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Nucor Corporation (NYSE:NUE)

Q4 2010 Earnings Conference Call

January 27, 2011 2:00 PM ET

Executives

Daniel DiMicco – Chairman, President and CEO

James Frias – CFO, EVP and Treasurer

John Ferriola – COO, Steelmaking Operations

Analysts

Timna Tanners – UBS

Brian Yu – Citi

Sal Tharani – Goldman Sachs

Mark Parr – KeyBanc Capital Markets

David Gagliano – Credit Suisse

Mark Liinamaa – Morgan Stanley

Michelle Applebaum – Steel Market Intelligence

Tony Rizzuto – Dahlman Rose

David Martin – Deutsche Bank

Operator

Please standby, we are about to begin. Good day, everyone and welcome to the Nucor Corporation Fourth Quarter and Year End of 2010 Earnings Call. As a reminder, today’s call is being recorded. Later, we will conduct a question-and-answer session and instructions will come at that time.

Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. The word we expect, believe, anticipate and variations of such words are – and similar expressions are intended to identify those forward-looking statements, which are based on management’s current expectations and information that is currently available.

Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. For more information about the risks and uncertainties relating to these forward-looking statements may be found in the Nucor’s latest 10-K and subsequently filed 10-Qs, which are available on the SEC’s and Nucor’s website. The forward-looking statements made in this conference call speak only as of this date, and Nucor does not assume any obligation to update them either as a result of new information, future events or otherwise.

For opening remarks and introductions, I would like to turn the call over to Mr. Dan DiMicco, Chairman and Chief Executive Officer of Nucor Corporation. Please go ahead, sir.

Daniel DiMicco

Good afternoon. We want to thank you for joining us for our conference call. As always, we appreciate your interest in Nucor. With me for today’s call are the other members of Nucor’s senior management team, our newly elected President, Chief Operating Officer and Board Member, John Ferriola; Chief Financial Officer, Jim Frias; and our other Executive Vice Presidents, Jim Darsey, over Launch Products, Keith Grass, over our Raw Materials/Scrap Operations, Ladd Hall, over our Flat-Rolled Operations, Ham Lott, over our Fabricated Product Divisions and Joe Stratman in Business Development and over our Beam and Plate Operations.

First as usual and most importantly we want to thank everyone on our team at Nucor and our Harris Steel and David J. Joseph operations for working safely and working together in what remains an extremely challenging economic environment. The talent and can-do attitude of the Nucor team are why our company will continue our long history of emerging from downturns stronger than we entered into them.

When a robust, sustainable economic recovery inevitably begins, our team’s efforts will pay big dividends to all members of the Nucor family, particularly the people who own Nucor, our shareholders. Again, thank you to all of the 20,000-plus men and women of the Nucor team and most importantly continue to work safely.

I will now ask our CFO, Jim Frias, to discuss our fourth quarter results and financial position. Following Jim’s comments, President and CEO John Ferriola will report on our operations and the implementation of our growth initiatives. And then before we take your questions, I will share with you some of my thoughts. Jim?

James Frias

Thank you, Dan, and good afternoon. With a loss of $0.04 per diluted share the fourth quarter proved to be the most challenging quarter of 2010, as we predicted. Of particular note, metal margins at our steel mills declined by $27 per ton from third quarter levels. A sharp escalation in scrap prices late this fall outpaced our ability to realize mill price increases in time to benefit the fourth quarter. The margin compression was greatest at our flat-rolled mills.

In our mid-December guidance, we reported our expectation that the 2010 full year LIFO charge would be lower than the amount estimated at the end of the third quarter. The fourth quarter LIFO charge of $23 million was down from our average quarterly expense of $47 million at the end of the third quarter but in line with our guidance estimate. This decline reflected lower year-end units of inventory compared to third quarter.

Our full year 2010 LIFO charge was $164 million compared with a 2009 LIFO credit of 467 million. Nucor incurred a $10 million charge in the fourth quarter related to the termination of the HIsmelt joint venture in Australia. This charge was not incorporated in the quantitative guidance we gave in mid-December. While the HIsmelt technology still has promise, the partners have decided that additional capital expenditures would not be a good investment in the current economic environment.

For Nucor, we believe our best iron-making investment opportunities today are in growing our direct-produced iron or DRI production capabilities. We will continue to build on both the knowledge gained from our highly successful DRI plant in Trinidad and on our long-term supplies of attractively priced natural gas.

Fourth quarter results also included $39 million of pre-operating and start-up costs. On a quarterly basis, there has been some improvement from the peak level of more than $50 million in 2010’s first quarter. For the full year 2010, these expenses totaled $175 million.

Nucor typically incurs significant pre-operating and startup expenses during economic downturns. We view these costs as investments to grow our long-term earnings power. We look for these new businesses to be significant profit generators in the years ahead. That has been our company’s experience over many previous cycles. For example, Nucor’s most recent cyclical peak earnings of almost $6 per share in 2008 carried sizable benefits and contributions from the start-up projects undertaken during the 2001 to 2003 downturn.

It goes back to Dan’s point that our team expects to continue Nucor’s long history of emerging from downturns stronger than we entered them. Successful execution of this strategy is how we build long-term value for our shareholders. It is our financial strength that allows us to invest in attractive growth opportunities through the economic cycle.

At the close of 2010, cash and short-term investments totaled almost $2.5 billion. Not included in that total is an additional $600 million of restricted cash. This restricted cash resulted from our issuance of Gulf Opportunity or GO Zone bonds in November. These tax-exempt bonds were authorized by the state of Louisiana and will finance a significant portion of the $750 million DRI plant we are building in St. James Parish, Louisiana.

Further to Nucor’s strong liquidity, our $1.3 billion unsecured revolving credit facility is undrawn and does not mature until November 2012. We have no commercial paper outstanding. Long-term debt totaled $4.3 billion at year-end 2010. That is an increase of $1.2 billion from the beginning of the year. Nucor’s conservative financial practices and strong balance sheet allowed us to be opportunistic in taking advantage of favorable credit market conditions last year to reduce our overall cost of capital.

In addition to November’s tax-exempt bond financing, we issued $600 million of 12-year unsecured notes with a coupon rate of 4.125%. That transaction was an excellent opportunity to prepare for upcoming long-term debt maturities of $650 million in 2012 and $250 million in 2013. Allowing for these dynamics, Moody’s has reported that our debt to capital ratio will be viewed on a net debt basis for any cash balances over $1.2 billion. At year-end 2010, that net debt to capital ratio was approximately 29%. That calculation excludes restricted cash.

Our operating cash flow performance in 2010 highlights another key strength of our business model. Cash provided by operating activities was nearly $900 million in 2010. That more than covered capital spending of $345 million and cash dividends paid of $457 million for the year. In 2011, we will continue to allocate capital to investments that build our long term earnings power and provide attractive returns to our shareholders.

We project 2011 capital spending of approximately $560 million. Included in that total are about $120 million of spending for our Louisiana DRI plant and about $60 million for our natural gas working interest drilling program.

As we enter the first quarter, the trend of improving market conditions that began in the fourth quarter has continued. Steel mill utilization rates have increased. In fact, fourth quarter shipments increased 32% over third quarter levels. We have been able to significantly raise mill selling prices in response to rising raw material costs and some improvement in an end use demand.

Downstream fabricated construction products markets remain very challenging. Overall, we expect a return to profitability in the first quarter, and we believe the positive trend in earnings will continue into the second quarter. We’ll again follow our practice of providing quantitative guidance in the final month of the quarter. In the long-term, we are very optimistic about Nucor’s prospects to continue building attractive and sustainable long-term value for our shareholders. Our team is working hard and very effectively to capitalize on our company’s position of strength. Thank you for your interest in Nucor. Dan?

Daniel DiMicco

Thank you, Jim. We’ll ask John Ferriola to report on Nucor’s operations. John?

John Ferriola

Thanks, Dan. Good afternoon. Let me begin by thanking all of our raw materials, steelmaking and steel products teammates for your outstanding commitment to working safety and taking care of Nucor’s customers. We are extremely proud of the work that you are doing in the tough economic times that have been with us for more than two years. Thank you, and please keep it going.

My report can be summarized in this one sentence. For Nucor, downturns create opportunities, opportunities for profitable growth. Here are some examples of how we are coming out of the economic downturn stronger than we entered it. Nucor’s plate and structural mills are doing an excellent job of growing our market during the current downturn. Highlighting the gains, these mills have shipped a total of 240,000 tons of products that were not even offered in our mix two years ago.

Even better their work continues. Our Hertford County, North Carolina plate mill’s new heat treat line was commissioned in the fourth quarter of 2010, and it is quickly ramping up to its full capacity of 125,000 tons per year. The product coming off of this line is everything we hoped it would be: great shape, great surface and right on spec. This investment allows Hertford County to grow into higher margin products where higher strength, abrasion resistance and greater toughness are required.

Our Tuscaloosa, Alabama plate mill team has continued to improve our recently added temper line so that it is now capable of running one-inch thick plate. This will allow us to sell as much as 250,000 tons per year of higher margin, temper-passed, cut-to-length plate rather than commodity hot-rolled coil. Just as exciting the Tuscaloosa team has used their ingenuity and virtually no capital to start producing discreet plate off the end of the hot mill. We expect to be able to produce as much as 125,000 tons per year of this higher-valued, higher margin discrete plate at Tuscaloosa due to these improvements.

Although these projects at Hertford County and Tuscaloosa will not increase our total plate capacity, they will have the combined effect of moving more than 500,000 annual tons of plate output from commodity grades to higher value grades that generate higher margins per ton. That, of course, means higher earnings power in the future from our plate mills. And we will not stop there in expanding our portfolio of margin-enhanced plate products to better serve our customers and generate greater profits for our shareholders. We recently approved the capital to install a vacuum degasser at Hertford County. Commissioning is expected in the first quarter of 2013. This will further broaden our product mix to include armor plate and certain alloyed plate grades.

Our Bar Mill group is also growing Nucor’s long-term earnings power with a number of projects that have started up during the current downturn. These include our new SBQ mill in Memphis and our wire rod and coiled re-bar rolling mill in Arizona. The Memphis mill more than doubled our capacity to serve the SBQ markets, while also expanding our product range into the highly attractive 3-inch and 10-inch larger diameter segment. Memphis continues to gain product qualifications and production volumes for OEMs in the Construction Equipment, Automotive, Heavy Truck, Farm Equipment and Energy markets. In December, our Memphis team set a record for shipments of rolled finished goods.

With the addition of our low-cost rolling mill in Arizona, Nucor can now serve all regions of the country with our wire rod products. Our Nucor Steel Kingman team also set a shipment record in December and recently expanded from a single shift to double shift operation.

Reflecting our culture’s drive for continual improvement and profitable growth, there is more to come. For example, Nucor Steel Nebraska will be adding a downstream processing line that provides new growth opportunities and even higher quality SBQ products than they currently offer. Additionally, our bar mills in Texas, Utah and South Carolina along with our Nucor-Yamato beam mill have established NQA-1 quality systems that will allow them to supply steel for nuclear power plant construction projects.

Nucor’s sheet mill group is also continuing to move up the value chain with margin-enhanced products that grow long-term earnings power. Building on Nucor Steel Berkeley’s success with selling value-added vacuum degassed steel, we will be installing a second sheet mill vacuum degasser at our Hickman, Arkansas facility. As the westernmost flat-rolled facility in the United States with a vacuum-degasser, Nucor Steel Arkansas will be strategically positioned to take advantage of the growing markets to the west, southwest and in Mexico.

Already, over 20% of all degassed steels currently sold in the U.S. are purchased by OEMs located in states adjacent to Arkansas. In addition to the opportunities to expand our current market share with existing customers in automotive, HVAC and oil country tubular goods, the Hickman degasser will enable us to develop new customers in target markets such as motor laminations, garage doors and lawn and garden. We expect commissioning to occur in the fourth quarter of 2012.

I will close my report with our thoughts on current market conditions. The market environment for our Fabricated Construction Products business continues to be extremely challenged, and it has been for some time. We have been working throughout 2010 to raise prices in each of the industries in which we participate with varying degrees of success. In addition to seeing some measured success in achieving price increases, we have seen our market share increase strongly in several of our downstream businesses.

In our Vulcraft Verco group, we achieved significant market share increase in both joist and deck in 2010. In our Metal Buildings group, we obtained an even greater market share increase. We also signed up a large number of new builders. Builders are the distribution chain in that industry. In rebar fabrication, we bought several small fabricators in the Southeast and another one in Texas.

We want to thank all of our teammates in those businesses for their excellent work in making the best of a very difficult environment. Despite the challenging times, they are unrelenting in demonstrating the Nucor can-do spirit by working safely, working hard and staying focused on continuous improvement.

On the steelmaking side, we are encouraged by recent signs of some improvement in real demand. However, it is difficult to determine how much of the overall increase in apparent demand is driven by steel buyers reacting to increasing raw material and steel prices. Fortunately, service center inventories through December remain at relatively low levels. It is our belief that real demand will continue to grow gradually throughout 2011. The December AIA Architecture Building Index suggests non-residential construction activity may start growing again in late 2011.

We view 2011 with cautious optimism, an optimism anchored by our ongoing view that the U.S. economy is likely to experience a gradual recovery due to structural imbalances that must be addressed by our elected officials. In addition, we are keeping more than a watchful eye on imports that continue to have too great a share of the U.S. market at a time when our low-cost domestic industry is still running at only 70% of capacity.

We are focused on taking preemptive trade action as a more supportive administration and Congress has shown a willingness to do. But whatever direction the economy takes over the short term, our team is primed and ready to utilize Nucor’s position of strength and our extremely flexible business model to continue to generate long-term earnings for our shareholders. Thank you for your interest in Nucor. Dan?

Daniel DiMicco

Thank you, John. There’s one loud and clear message coming from these reports from Jim and John. The Nucor team is building long-term value for our shareholders, and we have had a successful record that extends over nearly five decades of doing just that. It is worthwhile to look at the long-term value we have generated over the last cycle. From the cyclical trough that our stock price reached in September 2000 when a new executive team started to 2010’s closing price, our long-term shareholders enjoyed a more than 7.3 times increase in the value of their investment, including dividends. 7.3 times.

Speaking of dividends, in December, our board increased our regular quarterly cash dividend for the 38th consecutive year, and over the period from 2000 to 2010, Nucor’s base dividend has increased approximately tenfold. These returns to our shareholders through growth in our stock price and paying cash dividends did not just happen by accident or by riding a cyclical upturn. They were achieved by building sustainable business that has generated the highest returns on capital in the North American steel industry over that 2000 to 2010 time span. And they reflect our team’s unrelenting focus on being effective stewards of our shareholders’ valuable capital.

And our long-term focus and approach in managing our business has been constant with this most recent severe recession. Nucor’s continued to make substantial investments that position us for new higher highs in cyclical earnings power once the sustainable economic recovery arrives. That is exactly what we mean when we say growing stronger during downturns. From 2007 to our expected 2011 capital spending plans, we have invested more than $6 billion of capital, including both capital expenditures and acquisitions. That is a lot of capital that Nucor’s shareholders will get paid for through attractive returns as we move into the next up-cycle. Our team is very optimistic about Nucor’s prospects for rewarding our shareholders with attractive long-term returns, just like we’ve been doing. Why? Because of the team, we are driven to settle for nothing less.

Finally I will close with some very exciting news received just today. We have received the final permit for the two 2.5 million-ton DRI plants in Louisiana. These facilities will produce high-quality DRI to be used at our SBQ plate and sheet mills. Initially, we will build one DRI plant with plans to expand to the second facility shortly thereafter.

These plants will enable us to continue to allow for greater self-sufficiency, controlling more of our own raw materials along with assuring us of high-quality raw material feed. We anticipate starting construction immediately, and we have placed orders for the major equipment items already with our suppliers. We have an anticipated start-up of mid-2013. The Nucor team’s excited to be a part of the St. James Parish community in Louisiana and bringing in the type of high-paying jobs that will help make us an integral part of this community.

We appreciate all of the help and support that Governor Bobby Jindal and all the other state and local agencies have given to us to help this process come to fruition. Once again, thank you for your interest in Nucor, and we would now be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) We will take our first question from Timna Tanners with UBS.

Timna Tanners – UBS

Hi, good afternoon.

Daniel DiMicco

Good afternoon, Timna.

Timna Tanners – UBS

Wanted to follow up on understanding the scrap price movement. So scrap price had been one of the primary reasons you’d talked about higher steel prices in your announcements to customers. Just wondering, can you remind us about the timing of when you see higher scrap prices? You only saw a 1% increase into the fourth quarter, so how does the revenue recognition work there again, please?

James Frias

Well, Timna, the…

Daniel DiMicco

You’re talking about revenue recognition for our scrap business?

Timna Tanners – UBS

Sorry. When do the cost hit your P&L on the – when you pay the higher price for scrap, is what I am asking?

Daniel DiMicco

It starts hitting the P&L heavily as we move through the end of December and into the first quarter.

Timna Tanners – UBS

Okay, so you had a 1% increase third quarter to fourth quarter. So I am just trying to understand.

Daniel DiMicco

Here is where you’re missing the point. You’re talking about usage versus purchase price.

Timna Tanners – UBS

Right.

Daniel DiMicco

Okay. So when you say we only saw a 1% increase in usage, right, we had already seen significant increases in the price that we were paying. And, it will just taking – over a several month period, it will take that period of time for all the higher-priced scrap purchases to work through into our actual usage numbers. And in additional we worked very hard to get pricing in our steel products up to keep as close a pace we could to the scrap movement. So our raw material price increases will coincide with finished steel price increases, substantial ones on both parts. And both of those moves should allow our margins to expand from where they have been reported in the fourth quarter.

Exact timing of those things, just it’s not feasible to pinpoint those for you, but as we stated you will see that occur throughout the first quarter, and it may be a month, maybe two lag between peak in pricing achieved on steel products, probably closer to a month versus the peak in raw material pricing. And as we get into the second quarter, they should be in lockstep, and we’re foreseeing a fairly stable pricing environment for both raw materials and steel prices as we move through the second quarter.

Timna Tanners – UBS

Okay. That’s helpful. It sounds like it’s a little tricky for us to figure out from outside so that’s a little more information. And then just if I could, just any other information you have, of course, being a big player in the construction market. I’m hearing some signs that things are starting to stabilize, and I wanted to get your take on that. What’s causing maybe your downstream to perform a little bit better if that ties in?

Daniel DiMicco

Well, first off, 2010 was actually the year that we saw the bottom occur in the downstream construction markets, and it wasn’t 2009, it was 2010. And yes, we do believe we have reached the bottom, and we’re seeing some positive demand signs, but they’re not rapid and they’re not large. We have seen some improvements in the Architectural Index. One of the faults of that index is it includes all of the architectural activity whether it’s domestic or foreign, so you have to be very careful judging the actual uptick in non-res and construction just from the AIA numbers. You have to take into account more factors than that.

But indeed we have seen things improve. We’ve start – we’ve come off the bottom, but it’s going to be a slow, gradual climb. There’s really nothing going on out there that’s going to change things in a dramatic fashion in the first quarter. But we do expect to see steady improvement throughout the year, and we do expect to see the ability to maintain strong pricing to cover our raw material costs throughout the year.

Timna Tanners – UBS

Okay. Thanks a lot.

Operator

Moving on, we’ll now go to Brian Yu with Citi.

Brian Yu – Citi

Thanks. Good afternoon. Dan, my question relates to the structural business. So when we look at the minority interest charge, the profit sharing suggests that your overall profits there are very similar to 2004 and 2005 levels, but back then shipments were a lot higher than it is today. First, can you discuss your first half outlook on structural? I know you commented a little bit earlier in terms of demand, order entry rates. And then anything else you could share with us about what’s changed in the structural business that’s allowing this level of profits relative to shipments?

Daniel DiMicco

Well, my comments with respect to the structural beam business and the operations at the mills that produce those products aren’t any different than what I just shared with Timna in answer to her question. With respect to what’s changed, John Ferriola specifically addressed the fact that our market – the products that we are marketing today and the higher value added mix of those products has had a significant positive impact on the earnings. So while we are producing less tons than back in ‘04, we are producing more higher margin tons and that has allowed us to maintain a very good profitability. John, do you have any other comments you want to add?

John Ferriola

The only other comment I would make is that you asked, Brian, about how we see it going forward. We see the structural market very stable going forward, and we would expect the first half of 2011 to be similar to our performance in 2010. Again, to Dan’s point, with the higher margin profits although the volumes will be the same, we expect to see higher margins from that business.

Brian Yu – Citi

Thank you.

Operator

And now, we’ll go to Sal Tharani with Goldman Sachs.

Sal Tharani – Goldman Sachs

Thank you. Good afternoon, Dan.

Daniel DiMicco

Are you related to Sal?

Sal Tharani – Goldman Sachs

How are you? I’m sorry. I hope you can hear me. I’m on a cell phone.

Daniel DiMicco

We can hear you fine, Sal.

Sal Tharani – Goldman Sachs

Okay. A couple of questions, you used to have a significant portion of contract business on the flat-rolled. So I just don’t understand if you still do that and are you realizing similar prices in those and what’s the percentage of contract you have right now?

Daniel DiMicco

John, you want to address that?

John Ferriola

Yeah. Our percentage of contract for the last half of 2010 was about 35% and as we go forward into 2011, the first half of 2011, we’re expecting it to be a little bit lower. It will be about 30% during the first half of 2011.

Sal Tharani – Goldman Sachs

And these contracts, the prices work off the surcharge formula for VAM is that the way it works?

John Ferriola

We have two types well actually we have three types. Some are scrap rebate programs where we take scrap in and value it against the scrap used to produce the product that we then ship to the customer. We have some that are scrap surcharge-based, and we have some that are CRU-based.

Sal Tharani – Goldman Sachs

Okay. So the realization of the prices on that is even a little more delayed than your – that the first quarter prices will be more reflective of what – if it’s the CRU indexes of what happened in the fourth quarter for those?

John Ferriola

On the scrap rebate program and on the contracts that are tied to scrap surcharges, we see it immediately. On the CRU, there’s usually a delay of about a month before we realize the price increases that would correspond to spot pricing.

Sal Tharani – Goldman Sachs

And my second question is about the Arizona mill. John, you mentioned that you have increased is it two shifts. First I want to understand the product mix. Is there any re-bar in there? And second, is the increasing the shift on the volume is it something changing in the West Coast industry in terms of demand? Or is it just you gaining market share from some other people?

John Ferriola

Well, first of all in terms of product, it’s wire rod and it’s coiled rebar. And in terms of whether we see the market increasing or whether we’re gaining market share I would say our team is doing a great job of gaining market share in that region.

Sal Tharani – Goldman Sachs

Okay. Thank you very much.

Daniel DiMicco

Sal, one further clarification. Now, we move in and out of the contract business and the percentages that we have contract versus spot a lot of it has to do with just the dynamics in the economy and how fast things are changing. And there’ve been times when we’ve had 70% contract business, and times we’ve been at 25% and we usually determine how much of that we’re doing by the expected volatility that we see going forward. And right now the best mix for us is to maintain something at the lower end of our total production in the contract market.

Sal Tharani – Goldman Sachs

Thank you, Dan. That’s very helpful.

Operator

Moving on, we’ll now go to KeyBanc Capital Markets, Mark Parr.

Daniel DiMicco

Good afternoon, Mark.

Mark Parr – KeyBanc Capital Markets

Hey, Dan. Thanks very much. Hey, I had just a question and I do appreciate all the color that you’ve given. It’s very helpful. I was curious about the Memphis operation which you, I think it’s either you or John specifically mentioned. What’s the utilization of that facility right now?

Daniel DiMicco

That facility is continuing to ramp up. The speed at which the ramp-up has gone is directly related to the length of time it takes to get approved the various products that, that mill is specializing in. Working with our customers, CAT Tractor and John Deere and have a few businesses elsewhere. Currently we’re running at, John?

John Ferriola

We’re currently running at about 60% of capacity. And then I would just build upon what you said and add that the Memphis team has done a great job of gaining qualifications from all of those OEMs. It’s a long, difficult process, and I can tell that our team there is doing a great job of getting qualified in more and more OEMs and in more and more market segments every day.

Mark Parr – KeyBanc Capital Markets

Yeah. This is an operation that really expands the, call it, the large end of our SBQ business in a very meaningful way then just over the next couple of years, right?

John Ferriola

It absolutely does. When you look at it, working side-by-side with our Nebraska plant, we’ll be able to supply SBQ bars from about one-quarter inch up to 10 inches, and that’s a great span of products to be able to offer to the market.

Daniel DiMicco

Of course, we’re also supplying forging quality semi-finished to the forging industry in very large sizes of blooms and rounds. What’s the largest one we’re making there now?

John Ferriola

About 13 inch.

Daniel DiMicco

About 13 inch?

John Ferriola

Yeah.

Daniel DiMicco

Square? No. Round. And the other thing to keep in mind there is, the quality is so, so important. It takes so long to get approved, but once you do get approved, you tend to have a very solid customer base that continues to grow with you into new and more products. One of the most satisfying things that I’ve heard most recently about the quality of being a former metallurgist is how our customers are basically coming to us saying, your quality is as good as the quality we’re seeing out of the Japanese and other foreign producers, which has normally been regarded as the top quality in this area.

So it’s very satisfying to see that our team is really focused on making the quality products that the customers are getting, and opening their eyes wide to the fact that we can do things that we didn’t really think they could get done in the domestic market here. So it’s a big opportunity for us to continue to grow our customer base in a positive way.

Mark Parr – KeyBanc Capital Markets

Okay.

James Frias

And I might add that – excuse me. I might add that it’s in a great location. It’s located very closely to two of our potentially large customers, Whirlpool and Electrolux that are both located right there in eastern Tennessee.

Mark Parr – KeyBanc Capital Markets

No. It’s just the mills just kind of sat there for so long. It’s just really nice to see it under good stewardship now and congratulations on that progress. I had one other question if I could. I was wondering if you could give us an update on scrap, have you seen – in the last week and a half, have you seen the prime end of the scrap market be stable? Has it strengthened a little bit? Has it weakened a little bit? And do you think that the weather that we’re getting on the East Coast could have an impact on the February number as it unfolds here over the next couple of weeks?

John Ferriola

Let me put it to you this way. Nobody in this business whether on the scrap side, the analyst side or the steel producer or user side, predicted what was going to happen with scrap over the last couple of months. And so being that we have such a stellar track record, we’re going to refrain from predicting what we think’s going to happen in scrap over the next couple of months.

Mark Parr – KeyBanc Capital Markets

Well, hey, you know, John, what I always said, the key to good forecasting is to forecast often. So you know.

Daniel DiMicco

What I will say is there has been a tremendous run-up in scrap prices and we do believe that we will see a more stable environment for scrap pricing going forward. Not that it won’t have moves up and down, but in general it will be much more stable.

James Frias

At an elevated level.

Daniel DiMicco

And it will be at these elevated levels. And a lot of our scrap market behavior is dictated by a lot of exporting that’s been growing and growing year after year, and while they’re not necessarily real consistent about when they come to the market and when they go away from the market, so that’s added an element of volatility over the past years. Prices have gone up.

But again, we do see a more stable environment going forward and whether it goes up $20 or down $20 or what have you over the next couple of months, we’ve seen the lion’s share, we believe, of the volatility although it’s still at risk for that in the future. But right now we just predict a more stable environment going forward.

Mark Parr – KeyBanc Capital Markets

Okay. Thanks for that color, and good luck on the first quarter. Congratulations.

John Ferriola

Thank you, Mark.

Operator

David Gagliano with Credit Suisse has our next question.

David Gagliano – Credit Suisse

Great. Thanks. These will be pretty quick. I just have a couple of quick number questions. The 560 million CapEx in 2011, I was wondering if you could just divide that up by major project and how much of that is sustaining as well. That’s the first question.

Daniel DiMicco

Yeah, there’s a large chunk of that, that will be in the DRI project in Louisiana. I forget the actual number.

James Frias

We said 120.

Daniel DiMicco

About $120 million of that plus or minus. It could be more than that if we – now that we have the permit in hand, and they’re going to move forward aggressively on the project, a lot will depend on equipment deliveries and what have you.

James Frias

60 million for drilling on the working interest program, Dan.

Daniel DiMicco

Now tell me

James Frias

Yeah, Dave, there will be $60 million related to our working interest drilling program for gas supply.

David Gagliano – Credit Suisse

Okay.

James Frias

And those are the two biggest items. I don’t think we have the details of anything beyond that at our fingertips.

Daniel DiMicco

John went through a litany of new projects from vacuum degassers to all the items that he mentioned throughout the various product groups that will all add to it, but those would be the two most significant ones in terms of dollar amount. The rest are spread over the entire corporation anywhere from $0.5 million to $20 million.

David Gagliano – Credit Suisse

Okay. And how should we think about sustaining CapEx within that 560?

James Frias

Well, I think you have to think about the DRI project as being – it’s going to increase in the following year and then it’ll fall off after 2012. And then I think you can expect the working interest drilling to be at a steady state going forward. So I think the rest of the CapEx will be fairly steady from that going forward.

David Gagliano – Credit Suisse

Okay. Fair enough. And then just the 175 million in start-up costs in 2010, how should we be thinking about that number for 2011? There’s usually – obviously there’s going to be a bit more on the start-up cost line. Again.

James Frias

Initially for the first quarter, we expect it to go down to about $35 million. We really haven’t taken a view beyond that in detail. But our view is it’s going to go from 39 million in the fourth quarter to somewhere in the 35 range in the first quarter.

David Gagliano – Credit Suisse

Will it eventually go to zero? Or is this.

James Frias

It never has. We keep finding new things to invest in that have start-up costs associated with them.

Daniel DiMicco

David, typically in these down periods, Nucor has invested heavily in its operations using our strong balance sheet and preparing for the next upturn. And if you go back and listen to all the things that John mentioned that we’re doing and plan on doing, you can get a sense for that continued investment in the future, in our operations, new products, new markets. And so that’s going to continue and as we’re dropping projects off or adding new projects so I would expect that you’re going to see a continued level of new projects and start-up costs for those new projects as we go through the year. Exactly where we end up I don’t know, but they will continue at a pretty good pace.

David Gagliano – Credit Suisse

Okay. Thanks.

Operator

And now, we’ll move on to Mark Liinamaa with Morgan Stanley.

Mark Liinamaa – Morgan Stanley

Yeah, just on the pig iron facility. Could you revisit a little bit your iron ore and gas arrangements? And maybe talk a little bit about expected cash cost of production there once it’s all done?

Daniel DiMicco

Well, first, the project that we have approved now by the state is direct reduced iron. It’s not pig iron.

Mark Liinamaa – Morgan Stanley

Sorry, I apologize. Yeah.

Daniel DiMicco

That’s okay. That’s okay. And you’re right, the two variables that go into that are iron ore and natural gas. Natural gas we’ve mentioned in our last call, we have a very good arrangement that keeps natural gas prices at very competitive levels, comparable to what we’ve seen over the last 12 months going forward for 20-plus years. We’re not going to get into the actual numbers, but I gave you a frame of reference there as to where pricing has been the last 12 months on natural gas. And as far as iron ore goes, we’ve stated that up to this point in time, it will be spot market purchases in the open market like we do at our current DRI facility in Trinidad.

Mark Liinamaa – Morgan Stanley

And would it likely be U.S.-sourced or?

Daniel DiMicco

Well, currently, the Trinidad operations are mostly outside of the U.S. Canada is the closest we’d get to being in the U.S. and the rest comes from pretty much Brazil. And we anticipate a similar type of mix going forward for the second and third facilities.

Mark Liinamaa – Morgan Stanley

And then just quickly you talked a little bit about keeping a close eye on imports. Can you give any update on what you’re seeing on that front? We’ve heard mostly that imports haven’t been a problem.

Daniel DiMicco

Well, not a problem has to be put in quotations. The industries operated at an average operating rate of 70% last year, and imports were up some 40%, 50%. That makes no sense whatsoever considering how cost competitive we are in the marketplace. There have been trade cases filed because of some of that, and we are looking and working as we speak, filing some proactive cases. The amount of imports coming in are way too high, and you don’t see that anywhere else in the world to that level.

And the cost for making steel around the world has gone up as fast, if not faster than in our domestic market for some of – many of the domestic producers. So we don’t believe we’re going to see a massive increase over the levels that we’ve seen, but the levels we’ve seen are still too high.

Mark Liinamaa – Morgan Stanley

Thanks, guys.

Operator

And we’ll take a follow up from Sal. (Sal Tharani with Goldman Sachs).

Sal Tharani – Goldman Sachs

Thank you. Hey, Dan. I just wanted to send the Louisiana project CapEx, especially if there’s going to be $3 billion if you build both once the two phases are completed. So my guess would be that the first phase will be slightly higher because you’ve got to build more infrastructure. If I assume 1.8 billion, you have spent 50 million in the first – in 2010, 150 in 2011, so that’s 200 million, that leaves 1.6 billion. Should we assume that 2012 will have the brunt of it, close 1 billion or more for this project?

James Frias

Sal, I think you might be – this is Jim. I think you might be confused with the original scale of spending that was associated with the initial project, which is a blast furnace.

Daniel DiMicco

Which is actually closer to 6 billion in the total three phases of the project.

James Frias

Yes. And the number that’s in the news release, which I don’t know if our news release is out – it is out, regarding the St. James project refers to 3 billion in spending and that includes some of the follow-on spending beyond the two DRI plants as well.

Sal Tharani – Goldman Sachs

What would be the cost of each phase? I mean, first phase.

James Frias

The first phase, we’ve said – the first phase is really the only one we have priced out, and it’s $750 million.

Sal Tharani – Goldman Sachs

Okay. All right. And the drilling – go ahead. I’m sorry.

Daniel DiMicco

Sal, to answer your question, you can expect that the second phase, the second DRI plant will go in at a lower cost than the 750 because the handling equipment and the port facility that will handle both of those operations will be put in there for the first operation. And the original permit that we have in hand and that has been modified for the first phase now to be the two DRI plants, the original permit covered three phases and currently the second phase, it is still planned to be a blast furnace, coke oven operation. And the third phase to be finishing and rolling, maybe steel-making operations dependent upon how the market develops over the next several years.

And so the total investment could be significantly greater than 3 billion and you have seen numbers in the past that were as high as 6 billion, but those numbers included doing a blast furnace and coke ovens and associated support equipment and power plants for the first phase being a blast furnace as opposed to now being two DRI plants. So there are a lot of numbers that are out there. But the latest number that we have in the press release covers predominantly the two DRI plants and potentially a pelletizing operation at that facility and all the material handling equipment.

Sal Tharani – Goldman Sachs

The second phase will depend on how the first phase runs. Generally though, you can start that before the first phase is finished.

Daniel DiMicco

One of the reasons we went to the DRI instead of the blast furnace coke oven route was because of the uncertainty over what governments in the world and our government are going to do with respect to carbon. And the amount of carbon given off in a DRI plant is significantly less than a blast furnace coke oven route. So as we see how this develops with respect to carbon issues in Washington and around the world that will have a lot to do with rather or not we do a blast furnace, coke oven in the second phase or we do more DRI facilities.

Sal Tharani – Goldman Sachs

Okay; and lastly, the drilling project or drilling joint venture CapEx will that be recurrent or is that what you’re going to do for in 2012 the $60 million?

James Frias

It will increase probably somewhat from 2011 into 2012. It will probably level off in 2012 at that higher level.

Sal Tharani – Goldman Sachs

Okay; thank you very much.

Daniel DiMicco

You’re welcome.

Operator

And now we will hear from Michelle Applebaum with Steel Market Intelligence.

Michelle Applebaum – Steel Market Intelligence

Hi. Hi?

Daniel DiMicco

Hello, Michelle.

Michelle Applebaum – Steel Market Intelligence

Thank you. I have a couple of questions for you. You have a huge amount of non-res and construction exposure in your business mix, and you’re saying that remains weak and that is the weakest piece that we’re seeing. But you seem to be having as robust a book of business as anyone else. Could you explain how that works?

Daniel DiMicco

Well, first of all, we are more diversified into flat products than all you analysts seem to focus on or at least most of you. We’ve worked hard.

Michelle Applebaum – Steel Market Intelligence

Well, thanks.

Daniel DiMicco

We’ve worked hard to educate – not you personally but the community in general, that out of our 25 million tons of capacity, we have 10 million tons of sheet, we have well over 3 million tons of – or around 3 million tons of plate. But when you roll in our downstream businesses, which are predominantly construction-related, plus the Bar and Beam segments of our business, we definitely are more heavily weighted towards that but not as heavy as many people think. And so at the end of the day, we have a more balanced product mix than people normally anticipate. John, you want to comment?

John Ferriola

Yeah. I would just add that in the products that you mentioned, Dan, in plate and in sheet we’ve also worked and succeeded over the last several years in moving up the value chain and moving more into OEM applications and away from the non-residential construction. For example, we talked a lot about appliance and automotive and those other agricultural applications for our plate business, all of which remain very strong.

Daniel DiMicco

We’re also the largest cold-finished bar producer in the country. So we have product mixes that go even in the long products that go beyond just the construction. But at the end of the day, you could talk to any of the CEOs and the straight skinny on that is they’re all dependent on the construction segment. And even in the sheet product mix, there’s a lot of sheet that goes into construction or doesn’t go into construction depending on the market. So just being in appliances and what have you lawnmowers, refrigerators, air-conditioning systems. If there’s no construction going on, all the sheet that goes into those markets isn’t doing very well either so.

Michelle Applebaum – Steel Market Intelligence

Can I ask you a specific, related? Sometimes I’ve seen in the past when you see a pick-up in things like automotive what happens is that a lot of the, particularly the Midwestern mills out by me, a lot of that product leaves the spot market where you guys play and goes into those OEMs, which creates kind of a vacuum of supply, sometimes in the past? And some of that product that’ll be sold to the OEMs doesn’t have pricing flexibility so that you kind of become the – the spot market sort of becomes the tail wagging the dog. Those guys leave the spot market, and there’s fewer tons. Are you seeing that this cycle?

Daniel DiMicco

Well, there’s some of that, that goes on but we’ve also moved more heavily into the OEM business ourselves and so I’m not so sure that it’s that big an issue right now.

Michelle Applebaum – Steel Market Intelligence

Okay. So your mix change is a bigger deal right now.

Daniel DiMicco

Yes.

Michelle Applebaum – Steel Market Intelligence

Okay. Can I ask another question?

John Ferriola

Sure.

Michelle Applebaum – Steel Market Intelligence

I get asked this question like – I don’t know how many 10 times a day, where people throw the 72% operating rate at me and they say, can you just explain 50% price increases with a 72% operating rate? And I got some theories, but I’d like to hear yours.

Daniel DiMicco

Well, it’s really not very scientific and difficult to understand. Raw material costs of all kinds are going through the roof and the principal ones obviously that everybody’s aware of are iron ore, coking coal and scrap. But that’s not all of it. Energy costs and what have you have gone up.

None of the steel industry in this country for sure is making much, if any, money. And if you look around the world, even in places where things are going well, I wouldn’t call the companies that are involved wildly profitable. So you have a situation where raw material costs are going up and even though utilization rates are fairly low you still have to cover your costs, otherwise, the losses become extreme. And so the industries both here and around the world have been working to get their prices up. So you take a look at price increases, they’re occurring all around the world not just here. They have occurred a little faster here, but the rest of them are catching up. John, do you have any comments?

John Ferriola

No, I would just agree with what you said there, Dan. When you look at world pricing, it is rising rapidly and following what we’re seeing here in the United States.

Michelle Applebaum – Steel Market Intelligence

Okay. Can I ask one more? Hello?

Daniel DiMicco

Okay. One more.

Michelle Applebaum – Steel Market Intelligence

Okay. On the scrap increase, so there was this kind of tiny $2 a ton scrap price increase in the fourth quarter, which I think I didn’t really – and maybe I just zoned and missed some of your answer. But if you’re on LIFO – last in first out – in your steel mills primarily, almost exclusively, then the highest priced scrap has already – is what goes through, right? And so I was just wondering, I know quarter-to-quarter, your mix of different types of scrap and then your mix of DRI and all this other stuff, even pig iron stuff that you buy, it varies a lot. So can we really say that the fourth quarter scrap costs didn’t rise? Because we might not have enough information to know if to if it’s apples-to-apples.

James Frias

Michelle, I think you’re confusing a few things. We record the LIFO adjustment here in Charlotte separate of our scrap accounting. Certainly, scrap prices affect the LIFO calculation, but when we say scrap cost used with X, that was scrap cost used on a FIFO basis. So the numbers that we reported are the scrap costs used on a FIFO basis. Now, the thing that John emphasized when I think he was asked this question earlier is that there was a timing issue when scrap prices increased – or maybe Dan talked about this. Over the quarter, we had purchases of scrap that were higher than the scrap we used.

A lot of the inventory that we were receiving in December in new scrap deliveries didn’t get into the scrap that we used yet. It’ll be part of our January cost structure. So there’s a little bit of a lag effect between when prices rise in the marketplace and when they hit us in our usage numbers. But we try and get the pricing matched in a way that we’re neutral, and as we said we had a squeeze this time. Prices went down initially in the markets, then they started recovering but scrap ended up overall going up.

Michelle Applebaum – Steel Market Intelligence

So was yours.

Daniel DiMicco

Scrap usage.

James Frias

Yeah, scrap.

Daniel DiMicco

Scrap usage.

James Frias

Yeah.

Michelle Applebaum – Steel Market Intelligence

Would your LIFO charge have reconciled that 359 a ton to a more realistic number so that there isn’t a massive uptick coming in the first quarter? Or how would that work?

James Frias

LIFO’s not going to – there’s so much that goes into LIFO, you can’t just tie it – certainly scrap is the biggest single driver, but you can’t make direct correlations like that, Michelle.

Michelle Applebaum – Steel Market Intelligence

Okay.

James Frias

You should think of them as two separate things.

Daniel DiMicco

Yeah. Because the inventory levels, other than – which includes inventory scrap, work-in-process, finished goods inventory, the movements in the actual tons of inventory also have a major impact on the LIFO calculation. It’s not just the price of scrap. It’s the price of what’s going through the entire system and where it sits. And so it is not a simple thing to be able to say oh, LIFO did this, scrap did that, so LIFO did this, or the LIFO impact should cover what’s going on in scrap.

At the end of the day, what you and the analysts and the investment community should be focusing on is that scrap prices have gone up, steel prices have gone up very strongly, and what we’re saying to you about the first quarter and the second quarter of the year is that we will be getting to the point during the quarter that the steel pricing is covering the scrap costs, even the increases that you haven’t, quote, unquote, seen in our usage numbers yet. Those will be going up in lockstep, and we see expanding margins as we go through the first quarter into the second quarter. And that’s why we’re forecasting a profitable first quarter and continued strength in profits moving into and through the second quarter.

So it’s not like I heard you say and I think that some other people may have said it earlier and I didn’t comment on it, there’s going to be this huge, giant disparity between steel pricing and scrap pricing in the first quarter that’s going to hit us. There is going to be increased usage costs, but it will also be increased selling prices.

Michelle Applebaum – Steel Market Intelligence

By more than the difference. Thank you.

Daniel DiMicco

You’re welcome.

Operator

Tony Rizzuto with Dahlman Rose is next.

Tony Rizzuto – Dahlman Rose

Thank you, and good afternoon. And I appreciate your stamina on this call. I’ve just got a.

Daniel DiMicco

Hey, Tony. We had a big lunch.

Tony Rizzuto – Dahlman Rose There you go. You got the carbohydrates working there. You obviously, you have a lot of pent-up earnings power and appreciate to hear all the efforts on upgrading your mix, et cetera. I haven’t heard a lot specifically about Nucor-Yamato, and I was wondering if you could maybe share with us what your operating rate was for all of 2010 there and where you kind of exited the year? And if you can give us any visibility in the first half, maybe directionally for operating rates that would helpful.

And then my second question would be, do you guys have any plans to maybe break out and give us a little bit better transparency on your recycling operations, your metallics operations? Because it would be very helpful, I think, to helping us get a better understanding of what you guys are all about.

Daniel DiMicco

Appreciate your questions, we have no plans to break out the raw materials segments any different than they are today. The good news is David J. Joseph Company it continues to be profitable and profitable at a rate that more than justifies the metrics we have for our IRRs on the acquisition.

And as far as Nucor-Yamato, we don’t normally break out individual mills, and that’s what Nucor-Yamato would be. It’s not – all our beam business is not at Nucor-Yamato. It’s at Berkeley as well. And so I’m not going to give you a utilization rate for that facility other than to say that, as was pointed out earlier, the profitability has been strong, surprisingly so because of the additional value-added products that bring us bigger margins, similar to where we saw things earlier in the middle part of this decade. So it’s – but the overall long products business has been in the 50% to 60% range. Okay?

Tony Rizzuto – Dahlman Rose

Right.

John Ferriola

And so we’ll leave our comments about their utilization to fall within that range.

Tony Rizzuto – Dahlman Rose

Okay. Good. And fair enough. And if I may have one just quick follow-up, with respect with looking at trying to gauge trends and leading indicators, obviously aside from the AIA, the Architectural Buildings Index and looking at the weekly utilization rates and talking to people in the construction industry, things like that, what other indicators should we be looking at that you guys really focus on? Obviously, you’ve got a lot of downstream business in the fabrication. Is there anything else we should be looking at to gauge a leading indicator or others that would be helpful to helping us understand when that turn is going to take place?

Daniel DiMicco

Well, you’re not getting a rapid response to that. I’ll let someone else, if they feel like they have something meaningful to add on that, that’s not out in left field. John, anything you want to add?

John Ferriola

Well, you mentioned the publications that we look at that you look at. We look at the same ones. McGraw-Hill is out there. Those are really all we have to go with.

Tony Rizzuto – Dahlman Rose

Yes.

Daniel DiMicco

Tony, listen, this is not rocket science. It’s pretty straightforward. I think sometimes people try and find out the magic formula for predicting what’s going on. Where’s the GDP growth rate in the economy? If it’s not above 3%, steel demand is not growing, okay? You know what’s going on in the residential housing, which impacts the non-residential. You know how bad things are there. We watch the housing starts and what have you. There’s a million things that we look at. But at the end of the day, you know how well the economy’s doing and if we don’t see economic growth north of 3%, then things are going to grow slowly for steel consumption whether it’s in manufactured goods or it’s in construction products or construction-related products.

And the best gauge that we can give you is listen to what we’re telling you because we’ve been very conservative and pretty spot-on as to what is really going on from time to time to time and we’re saying to you today that, listen, things are getting better, but they’re getting better slowly. And if anybody’s providing contrary information to that, then I don’t think they’re giving you accurate information. And the main things we look at are the things you mentioned.

And we can’t predict what’s going to go on with scrap. Our track record there is poor, even though we have a major scrap processing and brokerage company within the company. Scrap is not the same environment – it doesn’t have the same environment today as it had 20 years ago. When scrap moved $10, $15, $20 a year it was big move. All right? That’s not the case for the last seven years. It’s because of global demand. It’s become much more volatile.

So if we’re predicting when that is going to happen, it’s still difficult to do despite our best efforts because we don’t control really what goes on in these markets. In the global world, it’s much more complicated than that. But at the end of the day, if you don’t see GDP growing over 3%, it’s going to be slow growth for the steel industry.

Tony Rizzuto – Dahlman Rose

Dan, I appreciate those thoughts; and you too, John. I appreciate it, guys.

Operator

Moving on, we’ll now go to Dave Martin with Deutsche Bank.

David Martin – Deutsche Bank

Thank you and good afternoon. I had two remaining questions. The first is on pig iron. A couple of months ago, I believe Valley had port outage, which I think continues to persist down in Brazil. I’m just curious whether you’ve had any delays in getting pig iron?

Jim Frias

No.

Daniel DiMicco

No. We haven’t had any problems yet getting pig iron. Of course, we’re using less of it today than in the past because we’re using a good mix of DRI in our charges.

David Martin – Deutsche Bank

Okay. And then secondly I just wanted to ask about the sheet mills. I guess given your overall market commentary, would you conclude you’re operating at pretty close to full capacity? I’m just curious, are you still selling for February? Or are you into March or April at this point?

John Ferriola

I’ll handle that one, Dan. We are not selling for February; we have closed February and we have just opened March.

Daniel DiMicco

We just opened March, which means that orders taken for the month of March will be at the highest pricing levels that are out there in the marketplace.

David Martin – Deutsche Bank

Okay. That’s fair. Thank you.

Operator

And we’ll take a follow up from Brian with Citi.

Brian Yu – Citi

Great. Thanks. I think in the prepared remarks you mentioned that you’re trying to raise price in the downstream and seen varying degrees of success. I was wondering what you’re hearing from your customers on the sheet side? And then also for your – specifically for your steel products business, any light at the end of the tunnel for when that segment might be able to break even?

Daniel DiMicco

The answer to the last question is no. We continue improving as we go forward, but it’s just going to be slow, okay? There’s not going to be some massive inflection point that occurs because the demand is very low in construction and construction-related products and in the marketplace. What was the first part of your question?

Brian Yu – Citi

Yeah. Just along the lines of steel price increases, what kind of feedback you’re getting from customers on their ability to pass on these rapidly rising costs?

Daniel DiMicco

They’re passing them along. They have no choice. This is not the first time that the market in this country and around the world has been faced with these rapidly rising prices due to raw materials. I mean this took place in ‘03 and ‘04 and continued through the last peak up and down from quarter to quarter, year to year. And so people are pretty well adjusted to the fact that they’ve got to get these prices passed through to their end users in the quickest way possible. And they do a pretty good job.

Brian Yu – Citi

Okay. Thank you.

Daniel DiMicco

Thank you.

Operator

And that does conclude our question and answer session. I’ll turn it back over to our speakers for any closing or additional remarks.

Daniel DiMicco

Yeah, I want to thank everybody for the questions and the interest in our company. And once again, I want to state to our shareholders and our employees, Nucor’s best years are ahead of us. Things don’t always go as fast as you’d like, but as long you’re doing the right things to build for a profitable future, we will have a good solid future and we look forward to the next upturn, providing the kind of earnings growth that we saw from the last downturn to upturn, ‘01, ‘02 and ‘03, to ‘04 through ‘08 in a bigger way than took place back then. Thank you to all of our teammates. Stay focused. Keep working together. Keep working on getting better. Thank you.

Operator

Ladies and gentlemen, that does conclude our conference call for today. Again, thank you for your participation.

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