Marlene Owen - Director of Investor Relations Mark D. Millett - Co-Founder, Chief Executive Officer, President and Executive Director Theresa E. Wagler - Chief Financial Officer, Chief Accounting Officer and Executive Vice President Christopher A. Graham - Vice President and President of New Millennium Building Systems Russel B.

Rinn - Executive Vice President of Metals Recycling, President of Omnisource Corporation and Chief Operating Officer of Omnisource Corporation.

Brett M. Levy - Jefferies LLC, Fixed Income Research Luke Folta - Jefferies LLC, Research Division Brian Yu - Citigroup Inc, Research Division Jorge M. Beristain - Deutsche Bank AG, Research Division Matthew Murphy - UBS Investment Bank, Research Division Evan L.

Kurtz - Morgan Stanley, Research Division Timna Tanners - BofA Merrill Lynch, Research Division Michael F. Gambardella - JP Morgan Chase & Co, Research Division Anthony B.

Rizzuto - Cowen and Company, LLC, Research Division Nathan Littlewood - Crédit Suisse AG, Research Division Philip Ross Gibbs - KeyBanc Capital Markets Inc., Research Division Andrew Lane - Morningstar Inc., Research Division Aldo J. Mazzaferro - Macquarie Research Charles A. Bradford - Bradford Research, Inc..

Good day, and welcome to the Steel Dynamics Fourth Quarter Full Year 2014 Earnings Conference Call. [Operator Instructions] Please be advised this call is being recorded today, January 29, 2015, and your participation implies consent on recording this call. If you do not agree with these terms, please disconnect.

At this time, I'd like to turn the conference over to Marlene Owen, Director of Investor Relations. Please go ahead..

Thank you, Kevin. Good morning, everyone. Happy new year. Welcome to Steel Dynamics Fourth Quarter and Full Year 2014 Financial Results Conference Call. As a reminder, today's call is being recorded and will be available on the company's website for a replay later today.

Leading today's call are Mark Millett, President and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer.

We also have our leaders for the company's operating platforms, including Russ Rinn, President and Chief Operating Officer for our Metals Recycling Operations; and Chris Graham, President of our Fabrications Operations; and Dick Teets is on vacation.

Please be advised that certain comments made today may involve forward-looking statements that, by their nature, are predictive. These are intended to be covered by the safe harbor protections of the Private Securities Litigation Reform Act of 1995.

Such statements, however, speak only as of this date, today, January 29, 2015, and involve risks and uncertainties related to our metals business or to general business and economic conditions, which may cause actual results to turn out differently.

More detailed information about such risks and uncertainties may be found at the Investor Center advisory Information tab on our Steel Dynamics website and our Form 10-K Annual Report under the captions, Forward-looking Statements and Risk Factors, or as applicable in subsequently filed Forms 10-Q filed with the Securities and Exchange Commission.

And now, I'm pleased to turn the call over to Mark..

Super. Thank you, Marlene. Good morning, everybody. Thank you for joining us today. I hope and trust 2015 will be bringing you all health, happiness and prosperity. 2014 was transformational for Steel Dynamics.

Due to the foundation put in place during the last several years, both operationally and financially, we're able to execute on organic growth initiatives while also taking advantage of acquisition opportunities. We strengthened our company and provided more opportunity for our employees, our customers and our communities.

Our positioning was rewarded through 2014 as we introduced new value-added product capabilities, further diversified our product portfolio and geographic presence and successfully executed our large acquisition, the addition of the Columbus Flat Roll mill, which adds approximately 3.4 million tons of hot-rolled capacity, bringing our total annual capability to some 11 million tons.

The dedication and hard work across the Steel Dynamics team and at all platforms has certainly been the cornerstone, making 2014 a memorable year. Despite 2015 began with some market instability, we believe our earnings catalysts and underlying market fundamentals support the opportunity for a strong 2015.

Now I'll turn the call over to Theresa for a few comments on our financial results, and after that, I'll share my thoughts on where I see both the near- and longer-term opportunities for SDI.

Theresa?.

Good morning. Despite the challenges related to effective steel imports in 2014, we achieved significant growth and solid financial results for the year, remaining a lowest cost, highly efficient steel company and delivering quality products and services to our customers. We achieved another year of best-in-class performance compared to our peers.

The year was full of records. We achieved record consolidated revenues of $8.8 billion, 18% higher than prior year; record steel shipments of 7.4 million tons, 20% higher than 2013; record steel fabrication shipments of 481,000 tons and fabrication operating income of $52 million. That's almost 7.5x last year's results.

We also achieved record liquidity levels of $1.6 billion, along with a very strong credit profile. For the year 2014, excluding the noncash asset impairment charges recorded in the fourth quarter and the purchase accounting and acquisition costs related to Columbus during the year, adjusted net income was $323 million or $1.35 per share.

This compares to net income of $189 million or $0.83 per diluted share in 2013, a 71% improvement over prior year's net income on an adjusted basis. On the same adjusted basis, 2014 operating income was $612 million, representing a 58% improvement over last year's results.

Including the mentioned charges, on an unadjusted basis, 2014 GAAP reported net income was $157 million or $0.67 per diluted share, and operating income was $320 million.

For the fourth quarter of 2014, and excluding the same items, our adjusted net income was $97 million or $0.40 per diluted share, within the range of our adjusted guidance of between $0.38 and $0.42. Our adjusted operating income for the fourth quarter was $195 million.

Describing the adjustments, during the fourth quarter, we recorded lower cost or market material -- excuse me, we recorded lower cost or market raw material inventory adjustments for Minnesota and additional purchase accounting adjustments related to Columbus. This reduced our gross margin by approximately $18 million or $0.04 per diluted share.

We don't estimate additional future purchase accounting adjustments. Based on our purchase price allocation, the price is very close to book value, and we recorded only $20 million of goodwill related to the Columbus acquisition.

Regarding the fixed asset impairment charge related to our Minnesota operations, their operating performance reached a steady pace in the fourth quarter of 2014, indicating the consistency in production, capability, process and cost structure.

As we indicated in our December 17 guidance release, we intended to perform an assessment of the recoverability of the carrying value of their fixed assets. We concluded that the carrying value of fixed asset was not fully recoverable when compared to their estimated remaining future and discounted cash flows.

Accordingly, we recorded a pretax noncash fixed asset impairment charge of $260 million in the fourth quarter. After giving effect to our joint venture ownership percentage, the impact on consolidated results was $213 million pretax or $0.55 per diluted share. Mark will share further comments regarding the operations in his commentary in a moment.

Fourth quarter 2014 revenues were $2.5 billion, 8% higher than the sequential third quarter. Our gross margin, as a percentage of sales, was comparable to the third quarter when taking into consideration purchase accounting and lower cost or market adjustments. You may also have noted there interest expense increased $13 million in the quarter.

This related to the September combined bond issues of $1.2 billion used to fund the Columbus acquisition. Pertaining to our steel operations, annual 2014 volumes and metal spread both expanded. Annual operating income improved 38% to $706 million, excluding purchase accounting.

For the fourth quarter, we also achieved record shipments of 2.3 million tons, a 23% improvement over the third quarter, but our metal spread contracted. Scrap raw material prices declined 3%, while overall steel prices fell an average of 4%.

Excluding the Columbus purchase accounting charges, fourth quarter operating income for our steel operations increased to $224 million in the quarter based on volume improvement. For our metals recycling business, the environment is still very challenging.

Year-over-year, 2014 ferrous and nonferrous shipments increased, but metal spread contracted based on falling commodity prices during the year. Full year operating income declined 31% to $44 million. For the fourth quarter, both ferrous and nonferrous shipments decreased as both export demand and domestic steel demand declined.

Ferrous metal spread contracted due to the oversupplied market environment, and fourth quarter operating income decreased to $3 million. On a much different note, our fabrication operations excelled in 2014, recording record shipments and record operating income of $52 million or $108 per ton shipped compared to $19 in 2013.

The momentum continued into the fourth quarter despite seasonality of construction, making another quarterly record in operating income of $22 million based on record quarterly sales and expanding margins. Operating income per ton shipped improved from $135 in the third quarter of this year to $159 in the fourth quarter, an 18% improvement.

We continue to see improvements in the underlying nonresidential construction demand. This is good news for everyone. During the fourth quarter, we had strong cash flow generation of $320 million, and for the full year, we reached our second highest annual level of cash flow from operations of $618 million, almost double 2013 annual results.

Annual working capital provided $36 million of funding and $117 million in the fourth quarter based on decreased customer accounts and inventory levels.

2014 capital investments totaled $112 million, well within a typical level of spending as we completed construction of our 2 larger organic growth projects related to SBQ and premium rail, and we focused on the integration of Columbus.

We currently estimate 2015 capital expenditures to be between $150 million and $175 million, but this number could increase as we proceed through the year and evaluate new projects. We also allocated $105 million in cash dividends to our shareholders during 2014.

Our Board of Directors increased our annual cash dividend by 10% in the first quarter of 2013 and another 5% in the first quarter of 2004, evidencing their continued confidence in the strength of our cash generation capability, financial position and optimism concerning our future.

Throughout market cycles, our operating performance generate strong cash flow from operations based on the low, highly variable cost structure of our operations. In late November, we increased the amount of our senior secured credit facility and extended its maturity to 2019.

We expanded our revolver from $1.1 billion to $1.2 billion and entered into a new $250 million term loan. Subject to certain conditions, we also have the ability to further increase the combined facility size by a minimum of an additional $750 million.

Combined with our strong cash flow performance, the resulting record liquidity at December 31, 2014, was $1.6 billion, comprised of our undrawn revolver and $361 million of available cash At the end of the year, our net debt was $2.7 billion, with trailing 12-month adjusted EBITDA of $1.1 billion, including a full year of Columbus.

This results to net leverage of 2.5x, a profile already aligned with our preferred through-cycle net leverage of less than 3x. This is a testament to our disciplined approach to grow, creating shareholder value through sound capital allocation and an efficient balance sheet. Additionally, our debt maturity outlook is incredibly flexible.

We don't have any near-term meaningful maturities, and those of a longer term are well laddered. We believe that our capital structure and our credit profile has the flexibility to not only sustain current operations but to support additional growth. Thank you.

Mark?.

one, the deteriorating energy market; but more importantly, imports. Firstly, energy. With the growth of shale now comprising -- the growth of shale actually makes the OCTG goods consumption around by 10% of our domestic demand. With the shock, that drop in oil price, OCTG consumption has fallen with rig count.

Inventory is being reduced throughout the supply chain, and imports of both scrap and pipe are still on the system. The associated reduced demand has had a marginal effect on the Butler sheet mill as only a small percentage of these shipments are energy related.

At Columbus, however, approximately 20% of the shipments were related to energy products, such as OCTG and line pipe, and they are seeing a greater impact. If you look at us, company-wide, exposure to energy markets approximates 8% in our steel business.

We will further diversify the product mix of Columbus through 2015 and into 2016 so that we can move from market-to-market to optimize return. There are many reviews concerning the time line for recovering oil prices, but the constant is that oil pricing cycle is up and down. And it's inevitable that stronger pricing will return.

It's just a question of when. Past cycles have demonstrated a return, about 70% of the prior peak, after approximately 12 months from that peak, thereby suggesting recovery beginnings in Q2 of this year. Imports had a second wind. I would suggest the most important headwind.

While domestic demand remains robust, global economies are battling slow and inconsistent growth, resulting in weak global steel consumption. Global overcapacity, strong dollar and low raw material costs have been driving a historically wide price disparity between U.S.

and foreign mills, and unfair trading practice only continue to compound the problem. Although now receding with the recent erosion in domestic pricing, the large price spread drove imports to a peak of 11.4 million tons in Q4 and were a near record 43.1 million tons for the year, a historical high of 28% of total demand.

The combination of seasonally lower demand and elevated imports resulted in increased customer inventories, particularly for our distributors, and consequently decreased selling prices. We believe this overhang can be resolved in the first quarter 2015, with customers reportedly coming back to the market in strength in March.

However, this has had a dramatic effect on our order entry late in the quarter, with mills throwing back production to match their respective order books, and this has continued into January. The associated low mill utilization, ample scrap flow and subdued export market will likely result in a drop in scrap pricing in the coming months.

Anticipation of lower scrap pricing has already helped erode hot-band price, reducing the spread to levels that will begin to dissipate the attraction of imports. However, as the inventory overhang subsides, the underlying market demand will give support to product pricing while scrap trends lower towards historical relationship with iron ore.

As raw material prices decline, the price support will provide opportunity for improved margin. In short, the first quarter may be challenging as the markets find themselves, but we believe the fundamentals are supportive of strong economic growth in 2015.

We believe the current global growth expectations, combined with global production overcapacity, will be a headwind to steel pricing for the foreseeable future, but as raw material prices reset sharply, there's a margin expansion opportunity.

Driven to maintain a sustainable differentiated business, we continue to focus on the opportunities that maximize our financial performance. We believe our superior operating and financial performance clearly demonstrate the sustainability of our business model throughout the market cycle.

We're focused on providing exceptional value to our customers, committing to the highest levels of quality and timeliness, conquering them to create value and deliver what they need today and anticipating what they're going to be needing tomorrow. As we look ahead, we continue to be optimistic regarding our future.

Columbus is one aspect of our story and our organic growth projects that are beginning to benefit our operations, now another. We believe we're fully equipped to take advantage of new opportunities that lay ahead.

Our resolve to maintaining a differentiated growth company that effectively and efficiently performs through all market environments is unwavering.

We believe our superior operating culture, best-in-class performance through the market cycle and the strength of our financial performance provides clear evidence of a successful business model and a differentiation to our peers. The strong character and fortitude of our employees, I believe, are unmatched.

Their dedication to our customers and passion for excellence compel us to achieve highest standards of performance, and I thank each one for their hard work and dedication and remind them that safety is always the first priority. So again, thank you, everyone, for your time today. And Kevin, we'd like to open the call up for questions..

[Operator Instructions] Our first question today is coming from Brett Levy from Jefferies..

It sounds like things are kind of slow in January and maybe slow in February.

Can you give a little detail around that and just sort of give a sense, kind of order book by product in that sort of sense?.

Okay. Well, again, if you look at demand, I think that the -- just sort of the overview. The strong import level and the fact that mill utilization haven't really ticked down [ph]. I think it just emphasizes that the underlying market fundamentals, underlying demand is absolutely there.

And as I spent time with our customers -- I've been doing a lot of that the last 3 weeks. They certainly are busy, they are confident and they express growth through 2015. And depending on who you ask, they're looking at a 5% to 10% growth.

Again, as we said before, not a hockey stick but slow incremental growth and demand, and I think things support that. And that's supported by the growing factory activity. If you look at the truck and tonnage volumes, they tend to be -- continue to grow and almost at record levels. Manufacturing is solid. Automotive is incredibly strong.

And I think importantly, nonresidential construction, which I emphasize -- it's probably 40% of the steel market. It continues to show growth. Fabricators are busy particularly on the commercial side, and I think the -- and I've said it before.

The visibility of our joist business into that market is a clear signal, and Chris continues to facilitate -- perform there.

Chris, do you want to give some -- a look on that?.

Yes. I think that some of the things that we should take note of, our backlog as of December 31, Mark, was the highest year-end backlog, full size and value in our company's history. Our customers continue to be bullish regarding demand and in 2015, and as usual, I think our team is well positioned to successfully compete for that business.

We see a lot of variety in the type of work we do, which is always good, from small things to big box to institutional, and indications are that, that will continue..

And I think the -- if you look at the softness, end of the last quarter and going into January and it's probably going into February, again, I think it was a combination of a strong import level.

And that arrived at the distributors -- it started coming through in the supply chain and strength at the end of the quarter just as a little bit of seasonality, the tip of winter, the seasonally hit. So service centers, inventories have certainly grown, and that people just took their foot off the older -- or the sort of accelerator.

I think people have also been anticipating this drop in scrap. And so people are -- they're kind of trying to readjust, tightening their inventories.

They're buying currently on an as-needed basis just to fill holes, and I think it's the overhang -- that supply overhang subsides with the good demand, we'll start to see the order rate pick up in the latter part of the first quarter into the second half.

If you look at our backlogs -- again, I don't want to paint an absolutely bleak picture, the Butler hot-band backlogs are around, I think, 3 weeks or so and finished -- it's around about 4, so would not in a bad shape. It's just volumes will be off quarter-over-quarter. I think Columbus is ahead or a little bit harder.

They're closer to the import scenario given the Southern proximity, and they've got a slightly higher energy exposure than Butler. In total, Columbus' exposure is around about 20%, and so that's seeing a little greater impact, I think, with, yes, the Butler sheet mill..

Mark, again, fabrication, as we discussed on previous calls that they would stand to reason that as we continue to approach more historical norms, we see the effect of seasonality become more visible again. We've seen a little bit of seasonality in Indiana and Virginia.

If their backlogs remain at all-time high -- an all-time high for this time of year. More positive news would be -- while the Northern plants, we've seen -- there's a seasonal slowing. Or entry [ph], our plant serving in Southeast and Southwest continue their -- book new work in a pace that bars any seasonal effect.

And again, our expanded geographic footprint continues to pay dividends, as we mentioned..

And just a couple of other markets. I guess, the truck trailer, material handling markets, are strong. I think that's a reflection of the large amount of freight being shipped around the country. In fact, the FCR, which puts estimates for the trailer manufacturer, actually swung. They revised their negative 6% for 2015 and actually now at positive 6%.

So again, I think that tends to be positive for industry, but it's also a signal that the economy really is -- has got good demand out there. A couple of areas that we do see softness, off-road equipment, the mining, the Caterpillars, the John Deeres. They're a little light. That's impacted the engineered bar to a small degree.

And then obviously, as I mentioned earlier, energy is -- affecting us all. But I think the -- our optimism is that American pricing has eroded, and it's eroded, in all honesty, a little more than you would see from plants in CRU data.

And so -- whereas in November and December, the price disparity between Indiana or Midwest delivered pricing and China port pricing was a couple of hundred dollars. That is eroding dramatically. And one has to also remember you have freight expense to get it from China to here. You've got to insurance and other things.

Probably, there's a $40 or $50 additional cost to get it to our ports. If we get it to the Midwest, there's another $40 or $45. And as I've said before, our Butler mill has a little insulation more so than, perhaps, some of our peers close to the ports. So that erosion of our spread, I think it's going to dissipate the attraction of import orders.

And with demand where it is today, I think there is going to be a lesser -- the change in pricing relative to scrap movement..

And then the follow-up is in the context of the weak environment. You guys have a strong balance sheet.

Can you guys talk a little bit about sort of trade cases? And then also about, perhaps, what geographies and product areas might be interesting from the standpoint of acquisition?.

Well, as far as trade, I don't think there's been any dramatic change. Obviously, there are cheating [ph] unfair trading practices or there and currency manipulation that is compounding the import pressure. The termination of the price suspension, duties on Russian imports should be a positive for the industry -- sorry, for Columbus.

As you know, the Korean OCTG was successful and that the line pipe filing against Korea and Turkey -- they comprise, I think, about 60%, 70% of the imported line pipe, had a sort of a positive commentary back in Thanksgiving -- around Thanksgiving time. And we hope that will be successful. That will be a big case.

That not only impacts the import line pipe, but obviously, scalps [ph] suppliers such as ourselves, to that industry. What has been done on the corrosion resistant products, it remains to be seen, the timing of any action there. So again, no massive change in the trade picture at least from my perspective.

Obviously, companies are -- don't always work through a-- They're also doing their own things. So I can't speak for them. Relative to acquisitions, as you can see, of late, folks are sort of throwing back some of their facilities, which has helping the industry in general.

The elimination of -- or the reduction in [indiscernible] up in Chicago in the bar front is going to help, I think, our Pittsboro SBQ order book. And U.S. is rationalizing their facilities. I think that's a sign that everyone is looking inwardly at their portfolios, their asset base and see what is core and what is not.

And that will provide the opportunity in the months and the year ahead for potential acquisition activity..

Our next question today is coming from Luke Folta from Jefferies..

Just as a follow-up to that, I guess 2 questions on line pipes. I think you're selling to some line pipe producers out of Columbus. Just curious to know if that market is seeing the same sort of weakness as we're seeing in OCTG.

And also, I recall speaking with you not too long ago about the potential to -- that there could be interesting opportunities maybe in the line pipe business for steel and have it [ph] at some point in the future, at least something that have been thought about. So just any update in terms of your thinking around that would be interesting..

Well, I think that the larger line pipe consumers that we supply recognize the softness. They clearly recognize that energy and oil goes down and it comes back up, and they don't believe there's any paradigm shift that's going to hold oil down for a prolonged period of time. So longer term, I think they're optimistic.

Obviously, they're drawing back their consumption in the near future. Recognize that Columbus -- as I said, we've got about 20% exposure there.

In the past, that was higher, but I -- we're back to 30% into pipes and tubes, but some of that -- or a good portion of that is actually sort of water transmission, other types of line pipe, not necessarily structural, mechanical tubing, those sorts of things. It's not all energy. So only 20% of the mill is exposed there.

Relative to -- I'm not clear as to what you were getting at, to be honest, in the second part of the question, but we have tended to stay away from competing from our customers. And so we're not actively pursuing, simply getting into the ERW line pipe business..

Okay. That answers my question. And secondly, on SBQ, just some energy leverage there as well. I mean, you mentioned some weakness on the ag side. I think that the expectation was that it's -- throughout the course of this year that you could potentially ramp that mill, the expansion, to roughly full.

Is that something that you still think is possible for this year?.

I think it's -- I'm not sure I ever said we'll be totally full in 2015, perhaps I did, but I think it -- I'm reasonably confident that we can get up to the 75% utilization, which should be meaningful growth year-over-year..

Our next question today is coming from Brian Yu from Citi..

Mark, on Columbus, you guys have gotten the energy exposure down 20. I think it was actually closer to 40 in the acquisitions slide.

Is that 20% level where you guys are comfortable with in terms of -- over the cycle, with the diversification, that's where you want it? Or do you plan to take that lower as you break into new market?.

Okay. Well, just for clarity, on the acquisitions slide, that referred to 2013 volumes, and that 40% was not just energy. As I said, it was also order transmission line pipe, structural tubing, that sort of thing.

With the growth in shipments at Columbus over 2014, the total pipe and tube exposure is probably about 30%, and that -- actually, total shipment supply went up because we had much greater volume. The actual percentage, each stand at 30%. And as I said, pure energy, OCTG, energy line pipe is -- remains about 20% today.

And I would suggest that it's probably a good level for us, but I think we fully intend on diversifying the product portfolio at Columbus. And that will allow us to shift from market-to-market to optimize returns depending on the profitability of the different sectors.

That being said, we have no intent of deserting the energy markets, and I wouldn't want anyone to take that away. That's going to be a robust market for us going forward. The energy down tick, I do believe, is temporary. It's just a matter of when it returns..

Okay. And then second question on the fabrication business, that seemed to be doing well. Can you give us a sense of how much of that, the business there, has in -- locked in pricing? And the reason why I asked is, we are seeing prices coming down on the steel side, and I'm wondering if you might see some margin expansion there.

And then maybe part B of that is, how much of that is supplied internally by you guys? So essentially, awash versus what you purchased externally..

Chris, do you want to take that?.

We would tell you that it's a fairly small portion of our business that's locked in for any length of time. That approach seems to work best for our customers and for ourselves, so really negligible, Mark. If there's opportunity one way or the other, we'll tend to have to work through that quarter-by-quarter basis. We have worked.

It's kind of locked in for 12 typical life cycle, maybe 12 or 13 weeks, and we would expect that pricing to remain strong there. And that'd be great.

We've taken the approach of buying the steel in normalized -- in normal times from the source that best serves that plant's needs as opposed to any subsidies or anything you have to talk about buying all internally. We tend to ask the mill to fill up and what's best for their mill and their customers and new millennium what's best for new millennium.

Ultimately then, what's best for the corporation is the result. But we do buy a large amount of steel from our sister mills. Theresa is asking me what percentage. I'd say 65% is probably inside. That fluctuates. It's been higher. It's been lower..

Your next question today comes from Jorge Beristain from Deutsche Bank..

My question, I guess, 2 of them.

Could you just talk a little bit about scrap prices, which appear to be a little bit higher versus published prices? And if you could just talk about the discrepancy and again, where you see scrap prices going and by what timing?.

Scrap prices, I think, again, are impacted by global issues, exchange rates policy. And as we see our customer base in the marketplace, they're all faced with the same issues that our own mills are faced with, and that's the threat of imports that has grown exponentially therefore affecting their worth.

At the same time, we don't have the ability -- or the scrap industry has lost the ability to competitively export because of the strong dollar and their -- the pricing level. So I think, as I see the reset button, it's going to have to get to a point where some of those exports come back. And where it gives our mills -- our old mills, the U.S.

Mills industry, an opportunity to compete with foreign competition to some degree. And that's not dollar for dollar, it's not ounce for ounce, but it is just a global market situation. And again, economics are going to drive it..

Would it be correct, Russ, to say that the last year or so, iron ore -- iron concentrate has come down very strong dramatically.

And scrap, because of the export pressure -- no, not pressure, but to the export level, has remained a little sticky and this is the -- a point of reset, where that ratio gets real static?.

Back in the normal -- normal ratios. That's correct..

Okay. Got it. And just maybe a question for Theresa.

What is the remaining carrying value of the nugget facility at this time?.

We actually prefer not to talk about that. We would tell you that what's left in Minnesota from a material value perspective is what we believe is the fair value of the asset. And that includes all 3 of the facilities..

So can I ask if your write down equated to 50% of the value?.

If I did that, you're smart enough to back into some sort of number, aren't you?.

Our next question today is coming from Matt Murphy from UBS..

Another question just on the internal sales.

On the scrap side, OmniSource provides the scrap to Columbus, right?.

Some amount of it but as we do with all mills, we supply some amount internally and a significant portion externally..

Okay. Yes, because I was just looking at intercompany sales. I thought they might pick up relative -- maybe external shipments of scrap going down.

But maybe that's just an accounting thing as opposed to an actual cost savings for you guys?.

This, as Chris talked about it, it's a market-driven situation. And again, you're looking -- scrap, in large part, is -- will flow to its logical freight haul creating such a big issue of all scrap that, again, the distance will make a difference to some degree..

Got it.

Okay, and then just on the effort over time to diversify the product mix at Columbus, just wondering if you can give some color on how long that takes, how nimble you can be in the short term if we see energy de-stocking continuing to weigh heavily there? Just my estimate is Columbus around like 82% capacity utilization right now? And is there a possibility to improve that notwithstanding weak energy?.

I think, as we stated, that we're confident of diversifying the mix there based on our existing customer relationships. There's certainly a great deal of room to improve on the value add downstream. Because I think I also said in the past, that it's -- that's not a near term next week type of deal. It's going to work through 2015 and into 2016..

Your next question today comes from Evan Kurtz from Morgan Stanley..

My first question is on the Mesabi. So you talked a little bit about how scrap is moving down because of iron ore and currency, and I think it's probably fair to argue that pig iron would as well. And we've seen a little bit of a decline in pig iron but it also seems to be a bit sticky.

And these numbers you gave you us, kind of, 340 to 360 on cost per metric ton, right now, you can eke out a little bit of profits but certainly, if pig iron falls anymore, I assume you price off of pig iron, it might be a cash neutral, maybe even a cash loss type of an operation.

Would you ever consider shutting down the nugget plant? I know that Magnetation's pelletizing facility is online, so there's probably a market out there right now for concentrate and turning that into a cash positive operation, if that where the scenario would unfold?.

Well, I think our position is -- well, the reality is on Q4, as we suggested, would concentrate at a $50 number, we would have been at cash breakeven, even at the 28,000 tons or 27,000-ton a month rate, that being based on the pig iron market over the last 2 or 3 months.

As we edge up and ramp up the production level, again, we feel confident -- or pretty confident that we can get to that 350-ish cost basis. So the future then lies on as one views the market. To your point, pig iron has remained somewhat sticky the last year. Even -- well, the last couple of last years.

Even when scrap has gone down dramatically, it seems to have stayed at that kind of 380-ish NOLA number, 390. And I think time will see, over the next couple of months, where the market plays out then..

Okay. And then maybe just one more follow-up on scrap. You talked a little bit about the historical relationship between iron ore and scrap. Would you -- what you think that relationship would yield as far as if it took a -- low 60s iron ore price, what does that actually mean for the U.S.

price for scrap? And then just maybe a second part of that, we're all hearing about this big leg down in scrap that were -- could get here in February.

How long does that take to actually flow through your numbers on FIFO? How much inventory do you have on the ground? And would that help the first quarter?.

As far as within what we have on the ground from a scrap perspective, we tend to always add and keep about 3 or 4 weeks on the steel side, and so that tends to be -- the way we factor it and the way you should model it, the 1 month lag. So what you buying in one month, you kind of get the benefit in, in the following month.

And regarding the relationship between iron ore and scrap, I'll let Mark or Russ talk to that one..

Right. Again, historically, just on a simple ratio, is in the 3x to 4x ore. So if you take 70 -- I know it's $65, but let's just take $70 times 4, you're at a 280-, 300-dollar number. And there are periods last year, there was this more in the 5x to even 6x range. So I think, getting back to that 3x to 4x range is a realistic expectation.

I've always been a great believer, the markets -- they're uncanny. They just have an efficiency to balance themselves over time, and I don't think there's been a paradigm shift that -- on a sustained basis, we can't get back to that ratio.

I think the support or the stickiness of the export level, and for whatever it was, Russ, 3, 4 years, there at 22 million tons, 24 million tons, that's 25% of the metallics market roughly. That's dissipated dramatically. And I think things will return back to normal..

Your next question today is coming from Timna Tanners from Bank of America..

I don't want to mess up this philosophical discussion of scraps, I have one question on that and I'll move on to something else. On the scrap side, you made a comment that with scrap falling, you could see margins expand. I don't know that, that's happened historically.

So I was just wondered if you were talking about some sort of outside scrap move relative to steel? Or if you were talking about how you've improved your underlying margins and that's where the expansion comes from? Or a little of both?.

No, I guess, it's just looking at the general market pricing. The spread. Our headwind is certainly imports going forward. The import pressure is going to remain. Low below the capacity, it's going to be there for some time. The strength of the dollar, in our mind, is going to be there for some time.

So the driver of the level of imports will purely be the price differential between domestic pricing and global pricing.

As I said earlier, November, December, the spread, and people keep talking about a $200 spread, it's a little disingenuous because you've got -- that's the spread between Midwest delivered versus China port, and you've got to get it here, you've got to insure the cargo and not only do you have to get it to the U.S.

port, you've got to get it to the Midwest. So the $200 spread, so to speak, is -- kind of amplifies the motion of it all.

But nonetheless, the increased inventory level, the import level, the lower mill utilization, that is eroded -- and the anticipation of a lower scrap price has eroded domestic pricing a little more than what you might think from Platts and CRU.

And that spread now between domestic pricing and Asian or European imports have dissipated dramatically and the attraction or the discount there is going to dissipate, in my belief, our customers' appetite to bring foreign steel in. So you've got that -- you're going to have a little bit of a price support there.

Secondly, inventories are pretty strong right now, people don't have the capacity to bring a great deal foreign import in. And you've got underlying strong demand. So surprising, in our belief, is will it drift down a little bit? Perhaps it does. But there are some support there.

On the other hand, scrap is, Russ coined the phrase, We think it's at a reset point. And so for the next couple of months, could see an adjustment there more so but then product price -- and that's where we sort of imply or infer there's the opportunity of margin expansion, even in kind of a strange market dynamic that we see ourselves today..

Okay.

So steel is overshot, scrap has yet to adjust, and that can be the margin expansion?.

That could be. Yes..

Okay. And then you guys have actually been importing scrap, from what I understand, into Columbus.

How much of that can you capitalize on it with a strong dollar environment? Is that just a marginal strategy or is that a real opportunity going forward?.

I know -- Russ, you may know better than I, but actual scrap import, I think, is minimal..

Very minimal..

Obviously, we're bringing in pig iron..

Pig iron, correct..

And that's a larger percentage..

Got you. Okay, last question, I just thought it was interesting that you were pretty decisive about the weakness and the near-term being finalized in Q1.

I'm just wondering if there was something specific that was giving you that impression or is it just your timing of imports or the inventory draw down or just if you could give some color on why Q1 will be -- will contain all this weakness and then you Q2 can rebound..

Well, I guess, it's just color more from our customers than anything else, Timna. It obviously depend on the level of imports in January, February and March. If they maintain their November, December level, maybe gets pushed into the second quarter.

But the anticipation, again, because of that -- the price differential erosion, the -- I think some folks' expectation, is the import level will start to edge back and the underlying demand will pick up the slack..

Your next question today comes from Michael Gambardella from JPMorgan..

I just want to ask you a question on, when scrap hits this so-called reset button and drops down maybe $40, $45, $55 or something like that, get it back into relationship with iron ore.

Have you, at Steel Dynamics, balanced that situation in terms of price versus market share grab?.

On the -- when you say market share grab, you're talking about our market share of the scrap annex [ph] flow? Or are you --.

Well, just between sheet market, not in the bar market. And long products, everyone has the same scrap advantage, disadvantage, whatever, because everything is bought, produced using scrap.

But in the sheet business, it's basically you and new corner, the other smaller players account for about 1/3 of the supplies of domestic sheet are made from scrap and if you get a reset down in your scrap cost for 1/3 of market supply, there's an opportunity for you and the other scrap-based sheet guys to take some market share in that environment, specially down at Mississippi, where you got 20%, 30% is -- of your demand is being impacted by the drop in oil.

So my question is, how do you balance that situation or opportunity between taking more share from your iron ore-based competitors, who are not going to see a reduction in cost, and this scrap reset happen, and your ability to capture that scrap cost drop, you take some share and maybe take a little price as well..

I guess, I think that it'll happen naturally as opposed to us sitting around the table and deliberating and saying, "Hey, we're going to get 2% or 3% or 5% or whatever." I think naturally, we're going to be in a better position and the natural -- the last few months, the -- our integrated brethren certainly have had, at least on the hot metal side, a huge advantage.

Nonetheless, even with that -- and even with that advantage, our efficiencies downstream are incredible and we still make up for that deficit, so to speak.

But if there is this reset, obviously, we'll be in a better competitive position, and I think you'll see that our utilization rates, as been demonstrated in the past, will be higher than industry peers..

In the past, years ago, many mills in the sheet business would basically run at capacity to capture whatever volume they could.

Do you anticipate running near capacity when you get this scrap reset? In the sheet side?.

I would suggest that we will, as we do every day and every month, attempt to do so. I think the market dynamic is a little more complicated than that, and we will be in a more competitive position to get our mills up at full rate. Yes..

Your next question today is coming from Tony Rizzuto from Cowen and Company..

A couple of questions here. My first question, just to drill down a little bit further on Columbus, no pun intended there. But we're hearing some very aggressive behavior by another mill in the area. You probably see the oil comments and what's going on in that market. I'm wondering about the import congestion.

Has that eased to the extent you're seeing import flows more easily into the South East and the Mexican market? And how is this making your job to reposition that mix, how is that affecting that process?.

Sure. You want to take that? Chris, just to add, there was information. Chris Graham here is -- was given the task of integrating Columbus, is doing a phenomenal job along with the team down there.

So you want to give some color there?.

Yes, I think, as Mark started out, we think the impact of the price of oil is going to be lesser than people may have thought, because of the lowering exposure, someone mentioned earlier that the mills was at 80% capacity.

The folks at Columbus might say that they believe they have taken it to a higher percentage than that since they achieved over 3 million tons last year. But they recognize, as we do, the extra width and the opportunities of that -- or the capabilities of that mill, that there is some room there.

So irrespective of some these headwinds, there are opportunities in certain construction products may not capitalize on certain value added mix down there. To Mark's point, we would -- no plans to desert anyone.

We will add customers by pushing the envelope and even in the last 3 months, we've already expended daily capacity through bringing some of our best practices to bear there. We don't do a lot in the coated products. We don't do a lot of pickle and oil.

Those opportunities are out there and that can allow us to affect ore rates as well as diversity almost irrespective of whatever noise is going on outside of those markets..

I want to be clear though that Columbus right in the -- or the month of January isn't running at 80%, 85%. If February and March return, then perhaps for the quarter we could get that. But it is being impacted by both the energy and by imports..

Okay.

And just to -- and then follow up on scrap, what do you guys think will happen to scrap flows when the reset occurs?.

Tony, I think that certainly, there will be some impact to it, again, it will slow to some degree. Again, until the export market starts coming back up being meaningful part of it, there's plenty of scrap around in the system. So yes, there will be some slowing down. Again, a different price level brings up different levels of scrap.

But in the end, until we get to a point where exports are a viable alternative or a more viable alternative, the flows or the availability of scrap is still in oversupply in the United States..

And Russ, I have heard that one of your competitors is maybe sourcing some scrap from Canada and Europe.

Are you guys also?.

Well, we look at everything, Tony, as it applies to how we support our customers in our mills. And so we do have -- on the case, I think, we talked a little bit earlier, we have had opportunistically taken advantage of some of those opportunities. So we look at everything.

Again, that's part of our business is to deliver the best low cost scrap to our customers..

All right. and I just wanted to ask this question, if I may. I heard, obviously, you're talking about different factors affecting the market. And, I think, Mark, you brought up about the OCTG case with South Korea.

And interestingly, at least what we're seeing so far, maybe we're not looking at the data correctly, but it doesn't really look as if the South Koreans have really turned down or taken their foot off the gas pedal.

And I'm wondering, has the devaluation of South Korean won offset the relatively modest tariffs that were set against OCTG from that country?.

Again, haven't looked it at that level of detail either to be honest..

Your next question today is coming from Nathan Littlewood from Credit Suisse..

Just had a question on your fabrication business. Obviously, a fantastic result there. You did mention in your commentary that you had added a couple of more shifts.

But I was wondering if there was anything incremental you might be able to tell us about the sort of capacity of that business? How much scope is there to sort of scale things up further? And how much further could you take the tonnage of that business in the assumption that the demand for it exists, which certainly seems to be the case..

We are, from an infrastructure standpoint, positioned to probably build every joist necessary in the United States. As our other joist suppliers, the regional and the effective freight tends to limit how many shifts one can run in that particular region and not be in a cycle of up and down with employee headcount and doing things we like not to do.

So we're running on one shift basically. Our market share has continued to grow 5 consecutive years now. I think that we're not the only one with late capacity. But I think we're as positioned as well, if not better than most, to continue to take -- to be looked upon to service large parts of increase in market, and in demand.

So I guess, you can say we've been at -- we could double or triple the number of production crews but that's not it, we're not a steel miller on 24/7. But we have a lot of search capacity and I think that the suppliers in our industry, in general, are ready for a lot of growth and maybe we more so than most..

And I think the -- our market share has grown to 38% or thereabouts of the market, right, Chris?.

Yes..

And again, there's kind of a natural freight-regulated sort of volume for the players in that business. I don't necessarily see that we will have any great change in market share going forward. But obviously, that industry continues to grow on a volume basis and also on a margin basis..

And the thing I would add is that there is additional margin expansion capability, both through lower raw material costs with the support of higher pricing given the high demand, but also incremental volume going through the New Millennium facilities is exponential to the margin because the cost compression, it's just pretty astounding how volume impact their margins.

And there's margin -- I would -- Chris, I also put words in your mouth, the margins can expand from where they are today..

Absolutely..

Okay.

And I guess, on that same thing, Theresa, if we do get this sort of scrap price collapse that everyone is talking about here, and we've already seen the weakness in steel prices, could you talk a little bit about how pricing works for that steel fabrication business? Are customers immediately going to turn around and require you to pass those raw material cost reductions onto them? Or is there some sort of delay with respect to the way contracts work there?.

Well, I think that -- the good thing for our customer base is that they're able to price things in such a way as to reflect current situations, were able to procure materials as necessary without much speculation. And so everybody understands the rules of engagement. Day to day that can change.

The one thing that might provide some price support is that the market and the capacity of the providers. We're running at a very high utilization rate as the joist industry now, maybe as high as anybody can remember, ever, because of some of the changes in companies entering and leaving the industry.

So as construction deadlines loom, lead times will stretch a bit. We have that capacity previously mentioned so we can still take the work. But lead times tend to offer a good support, when they get extended, the way you expedite it is to do it for a price -- provide a service for a price.

It does tend to buoy the pricing even if other drivers would tell you it would go other way. Demand is going to be a big lever for one side or the other in our industry..

Okay. Much helpful. I just had one final one on Columbus. At the time of acquisition, you talked about some interesting opportunities there with respect to changing product mix and also scrap procurement. Obviously, there's been some new term headwinds that you already spoken about with respect to the ore price.

So maybe the product mix thing -- side of things is not quite there.

But how are you going with the opportunities that you've spoken about earlier with respect to scrap procurement?.

Well, let me just speak a little broader, perhaps for the conference integration [ph], as a whole. The team down there demonstrated a record level of production. Well, total shipments were close to 3.2 million tons, of which though about 138,000 tons were imported Russian band.

The good news there is that mill is never going to import Russian band again in the future, I guess. So total shipments from the actual mill itself were around about 3 million tons. I think very, very gratifying is that if you exclude the -- without questions of canning, the LTM [ph] cash was about $306 million.

This clearly demonstrates its earnings power..

That's EBITDA..

EBITDA, yes, without the synergies. And I think you speak of the synergies that we suggested some $30 million and from everything we see, that those are going to be achievable over the next 18 months. Not just in diversifying the product mix, we spoke of that earlier. That's not going to happen overnight.

It will certainly occur over the next -- about 2015 going into 2016. I think the teams have done an incredible job in working together and sort of we have a plane that goes down, takes a group of our folks down from Butler and it takes a group of the Columbus folks back up to Butler.

And so there's a very, very rapid sharing of best practices, I would tell you, both sides. It's not just from Butler to Columbus. I think it's occurring with a strong benefit to both mills. And it's not just on production or sort of technical issues, it's across the sphere of finance and just everything we do in business. The mill is being challenged.

They are challenging themselves now that they see what the Butler mill can do relative to the gauge with the nice strength, which is going to allow us to broaden the product portfolio near term into high strength quality light gauge materials that's been a benefit to Butler over the years.

And the learning curve on the coating and the pickling side at Columbus, I think, is rapid and will continue to be rapid. And those -- it's been interesting, once you get into the numbers and we talk together.

They had quite a -- or they had a much higher exposure to coaters and to pickle products in the past, and unfortunately, there's been -- the past teams and some quality issues, and we lost a little bit of credibility there.

I think that and working together, they are solving these problems -- those issues, and we'll gain that market share back, I think. It's a very, very positive down there..

Your next question today is coming from Phil Gibbs from KeyBanc..

Mark, can you balance your SBQ growth comments that you made earlier with the slowing in mining and energy? Because I know a lot of those markets are served by the SBQ piece..

The off road Cat business, again, that's not just the slowing over the last 4 weeks or a 1.5 months, that was in place through the fourth quarter, third quarter of last year. There's not a meaningful downtick to their order book sort of from segmental last year to this year. Energy is being impacted but -- and I think it's running about 15%, 20%..

No, no, no. It's well less than 10%..

Less than 10%? Okay. We've got one customer in particular there that their business, for whatever reason, is remaining a little sticky. I would say the engineered bar, in general, their order input rate is a little light. Again, people are picking holes in the inventory. It's just sort of a readjustment, I think, by everyone there.

But we don't have any -- we are not losing any sleep over an implosion in their utilization -- the utilization, their backlog is reasonable right now. And once we are now getting out of the holidays, we're getting back -- all industry is getting back to work, those orders and lead times will extend..

And Mark, what's the longer-term potential within the company for the current and long-term potential to be a player in exposed auto?.

Our focus, currently, is not necessarily exposed. If you look at our Butler facility, right, 32%, 30% of their output is going into auto applications, nonexposed. And the focus is not to grow their automotive share dramatically but grow Columbus' share. I think they were about 2% or 3% auto last year in 2014.

We are focused on emulating kind of the Butler's role model down there and pushing that auto percentage up to whatever, 10% or thereabouts, over the next year or so. We've actually put on a team of how many divisions we have? Six or seven, I think.

Folks that we brought on from Dearborn, quite capable people in the automotive world, and they are making some progress with BMW and VW and the folks in that piece relative to qualifying products and getting some business..

Thanks, Mark.

And Theresa, can you just provide us the mix as you typically do for the sheet business?.

Yes. Phil, I'm actually going to, at commercial perspective, going to combine both Columbus and Flat Roll, and were going to be a little more summary in the level. For hot-rolled and P&O, in the fourth quarter, we shipped 916,000 tons.

For cold-rolled, we shipped 95,000 tons, and then for all other coated products, which include painted, Galvalume and galvanized, we shipped 447,000 tons, for a total of 1.5 million tons..

Your next question is coming from Andrew Lane from Morningstar..

Regarding effective imports, could you provide some color as to which product lines across your portfolio have been subject to more displacement than others as import volumes have risen? Any specifics would be interesting to hear..

I think hot-band, in general, has been an issue. And I think our -- what's frustrating, our product is light gauge, which tends to be sort of as a stock building material, that standard width, standard gauges, the Galvalume. So that has impacted the Jeffersonville facility..

Okay. And then with respect to the energy end market, could you provide just a rough estimate as to the sequential percentage decrease you expect in shipment volumes going in the first quarter? Would it roughly track the decrease of the U.S.

rig count? Or do you think your energy-related volumes would deviate from that baseline?.

Given that we're only about 3 weeks into to the quarter, I have not necessarily looked to that, to be honest..

I guess, I'd reiterate. As a company -- from a company perspective, and if you look at our steel-making capabilities, we're only about 8% in total specifically energy-related. So it's not -- I think we need to keep that in mind. And no, I don't think you should look at rig count and try to correlate that to our volume..

Your next question today is coming from Aldo Mazzaferro from Macquarie Securities..

I have 2 questions. One, I think, pretty straightforward, you mentioned right upfront you had 7,700 workers at this point now.

Would you be able to break those into the 3 big buckets of mills, recycling and fab? Do we have a little feeling for that?.

Let Theresa take a look at that. I've got numbers in my mind but I don't want to give you wrong numbers. So let's go to the second and we'll get back to that..

Right.

You don't happen to remember how many people you added at Columbus though, right?.

Columbus was 600 people or thereabouts?.

650..

650, Aldo, was the addition..

And Aldo, for steel, we have about 3,700 people; in mills recycling, we have about 2,300 people; and fabrication, we have about 1,200 people; and then the remainder, even though I wish they were corporate, they're not. A few corporate but they're mostly the JVs..

Right. Okay. And my second question, Mark, is a little bit philosophical again. Nucor came out and said they expect scrap to fall.

But I'm just wondering, have you heard any good reasons in the marketplace from a supply and demand perspective why that would happen? Because I'm just thinking that the strength in the dollar, I think, was the major driver on what happened in steel and scrap, I think, since around the early part of December and I'm wondering if you see anything else that changed that maybe drove scrap higher than it normally would be? Or something that you see that might change that would drive scrap down all of a sudden..

It's like, again, I think out of the price support for why scrap remains sticky relative to ore coming back is principally the export market. And if you consider that exports reach 22, 24 million tons against the metallics, general metallics market of whatever, 85 million tons, there's a time when 25% or 30% of scrap was going offshore.

That had a major -- or was a major driver to keep pricing up, in my humble opinion. That has dropped dramatically with the relative currency, Turkey and folks can buy cheaper in Europe and from Russia than they can from our shores. So we would surmise that the export market is going to -- is coming down and will stay down.

You couple that with reasonable inventories gone into the fourth quarter, quite a downtick in utilization at the end of the fourth quarter going into January. Ample flow. I mean the weather has not been -- not been bad, it's been a little gray around here, but the scrap keeps flowing.

And you're actually getting scrap imported today at a much higher level than ever before. So if the -- I think you've got a sort of a perfect storm. Demand has dropped off dramatically and supply isn't as strong. And that imbalance is, I think, going to reset that market..

That all makes a lot of sense, except I wonder why it hasn't happened yet..

Well, we felt the same so -- sometimes you've got to be patient, though..

Well, it feels like Nucor is just saying, "Hey, you guys at OmniSource better cut the price to us and we're not going to cut steel prices and everything resets and margins get better." I don't know..

Sorry, Aldo, we totally lost that last commentary..

I was just saying it's funny how Nucor suggest that that's going to fall when they're really kind of saying that OmniSource is going to cut price to us and they're not going to give it back on steel price. But --.

I'm not so sure what they've said..

Your next question today is coming from Charles Bradford from Bradford Research..

Please, don't take this as a forecast. One of your competitors published some data showing that the relationship between shred and iron ore for the last 10 years has been about 0.8. And based on their analysis, although the data that's been presented, shred should be about $250.

However, if you do shred versus WTI oil, the correlation is 0.93, and that would drive the shred price to less than $200. Now the -- that has lots of ramifications like maybe a $400 hot-band. But also, shred relates a lot to what the shredders are willing to pay for the bodies.

And if they drive down, if shred were to go and it was near these kind of prices presumably, the price that shredders will pay will drop dramatically and the bodies won't show up.

Is there an equilibrium in there some place?.

I think -- and I'll let Russ -- Russel, this one, answer after me. But I think you're right, the floor of scraps will obviously be set by the flow of obsolete common to the yards. Scrap has been elastic. I'm not so sure it's so elastic that you're going to down to $200 a ton.

But I think there's substantial room to move from where it is today and where it has been in the fourth quarter..

So I would tell you that, again, I think there is -- there does become a point where economics will come into place from the collection standpoint. In other words, you get to a point, where it is not economically viable for the dealers or the peddlers or those guys to collect scrap and sell it, because they can't make a return.

So again, I thought the economics will drive what that is. So again, mathematics could tell you it's going to get here or get there, but I think in the end, it's going to be those market dynamics that are going to set that low..

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

Well, I just would like to thank all those that's still on the line. Thank you for your support and your interest in our company. To our customers, we will continue to -- and I continue to commit to you that we will try and create greater value for all of us. And to our employees, thanks, guys and girls, for doing a phenomenal job.

We are the best in the industry, you demonstrate it clearly, and just be safe right there. Thank you, all..

Once again, ladies and gentlemen, that does conclude today's call. Thank you for your participation. Have a great and safe day..