Hello and welcome to today’s Commercial Metals Company first quarter 2010 earnings conference call. (Operator Instructions) Your host for today’s call is Murray McClean, Chairman, President, and Chief Executive Officer of Commercial Metals Company; Mr. McClean, please begin your call.

Good morning and welcome to CMC’s first quarter fiscal 2010 conference call. With me is Bill Larson, our Chief Financial Officer. As usual, I’ll begin the call with an overview of the first quarter and then ask Bill to provide details on the first quarter. Finally, I’ll comment on the outlook for our second quarter fiscal 2010. During the first quarter markets were mixed with the US and European non-residential construction markets relatively weak while markets in China, rest of Asia, and Australia were continuing to improve. Ferrous scrap prices in the US trended down during the quarter with a pick up from mid November. Rebar and merchant bar prices followed ferrous scrap prices down. Inventory level remained low with scrap yards, mills, and fabrication facilities within the US. Also in the US the non-residential construction public sector business demand was okay, without any significant boost from stimulus dollars. However, the private sector remained very weak. Our fabrication and down stream businesses remain in a very competitive environment with lower prices and shrinking margins. In China steel prices stabilized during the quarter with some product price increases by quarter end. Demand for all steel products remained strong in China although inventories our high for many flat products and rebar, though spot iron prices and ferrous scrap prices to China increased significantly by quarter end. All our global trading businesses apart from the OS Steel trading business were profitable during the quarter. This reflects improving global market conditions. As reported our Polish mills volumes were good but the medal margins were poor. Our mill in Croatia showed signs of improvement, November was actually profitable. I’ll now ask Bill to provide details on the first quarter.

Good morning, let me call your attention to the detailed Safe Harbor statement included in our press release and in our August 31, 2010 10-K, that in summary says that in spite of management’s good faith current opinions on various forward-looking matters, circumstances can change and not everything that we think will happen, always happens. This is similar to your kid’s Christmas Wish List. In addition we’ve given guidance regarding our outlook for the second quarter of fiscal 2010 in our press release. Subsequent to this call we’ll not be under any obligation to update our outlook. In accordance with Regulation G of the Securities and Exchange Commission, you are aware of non-GAAP financial measures, some of these are derived fairly straight forward from our financial statements or our in common business use, can be the subject of our discussions today and in our investor visits but there are other items that may be outside of our ability for discussion and you may need to be patient with us if we defer comment. Our website has additional information at www.cmc.com. There’s a story told about Winston Churchill that he was confronted at a party by an irate woman who accused him of being drunk. He said to have replied, “Madam, I may be drunk but in the morning when I wake up I will not be. However you are ugly and when you wake up in the morning, you will still be ugly.” When I wake up tomorrow morning these first quarter results will still be ugly. You know, however I have dealt very well with ugly as any of my high school blind dates will attest. If we tear apart the quarter I think you will see why we believe we have one more tough quarter ahead of us…

Thanks Bill, just talking about the outlook for our second quarter fiscal 2010, Bill covered some of these points but are certainly worth repeating. The winter quarter December to February is always our weakest quarter. We anticipate our US recycling segment nevertheless to have a good quarter based on the ferrous scrap price increase for December and we believe there’ll be a further price increase in January led by overseas demand. Volumes however will be critical as scrap flows slow down at this time of the year due to difficulties in collection. With copper over $3.00 per pound our nonferrous scrap prices and volumes should be good for the quarter. Our US mills shipments are likely to be up 20% in December due to the announced price increase for rebar merchants effective January 1, 2010. However the metal margins will continue to be squeezed due to the rising scrap prices. Our US fabrication and down stream businesses will suffer from a significant margin squeeze due to rising import costs [that] steel and allow our price backlogs. Our international mills will be impacted by seasonal factors in Poland but our mill in Croatia are likely to continue to improve due to higher global pipe pricing. Our marketing and distribution businesses should all be okay apart from the OS steel trading business. Looking further ahead we remain optimistic as Bill mentioned, there are still demand and prices in China and the rest of Asia will be stronger during spring and summer of 2010 than 2009. In addition markets in Australia, India, North Africa, and the Middle East will continue to improve. We believe Poland will be stronger due to the major infrastructure projects planned in readiness for the European Cup in 2012. Other markets in Europe are likely to be mixed. Finally the US stimulus package is likely to have some impact on steel demand by mid 2010 which will be a positive. Overall once real demand starts to improve, capacity utilization will increase and margins will start to improve again. So with those comments we’ll now open up the conference for questions.

(Operator Instructions) Your first question comes from the line of Kuni Chen - Bank of America Securities-Merrill Lynch

Just to start off on some of the charges that you broke out this quarter is there any way to assign them to the different segments, can you help us out with that.

Yes there is, for the most part it would, its in the nature of, as it indicates inventory adjustments and probably $11 million of the total charges were in the international mills in Poland and in Croatia. In fact of the total, almost $20 million that was listed in the various elements about probably $15 million of it is sitting in the international mills.

Just your comments on scrap suggest maybe some more upside here in January ahead, how sustainable do you think the up trend is, is this sort of a two month trend or do you see something that can continue for longer period of time.

We think the trend will be up. Obviously scrap is volatile. It could come back down January or February period but we think the trend leading into spring and summer next month will be up. As I mentioned earlier we just think the demand in many markets of the world are going to be stronger next year and the other point I made is inventory levels in all areas of the supply chain are low. The only inventories that are high that we see at this point in time are in China. That’s mainly on flat products and to a lesser degree rebar that we all know the consumption level of rebar is at historical highs in China because of their infrastructure and stimulus packages there. So in summary we believe the trend for scrap will be up the next two or three months.

Your next question comes from the line of Timna Tanners - UBS Securities

I was wondering if you could comment a little bit about how you see your market condition year over year because I think talking about the second half gets a little complicated with seasonality so can you just discuss how you’re expecting the year to evolve compared to where you were at this point last year.

Where we were this point last year clearly there was tremendous destocking going on. Everyone was, demand almost stopped. So destocking in all sectors occurred. Whether it was scrap, whether it was the mills, whether the fabricators. So that’s changed, clearly we’ve gone through all the destocking for virtually all products and there was some restocking as you know late summer. We think as I mentioned earlier that inventory levels are very low and any pick up in demand you will see customers are already seeing it with the increase in rebar, merchant bar prices for January, customers are trying to beat their price increase. We believe for most products we’ve hit the bottom and we think there is going to be some recovery in 2010.

So you’re seeing some customers start to restock, but can you talk a little bit about the demand environment as well.

Well demand environment as mentioned, the public sector is okay and we think that will get clearly stronger here in the US once the stimulus dollars start to take effect. But the private sector remains pretty weak. So the only way that will recover is with the easing of credit situation, more consumer confidence etc. in the marketplace. So that’s going to take some time.

Talking about LIFO and I know its really difficult to forecast but if prices are rising, could we see the income reverse in this upcoming quarter, is that a reasonable way to look at it.

If prices continue to rise throughout the quarter the recyclers will have had enough period of time to turn the inventories over and what will be left in the inventories at 02/28 will be higher than what price, than what’s in a mid 11/30 and that would for that segment would bring on expense.

And not necessarily any other segments, could that not translate through for the other—

Yes, point well taken, but it’s a timing issue. It will take a little bit longer for that to work its way through the mills. We are, with our, with the information that SAP can generate for us we’re doing our best to keep the inventories at the lowest cost possible and that’s at the recycler so we’re trying to maintain more raw materials at the recycling level rather than factored all the way up and down the supply chain and keep higher inventories at the mills. So its always a question of volume versus price but I would say, let me just simplify the answer, you would probably see the increase hit more in the third quarter for the mills as they had a chance to cycle through the inventory.

And then finally on the one-offs that you identify in the front page of the release it seems reasonable that those are one-offs but we have seen them now for the past couple of quarters so can you characterize why you think to work closer to maybe the end of some of these items.

You’ll never see the word one-off in there, but why, well when I look at what makes up the most of them and going back to a previous question, 13 of the 20 are lower cost to market adjustments and the substantially the rest are job loss hits we have to take in fabrication because prices, the same conversation we’re having with rising prices but set sales prices we’re going to take a squeeze on that one. What we have seen when you look at where we took the largest hit which was almost $9 million in Croatia those are tubular products and we have seen first of all and you’ve read the same way with tubular manufacturers who are obviously a lot larger than we are, beginning to get orders on inventory niches that have run down low and the general trending on tubular products is stable to up. And we have written these products down to whatever the current market values would say at November 30 yet the trend over these last three or four weeks has been stable to up and so that’s the main reason, it’s the upward trend in generally in pricing.

So these items should start to taper off as we get to more steady pricing environment.

Yes, if prices stayed level you wouldn’t see most of this stuff at all. Now as prices increase you won’t see massive amounts of income in these items, it will roll through the profit and loss statement and you won’t, you’re not able to write things up I guess is what I’m telling you.

Your next question comes from the line of Luke Folta - Longbow Research

I have a quick question first off on your guidance for the quarter you had guided for similar results quarter over quarter, are you talking GAAP EPS.

Yes.

And so I guess the way to look at it, we probably don’t see as many charges in the [way] of the LCMs, so would that imply that the next result probably comes down excluding these charges.

That’s certainly the expectation.

And then what are you looking for as far as expenses related to the Arizona micro mill in the second quarter.

Not going to give a shot at that because we’re at that stage where everything and I know I’m tap dancing but its out of pure ignorance than anything else, everything that happens there is significant. If they go as I say from 12 they probably roll, I don’t know, 8,000 tons or so in November. When you go up 50% in one month it changes the dynamics rather strongly. I think its going to be lower but given the rapid ramp up in this thing I just don’t know. Put it this way, they’re not going to be profitable in the second quarter.

And just regarding the billet sales in the quarter, were those mostly export.

Yes, both from the US and from Poland.

If you could provide any kind of update on what you see as far as the inventory levels for OCTG products.

Well we’re mainly with our mill from in [inaudible] mainly a line pipe mill, a little bit of lower quality OCTG but so, the question is OCTG in general I think obviously oil and gas industry is improving and particularly with natural gas over $5.00 now, that’s a good sign. Rig counts are improving slightly so 2010 looks to be a better year clearly. There’s still significant inventory which will take depending on the type of product, several more months to work through. We are seeing from our mill in [C Sec] on line pipe anyway improvements, improving prices, improving market conditions, not just here in the US but in other parts of the world as well.

Your next question comes from the line of Sal Tharani - Goldman Sachs

In the outlook section you mentioned something about interest compliance covenant, that’s a new statement, is that something you always put out that it may not be guaranteed you will comply in future.

I think you put it in when you have a, if its one scenario out of many that might happen, in the abundance of caution and transparency my main concern is that the factors such as LIFO could give me an answer. You’ve seen it in the past where I ended up with $50 and $75 million of expense in a quarter and it may be non-cash but it runs through GAAP. So its just a question of abundance of caution and letting you know where we look and that there are lots of factors including factors that would go the other way. There are economies that could come back if Poland doesn’t have a particularly strong winter, that would be very favorable.

What’s the ratio right now.

It was about 1.8.

On the breakdown of all these run off charges there is a I believe credit for bad debt expense it means that you had over written the bad debt expense and you’re taking it back, is that correct to assume.

Yes, it happened this way though, we had specifically identified an account that we didn’t believe that we would collect and we collected it. It was more in the nature of an actual event that occurred than our assessment that right now the world has gotten better.

Can we see something like that in inventory write-downs in future, maybe some of the inventory you have written down over the last couple of quarters, prices may rise and you will be able to get better pricing.

You would but you would see that running through the P&L, you’re not allowed to write inventory up at least not here in the United States.

You had a, I have seen some new releases that some of the mills and perhaps you yourself have also raised prices for all the material, metals, all the steel based on higher scrap prices, about $65 of rebar, are you seeing those prices sticking in the market, or do you think they will stick.

We believe so, bear in mind there’s some discounting going on, or has been, but just the [inaudible] this month in December as I mentioned we could be 20% up on the November indicates customers are trying to beat that price increase. We think the trend as I mentioned earlier is scrap is certainly trending up and we can only talk for ourselves but we’ll be pushing through those higher import costs into steel prices in 2010.

What was the SAP cost you have been—

I don’t track it any more. Its just all part of our IT costs.

But its not any more significant as it used to be, is that correct.

It’s a lot less significant. That’s absolutely right.

Croatia was profitable because pricing volume, what was the reason for it to be profitable in you said December, November.

November, a couple of reasons, the yield improvement there. We’ve been doing a lot of work as you know in Croatia but also we got some better pricing on some recent orders, so a combination of things there helped. That’s only a sign so we believe the losses will be reduced once the major CapEx project is completed. That will be in the third quarter, it should start to be, we believe improve quite significantly from then.

This is a positive, I think this is the first—

It is a positive it was really, it was unexpected. We didn’t expect them to be profitable in November.

Is this the first time you’ve be positive on a monthly basis since you bought this company.

Yes.

You’re getting closer to what we were hoping some time ago to reach and on scrap inventory are you, you mentioned that there has been difficulty in securing scrap which we’ve been hearing also from other sources, but how is your scrap inventory at the mills. Are you running more than usual, less than usual or you would like to get more.

We’re running pretty low as Bill mentioned. We try and keep the scrap at the recyclers where we can. So it would be on the low side. But obviously we can, we’re long on scrap as you know so we collect, process enough scrap to supply our mills and also sell to other customers. So yes, its on the low side at the mills. [inaudible] collections is an issue with ferrous scrap. We would like to collect more if we could. Nonferrous doesn’t seem to be such a problem. Its only maybe down 15% on a year ago in terms of volumes. But ferrous scrap is down probably as much as 30%.

Your next question comes from the line of Tim Hayes - Davenport & Company Tim Hayes - Davenport & Company: Just a few numbers questions on Arizona, is the guidance for the year of 147,000 tons is that still good.

Yes. Tim Hayes - Davenport & Company: And then in the rebar shipments from American mills you had a number 227, does that include or exclude the Arizona shipments.

It includes, its all of the mills. Tim Hayes - Davenport & Company: And then what tax rate should we use for fiscal 2010.

I think 36% to 37% right now would be a good rate.

Your next question comes from the line of Barry Vogel – Barry Vogel & Associates Barry Vogel – Barry Vogel & Associates : In looking at Arizona would you think based on where you’re at right now that it will not have a deleterious effect on your P&L when the year is said and done.

We will make money by the end of the year but it will be a net loss for this year. Barry Vogel – Barry Vogel & Associates : Do you have any idea some kind of a range you think.

Not yet. Barry Vogel – Barry Vogel & Associates : And as far as the SAP program, I’m not going to ask you about that, because you answered that question with a non-answer, are you getting the returns on the SAP investments that you expected.

First of all Barry, you’re just mad because Texas beat North Carolina in basketball so there’s no need to vent on here. Barry Vogel – Barry Vogel & Associates : Texas deserves a break. That women’s volleyball championship was just out of sight.

Yes, down two sets and then Penn State came roaring back. Barry Vogel – Barry Vogel & Associates: Unbelievably exciting event, no question.

Yes, well I mean good for Penn State, they got quite a dynasty going there. I forgot your question, what was it? Barry Vogel – Barry Vogel & Associates : Yes, the returns on the SAP investments are you satisfied so far.

Yes I would say that I’m satisfied. I’m not ecstatic, its unfortunate that with the recession not, we’re not able to get all of the results because we don’t have as much to work with in terms of volumes that it can analyze but it is doing what it was supposed to do. And so with that, I think you have to be satisfied. We’re spending a lot of time right now and this is a longer answer than you wanted but we’re spending a lot of time right now instead of rolling out new units going back and optimizing the units that are on it. Turning on functionality, more sophisticated functionality and better reporting out of the system. So we’re really going back and mining it now for a lot more than just the initial rollout. Barry Vogel – Barry Vogel & Associates : What was the total amount of money that you invested in this project.

A lot. I don’t know, it was north of, including the infrastructure that goes with it, it was north of $200 million. Barry Vogel – Barry Vogel & Associates : So the returns on this investment so far are negative, and its going to take time I presume to get them to a positive basis.

Well it depends on how you calculate it, we are getting a return on the investment. If it’s a question of when will we recoup the investment it will be long after my career is over. Barry Vogel – Barry Vogel & Associates : Now your book value as you stated right now is $13.50 a share, before the conference call started your stock was around $15.50 a share, as you had stated you have hardly any goodwill, you have $350 million or so in cash, you don’t have a leverage balance sheet, what conditions will be needed for you to buy back stock on your remaining authorization.

The banks show a little bit more willingness to lend both to our customer base and to have better fee structures. The liquidity out there is still problematic, more so for our customers than for us but I think we need to see a greater improvement in the general capital markets before we would feel safe to be retiring any more of our own shares. Barry Vogel – Barry Vogel & Associates : That’s great, thank you very much. I appreciate it and have a great new year in every single regard, and you too Murray.

Your next question comes from the line of Gregory Macosko – Lord Abbett Gregory Macosko – Lord Abbett : Could you talk a little bit more about Arizona, what is the expected capacity there and could you give me a sense of how much of that capacity you figure is going to go to your internal fabrication uses versus what you might sell on the marketplace.

As Bill mentioned we’re looking at about 147,000 tons this fiscal year— Gregory Macosko – Lord Abbett : No but I mean capacity at full—

The second year we’ll build that up to capacity which is 280,000 tons. It may well be a little bit more than that depending on the cost of [inaudible], but approximately 60% of that will go to our own fabricators. Gregory Macosko – Lord Abbett : And the other 40 or whatever is left over, how far does that, do you expect that to go. Is that going to go to Los Angeles, does that go to Las Vegas, where do you expect those---

Mainly Arizona, Nevada but also into certain parts of California. Gregory Macosko – Lord Abbett : And what do you expect that competitive market to be.

It certainly will be competitive but generally speaking the west historically margins have been better there at this point in time the market is down on the west and the southwest but we expect it to come back in a couple of years’ time which is about the right timing from when we have that mill at full capacity. So we’re relatively optimistic that we certainly will sell out that mill. Gregory Macosko – Lord Abbett : And then on the billets the demand was as you said I guess strong, export both Poland the US what is your outlook, is that a one, sort of short-term thing because of the weak dollar or what’s the outlook there.

We’d clearly prefer to sell finished goods, and time in Poland we will be mainly selling rebar, wire rods, just not mesh quality, but as you know with the new mill going in, higher quality wire rod products, merchant products a bigger range with the flexible mills. So that’s what we’d like to sell and not so much in billets because billets you know you’re selling at a lower margin and then you’re aligned cleared more on export markets and prices of scrap can fluctuate tremendously from month to month so you can get caught selling billets. So longer-term we’d prefer not to sell billets. We’d prefer to sell finished goods. Gregory Macosko – Lord Abbett : But what are you seeing in December, are you seeing continued demand for that billet.

Yes, billet demand is good particularly in Asia and also some parts of central and South America.

Your next question comes from the line of Brian Yu - Citigroup

Question in regards to the fabrication segment, first I think earlier you mentioned that the stimulus program could kick in by spring, are much in the way of project coming up for bid.

Yes we’re seeing some coming up in various states including here in Texas and Florida and some other markets. So we are optimistic that these will be awarded in the first half of calendar 2010. So definitely 2010 will be better than 2009.

Can you comment on what type of projects there are, are they road building, infrastructure, hospitals, schools.

Yes, a combination, there’s a lot of road building, highway work, certainly here in Texas. There’s highway work in Florida. There’s Miami tunnel in Florida. There’s hospital work and education facilities. It’s a mixture of things. But certainly highway work is right up there.

And then for your backlog, can you give a sense of where that stands and maybe for the quarter ending November what your book to bill ratio might be in the fabrication side.

The backlog depending on what area did decline slightly. The main concern is prices dropped so higher price backlogs are being replaced by lower priced backlog. So that is where you see some of this margin squeeze. But overall its holding up reasonably well particularly in the public sector.

I think just some data points on backlog as far as our mills are concerned, at least in the greater Texas area, there’s probably nine months maybe almost a year’s worth of backlog. When you look at the rebar fabricators though I would say that they may have three months, four months worth of backlog as compared to in normal times, probably six to eight month’s worth of backlog. Copper tube probably has half a month, that’s a very spot business. It generally compared to last year is down significantly but its not so much the tons and that’s actually what I was referring to, but it’s the dollars in the backlog which are down significantly which is why the fabricators will have a little bit of a difficult time during this period of rising prices as they did in past times of rising prices, because the contracts are going out at pretty competitive prices and the mills are trying to raise their prices so there is going to be some margin compression.

Your next question comes from the line of Jeff Cranmer – UBS Jeff Cranmer – UBS: Just on the international fabrication and distribution, obviously had a good quarter and given your outlook on the international markets, do you see that continuing or possibly some upside from here.

Yes we think certainly in the spring and summer of next year we think it will be stronger. Our [indoor] Asia business is doing very well. Our raw materials business is doing well but it should improve. Europe should get better. Middle East, North Africa should get better. Australia is bouncing back quite strongly. And even our US steel import business which has dragged us down should start to improve by spring and summer of next year. So overall we’ll definitely be stronger. Maybe not this quarter but as I say in the spring and summer quarters. Jeff Cranmer – UBS: And the market conditions are obviously out of your control but can you comment on your commitment to investment grade ratings or what you may have discussed with the agencies last month.

I don’t think we’ll get into any particulars about what we discussed, we certainly gave them the same outlook that we’ve discussed with the investor group and that is there’s going to be a tough three months coming ahead and then light at the end of the tunnel come March. We are committed to staying investment grade. We believe it has very positive effects on the capital structure of the company. Jeff Cranmer – UBS: And just on the, for EBITDA and the compliance calculation, there’s no adjustment to that, its just a straight net income plus interest, taxes, depreciation calculation.

Correct. Jeff Cranmer – UBS: And if I heard you correctly earlier on the CapEx front you said $100 million in CapEx plus $20 million or so environmental is the expectation for fiscal 2010.

Well those are the ones that are on the approval list. I mean realistically the total amount that has been at least ostensibly approved and I think I’ve talked about this last quarter is probably in the nature of $155 to $160 million. But we’re not going to go forward with $40 or $50 million of those projects unless the skies clear and things look a whole lot better. So I wanted to be a little bit more distinctive in what I think we’re going to spend as opposed to what has technically been approved. I hope that makes sense. Jeff Cranmer – UBS: Yes.

Your next question comes from the line of Sanil Daptardar – Sentinel Investments Sanil Daptardar – Sentinel Investments : Where you talked about in the press release that China would be stronger in 2010 versus 2009 currently China was an exported of steel, operating at around 600 million tons annually, so what gives that confidence that China is going to be much stronger than 2009.

We think the Chinese, with the stimulus package there’s at least two more years of strong infrastructure growth there. Virtually all their industries are performing well obviously not the export industry, export manufacturing and ship building are probably the weakest but clearly automotive, white goods, real estate, you go through a whole list of things. They’re all strong. The Chinese government may start to work on monetary policies has slowed some things down, but overall the stated goal they want I think a 9% to 10% GDP growth rate next year which is up from what it is this year. So we think their steel consumption will be stronger next year. The Chinese government that have make these statements in the past but maybe they get more serious and want to crack down on some outdated mills, old mills, these are mainly [long] product mills which are polluting mills as well, cut down that capacity. They certainly want to consolidate the largest state owned mills, make those groups bigger so maybe that’ll accelerate those programs. And the other they’ve introduced is no new steel projects to be approved in the next three years so they’re trying to obviously curb new steel production capacity coming on stream. So when you put all those measures together we think China is going to be strong next year. We think oil prices are likely to be 20% up on 2009 so scrap prices will be stronger. And they will lead the rest of Asia so we’re quite optimistic that China will definitely be stronger and obviously they had a very good 2009. Sanil Daptardar – Sentinel Investments : So can it be reasonable to assume that probably China would be a net importer of steel for next two years given that there are going to be curbs on new steel capacity.

I don’t know if they’ll be a net steel importer, I think they’ll probably still remain a net exporter but it will be limited because clearly a lot of their products because of anti dumping and protectionism, they cannot send out to the US and to Europe so they’ll be limited to mainly selling their exports into Asia and some other markets. But there will definitely be import requirements particularly if prices in some parts of the world including the US are lower than in China there will be opportunities to sell steel to China next year. Sanil Daptardar – Sentinel Investments : On the US market of course the private sector is still weak, have you seen any kinds of any changes in the demand trend in the private sector in terms of the non residential construction market or you think that second half of 2010 doesn’t seem that its going to change or improve any time soon.

We think maybe we’re at the bottom but we don’t see any great change in the next few months. Clearly if the banks and obviously President Obama and the Administration are starting to put pressure on banks to lend more to small and mid sized businesses that will be a positive. So maybe the banks will start lending more freely some time next year. That would be a big positive. Sanil Daptardar – Sentinel Investments : On the numbers, in fact when you talked about the second half, if I were to see the improvement in the middle margins, it would be more driven by the price and volumes.

Yes we think as prices move up we think demand will come and as I mentioned, the capacity utilization rates will improve. There’ll be, the other key is very low inventory levels. We saw it over summer, at the end of the destocking period, some restocking. We think there’ll be more restocking next year. And the capacity utilization rates will improve so if mills are starting to say in spring and summer of next year operating over 70% to 80%, in that range, capacity utilization definitely margins will come back.

Your next question comes from the line of Charles Bradford - Affiliated Research Group

I’d like to ask my usual questions about costs and specifically about what you’re seeing these days in refractories and electrodes. Its about that time to do next year’s contracts.

Well we’re seeing at the moment a bit of a mixture. But overall the industry customers are cautiously optimistic about next year. So that means I think they anticipate demand to pick up and obviously prices will start to pick up. But if we look at prices in the last couple of months, some are up and some are down and some are unchanged. So it’s a bit all over the place. But I would say by spring and summer time next year overall people will be a little bit more optimistic than they have been.

I think in terms of electrode pricing and I think you pretty much have to compare it to 2008 because 2009 was a bit of a wash or a washout for them because the buying was so sporadic. I don’t think there’s a pattern. But I would say that you may see anywhere from 20% to 30% increases. It depends upon of course size on pricing.

When I look at refractory grade [inaudible], its down $15.00 a ton November versus October. [inaudible] is up $5.00 a ton, silicon carbide is down $10.00. Brown [inaudible] is up 25. Needle [coke] I know you follow that, that’s basically unchanged one month to the other.

I know you don’t use coking coal and iron ore in your various steel making but you trade it a lot, what are you thinking about next year’s pricing on coking coal and iron ore.

Well coking coal we’re really out of the market because we’re exporting from China until they slap the 40% export tax on it. The only market that’s probably available at the moment are India. We think it may move up a little bit. Iron ore you obviously follow that closer even than we do. As I mentioned earlier we think that price will definitely be up next year, maybe 20%.

A number I like to hear, when it comes to capacity obviously you’ve got the new mini mill on, [Newcor] has down the upgrade at Kingman, are they actually producing any product there. I know they’re not making any steel there, but are they shipping any finished product out of there that would be in competition with you.

I think you’re going to have to ask them.

Did you hear anything about the [Carony] project in Mississippi.

No.

Well I guess no news is good news. Thank you very much.

I know this is a shameless plug but shame doesn’t seem to be one of my attributes, thanks for sending the report on China and for those who don’t have it, Chuck has compiled some of the best historical statistics on Chinese manufacturing and output and other interesting ones. It’s a great read, so I appreciate you sending that to me Chuck.

Your next question comes from the line of John Tumazos – John Tumazos Very Independent Research John Tumazos – John Tumazos Very Independent Research : It sure looks good to –

Before John asks his question, John was number one in [inaudible] on returns, so I have to give a shameless plug to him too. John Tumazos – John Tumazos Very Independent Research : Thanks, the World Steel Association yesterday reported a decline in Chinese output, not quite 10% on a per day basis, I was wondering your interpretation of that first and then second from the standpoint of the various fabricating product lines and I’m just thinking for example of the joist market where the peak to trough decline in tonnage might be two thirds or three quarters, how you’re operating and staffing those facilities when the market goes quiet. And just give us a flavor in the different fabricated product lines of how you’re doing as well as you’re doing to contain results.

I’ll take the fabricated and then I’ll punt the Chinese to Murray, the fact of the matter is you must scale your business to the demand in the market and joist is off at least 50% maybe more if you look at forward order books as well. The rebar fabricator is not quite so bad and what have we done, well we closed down lines. We moved production to other facilities so that you still have a critical mass. The same is true with rebar fabrication. There are facilities that we have closed down. Its, we mothball certain lines. They are in condition to come back when the market returns but I think you would be incredulous if I told you the joist market is going to come back to its all time highs any time soon. It is off, there’s probably an expectation in 2009 that there be between 550, 600,000 tons of joist. That’s certainly less than half than the all time high. And given our comments on commercial construction and the outlook for that I think you need to be scaling back because there’s just, the demand is not going to be there.

Just on China, China typically does slow down this time of the year and right through to their Chinese New Year, the middle of February. Clearly, particularly construction steels, they are impacted by weather and a lot of parts of China are over the winter time so there is a natural slowdown, seasonal slowdown. So that’s not surprising. But I think what’s interesting is [inaudible] steel, who is obviously mainly a flat product producer and pipe etc., they announced price increases in January. Clearly that you see the market in China strong next year. There could be some inventory adjustment as well as I mentioned flat products, high inventory levels in China and some rebar areas there’s some high inventory level as well. But overall we’re still pretty bullish about China for 2010 as I mentioned earlier. So we’d expect from second half of February onwards that China to pick up again.

Your next question comes from the line of Bob Richard – Iron Edge Research Bob Richard – Iron Edge Research : Not to belabor the lower cost to market adjustment but if I heard you right, you said the majority of that was on finished tubular products in Croatia is that accurate.

Well yes, probably half of all of the charges were on the inventory that [C Sec] has, that’s correct. Bob Richard – Iron Edge Research : And I guess begs the question how many tons were written down by how much, can you give me round numbers there.

No. I don’t have that down but if you follow the tubes of good prices, whatever it feel from 8/31 to 11/30 you can use that, divide it into about 8 million, and you’ll figure out the ton. I’m not trying to hide it from you I just don’t have the number in front of me. Bob Richard – Iron Edge Research : And the other question is the premium of merchant over rebar, pretty important statistic, is it safe to assume that that’s still going to be under pressure going forward.

First there’s two parts to the calculation, there’s the price of rebar and there’s the price of merchants. The merchants have actually been fairly resilient in this. We would anticipate the premiums to stay out there. Bob Richard – Iron Edge Research : You had mentioned in your release that it was down year over year, but [163] is what we should expect, somewhere in that ballpark.

We don’t project individual pricing out quite that well but at least the current trend would be about that. Yes I would think so.

It is higher than historical, its been $100, $125.00 a ton, sometimes a little bit lower.

Your next question comes from the line of Fritz von Carp – Sage Asset Management Fritz von Carp – Sage Asset Management: Could you talk about some of the trends in terms of inventory stocking or destocking and price or demand or however you want to characterize it for some of the other long products like you talked a little bit about merchant bars, more on that sort of light structurals and things like that and sort of the non beam long products, non beam non rebar long products, where are they.

Well most of those products have fairly low inventory levels whether at the mills, yes, there was some restocking, late summer period but that seems to have slowed down some. But we would expect that to pick up again around probably February, March period of next year. Fritz von Carp – Sage Asset Management: Doesn’t sound like there’s any sort of, are the inventories low enough that its starting a frenzy or is it the case that its maybe a little bit higher than that and things will stay a little soggy or is it somewhere right in the middle of those two.

Certainly no frenzy, we’d need strong demand for that. But customers are, we mentioned rebar and merchant bar products going up $65.00 a ton January 1 so what we’re seeing as I mentioned earlier quite a pick up in shipments this month. People beating their price rise so I think many customers see the prices have reached the bottom and the trend will be and that will be our view for next year. There could be some fluctuations but overall based on scrap prices moving up, iron ore prices moving up, we would think steel prices on long products are going to move up in 2010. So customers where they can, they may start to increase their inventory levels, certainly to beat the price increase but overall they are remaining very cautious.

Your final question is a follow-up from the line of Sal Tharani - Goldman Sachs

Your comment that 60% of your rebar from Arizona is going to your own fabricators that implies about 170,000 tons when you’re running at full capacity. While you are ramping up to that level is everything going to your fab guys right now.

Yes it’s a high percentage than that. Substantially all of it has gone to in house but there have been some outside sales. But yes, the outside sales will be developed more as the year progresses.

The interesting thing is, not just our own people, but those people from outside have seen the new bundles. They are the best in the industry, typically the small diameters so we expect the demand for this rebar from this mill to be very good, to be a preferred product if you like, all things being equal in that market.

And you obviously have a cost advantage there because you’re not using a reheat furnace, are you observing that number you were using earlier, whatever, that you are getting that kind of cost benefit.

The indications are we will but of course we’re not putting as much tonnage through there but on the curve it is developing that way. But I don’t want to leave you with the impression the cost structure right now is any where near what its going to be. Its still on the development stage.

With today’s metal margin at what utilization rate do you think you can be profitable or break-even at this time in Arizona only.

I don’t know, we haven’t done that calculation because we haven’t tested the mill fully to find out all of the input costs and through put. So I don’t have an answer for you yet.

On the Arizona mill, you gave some comments, I want to make sure I heard correct that the mill actually will be profitable at the end of fiscal 2010, however for the year it will not be profitable, is that correct.

We think it will break into profitability in the fourth quarter.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Bill and I will be travelling during the first week of January on investor visits and we’ll be happy to answer further questions at that time. In the meantime wish you all Happy Holidays and thank you for your attendance today.