations, 

estimates the company will spend $475 million on capital projects 

domestically. That includes the blast furnace reline, the acquisition of mobile 

and mining equipment, and coke oven repairs at both Clairton and Gary 

Works. 

Nucor's Castrip team in Crawfordsville, Ind., has fully commercialized the 

direct casting of sheet steel, DiMicco reports. "They have now proved the 

technology is commercially and economically viable and can be successfully 

sold in the market." 

In fact, the process of selecting a location for Nucor's second Castrip 

production facility in the United States is under way. The company estimates 

that building a second plant-on the West Coast or in the South Central 

states-will cost about $100 million. 

Nucor's 2005 capital expenditure program of $415 million includes more than 

$150 million for greenfield projects. At the program's core is a raw materials 

strategy to control about one-third of the company's iron unit consumption. 

Completing three separate projects this year and next should give Nucor 

control of at least 2 million tons per year of high-quality scrap substitutes, 

DiMicco says. 

First is the Hlsmelt joint venture with Rio Tinto and other partners in western 

Australia. Cold commissioning of about 75 percent of the plant is in progress, 

and production should start in the second quarter. The plant converts iron ore 

fines and coal fines into liquid metal as both a blast furnace replacement 

technology and as a metal source for electric arc furnaces. Annual capacity 

initially will be 800,000 metric tons. 

Second is the green pig joint venture with Brazil's CVRD, called Ferro Gusa 

Carajas, which will cultivate eucalyptus trees as a charcoal source. The first 

module will use two conventional mini-blast furnaces to produce 380,000 tons 

of pig iron per year. "Construction continues on the furnaces," DiMicco says, 

and iron production may begin in the third quarter. 

Last September, Nucor purchased an idled direct reduced iron plant in 

Louisiana, and is moving it to Trinidad-which has low-cost supplies of 

natural gas and favorable logistics for receiving iron ore from Brazil and 

shipping DRI to the United States. The DRI project's capital budget is about 

$200 million; operations should start in the first quarter of 2006. 

International Steel Group is ramping up its Cleveland West operations and 

plans to add a 500,000 tons-per-year automotive-quality hot-dip galvanized 

line there. Production is expected to begin in the fourth quarter. 

ISG will also begin production, early in the second quarter, at its 11 O-inchwide plate mill at Burns Harbor, which has been idle since 2000. 

Mark Millett, vice president at Steel Dynamics, says the company will spend 

about $6.5 million on caster modifications, beginning late in 2005 and through 

2006, to bring the capacity at Butler Works up to 2.7 million to 2.8 million tons 

by 2007. 

Iron Dynamics is negotiating a partnership through Mesabi Nugget LLC to 

produce iron nuggets and is pursuing environmental permits in two states. 

"We expect to begin construction this year and have an operating plant open 

by next summer," Millett says. 

Capital expenditures for Dofasco this year should total $450 million. "We are 

revamping the pickling and cold-rolling lines, which will be completed in July," 

reports Walter W. Bilenki, vice president, finance. "We've started to revamp 

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our galvanizing facilities. Later , we'll start to see the improvement in

throughput, quality and a reduction in costs from $20 to $25 a ton."

Ipsco Inc. is building a $45 million steel plate quench, temper and normalizing

heat-treat facility at Mobile Steel Works in Alabama. Normalizing operations

will begin in the fourth quarter, followed by quench and temper operations in

the first quarter of 2006. Sutherland says customer interest in the products

that will come out of the heat-treat facility has been very strong.

All Eyes on M ittal Steel

The global steel industry is in a heightened state of watchfulness again while

Mittal Steel integrates its soon-to-be acquired North American operations

from International Steel Group.

Mittal has iron and steel producing facilities on five continents after

purchasing a stake in a Chinese mill in February. Its 2004 revenues

exceeded $22.2 billion.

International Steel Group was formed less than three years ago by acquiring

bankrupt integrated steelmaking assets formerly owned by Bethlehem Steel,

Lukens Steel , LTV Steel , Acme Metals , Weirton Steel and Georgetown

Steel. It's already a large company with 2004 revenues of more than $9

billion. ISG also owns coal reserves, iron ore and coke operations, a hot

briquette iron plant in Trinidad , lake shipping and trucking operations, and

seven short-line railroads.

President and CEO Rodney Mott says ISG's customers, employees,

shareholders, union leaders and managers "are all excited about becoming

a part of the world's largest steel company." The merger should close by

March 31.

"We believe consolidation of the industry is an important step toward

creating value and attracting increasing investor interest in our industry,"

Mott says.

The company will continue working closely with the United Steelworkers of

America. "Our innovative and mutually beneficial labor agreement is

designed to provide our represented employees with a fair, flexible and

incentive-driven compensation package. Our strong partnership with labor

has been an integral part of our success."

Mott and Lou Schorsch, president of Mittal's Inland Steel operations in

northwest Indiana, have been working to integrate the two companies.

"We have formed committees in key function areas to begin exploring the

opportunities we have to achieve synergies through this transaction," Mott

says. The committees include human resources, information technology,

labor relations, research and development, maintenance services and

operations integration, among others.

"We all share a common commitment to create a U.S.-based steel business

that is truly the best of the best. We are eager to identify best practices over

the combined company and extend those practices as quickly as possible

throughout all operations."

Mott says ISG is especially interested in tapping into Mittal Steel's access to

raw materials around the world, which "gives us a bit more security in our

operations. We got a little tight on raw materials last year and in fact ended

up paying a premium, which [under Mittal] we would not have to do. We're

looking forward to the global buying power that we're going to have."

http://www.metaleenternews . com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

our galvanizing facilities. Later, we'll start to see the improvement in 

throughput, quality and a reduction in costs from $20 to $25 a ton." 

Ipsco Inc. is building a $45 million steel plate quench, temper and normalizing 

heat-treat facility at Mobile Steel Works in Alabama. Normalizing operations 

will begin in the fourth quarter, followed by quench and temper operations in 

the first quarter of 2006. Sutherland says customer interest in the products 

that will come out of the heat-treat facility has been very strong. 

All Eyes on Mittal Steel 

The global steel industry is in a heightened state of watchfulness again while 

Mittal Steel integrates its soon-to-be acquired North American operations 

from International Steel Group. 

Mittal has iron and steel producing facilities on five continents after 

purchasing a stake in a Chinese mill in February. Its 2004 revenues 

exceeded $22.2 billion. 

International Steel Group was formed less than three years ago by acquiring 

bankrupt integrated steelmaking assets formerly owned by Bethlehem Steel, 

Lukens Steel, LTV Steel, Acme Metals, Weirton Steel and Georgetown 

Steel. It's already a large company with 2004 revenues of more than $9 

billion. ISG also owns coal reserves, iron ore and coke operations, a hot 

briquette iron plant in Trinidad, lake shipping and trucking operations, and 

seven short-line railroads. 

President and CEO Rodney Mott says ISG's customers, employees, 

shareholders, union leaders and managers "are all excited about becoming 

a part of the world's largest steel company." The merger should close by 

March 31. 

"We believe consolidation of the industry is an important step toward 

creating value and attracting increasing investor interest in our industry," 

Mott says. 

The company will continue working closely with the United Steelworkers of 

America. "Our innovative and mutually beneficial labor agreement is 

designed to provide our represented employees with a fair, flexible and 

incentive-driven compensation package. Our strong partnership with labor 

has been an integral part of our success." 

Mott and Lou Schorsch, president of Mittal's Inland Steel operations in 

northwest Indiana, have been working to integrate the two companies. 

"We have formed committees in key function areas to begin exploring the 

opportunities we have to achieve synergies through this transaction," Mott 

says. The committees include human resources, information technology, 

labor relations, research and development, maintenance services and 

operations integration, among others. 

"We all share a common commitment to create a U.S.-based steel business 

that is truly the best of the best. We are eager to identify best practices over 

the combined company and extend those practices as quickly as possible 

throughout all operations." 

Mott says ISG is especially interested in tapping into Mittal Steel's access to 

raw materials around the world, which "gives us a bit more security in our 

operations. We got a little tight on raw materials last year and in fact ended 

up paying a premium, which [under Mittal] we would not have to do. We're 

looking forward to the global buying power that we're going to have." 

http://www.metalcenternews.coml2005/MarchIMCN0503Flat-Roll.htm 

Page 6 of7 

8/812005 
March 2004 Page 7 of 7

He says customers, too, should benefit from having a steel supplier that can

be accessed around the globe, "and maybe even open some doors for them

in some countries they would like to sell into."

Questions or comments about Metal Center News. E-mail

feedback@metalcenternews.com

http://www.metaleenternews.com/2005/March/MCN0503F1at-Roll.htm 8/8/2005

 EE-RM/STD-00-550 COMMENT 86

March 2004 

He says customers, too, should benefit from having a steel supplier that can 

be accessed around the globe, "and maybe even open some doors for them 

in some countries they would like to sell into." 

Questions or comments about Metal Center News. E-mail 

feedba<:;k@metalcenternews.com 

http://www.metalcenternews.coml2005/MarchiMCN0503Flat-Roll.htm 

Page 7 of7 

8/812005