Tricia Meyers - IR Mark Millett - President & CEO Theresa Wagler - EVP & CFO Russ Rinn - EVP, Metals Recycling Operations Glenn Pushis - SVP, Steel Operations, Long Private Steel Group

Seth Rosenfeld - Jefferies Alex Hacking - Citi Novid Rassouli - Cowen and Company Timna Tanners - Bank of America Merrill Lynch Phil Gibbs - KeyBanc Capital Markets Jorge Beristain - Deutsche Bank Brett Levy - Seelaus Capital Curt Woodworth - Credit Suisse Sean Wondrack - Deutsche Bank Charles Bradford - Bradford Research

Thank you, Doug. Good morning, everyone and welcome to the Steel Dynamics Third Quarter 2017 Earnings Conference Call.

As a reminder, today's call is being recorded and will be available on the Company's website for replay later today. Leading today's call are Mark Millett, President and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer.

We also have our leaders for the Company's operating platforms, including our Metals Recycling Operations' Russ Rinn, Executive Vice President; our Steel Fabrication Operations' Chris Graham, Senior Vice President, Downstream Manufacturing Group; and our Steel Operations, Glenn Pushis, Senior Vice President, Long Private Steel Group; and Barry Schneider, Senior Vice President, Flat Roll Steel Group. Some of today's statements which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning.

They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties relating to our steel, metals recycling and fabrication businesses as well as the general business and economic conditions.

Examples of these are described in our annually filed SEC Form 10-K under the heading Forward-Looking Statements and Risk Factors, found on the Internet at www.sec.gov and is applicable on any later SEC Form 10-Q. You will also find any reference to non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Third Quarter 2017 Results.

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

Thank you, Tricia. Good morning, everyone.

Welcome to our third quarter call. We appreciate you all sharing time with us today.

I'd like to thank the entire SDI team for maintaining a strong quarter-over-quarter performance and what was a challenging market environment and also express my sincere appreciation to our customers for their continued loyalty and support. Also I'd like to express our sympathy to those impacted by the hurricanes.

Thankfully, our employees and their families remain safe during the storms, but our thoughts and prayers remain with those less fortunate. And before I pass it over to Theresa to comment on our third quarter financial results, I'd like the team to wish her Happy Birthday.

Theresa, floor is yours.

Thank you. Not sure, when did you know that.

I also want to recognize the strong performance of the team really across the entire company all the platforms performed very well. Our third quarter 2017 net income was $153 million or $0.64 per diluted share including debt refinancing and repayment charges of $8 million pretax or $0.02 per diluted share.

And for those of you that are wondering that $8 million is actually included in other expense on the income statement. Excluding these items are third quarter 2017 adjusted net income was $158 million or $0.66 within our adjusted guidance of between $0.63 and $0.67 per share.

Third quarter 2017 revenues were on par with sequential second quarter sales at $2.4 billion with increased revenues across all three platforms. As average quarterly sales prices remain fairly steady and volumes marginally increased.

Our third quarter operating income increased 2% sequentially to $271 million with improvement realized across all three platforms. But primarily result of higher engineered bar, structural and merchant steel shipments.

Despite continued pressure from excess domestic production capacity and elevated imports for structural and merchant steel products. For the third quarter 2017, total steel shipments increased 2% sequentially to 2.5 million tons.

Flat roll shipments were slightly lower, while long product steel volumes increased 6%. And for those of you, who are tracking our models of flat roll shipment.

Hot roll coil and pickled and oil shipments were 863,000 tons in the quarter. Cold roll 136,000 tons and coated which included painted and galvanized 734,000 tons.

Steel operating income increased $6 million or 2% to $280 million in the quarter, a result of higher long product shipment outpacing marginal metals spread compression. Our average quarterly external steel selling price decreased $1 per ton to $778 in the third quarter.

Their average scrap cost increased $2 per ton to $305. For metals recycling platforms various metals spreads due to improved average quarterly scrap sales price and relatively heavy shipments resulting in third quarter 2017 operating income of $21 million.

Additionally the team's done a great job optimizing cost throughout the business. With year-to-date 2017 operating income of $62 million more than doubled in last year's performance.

The team continues to effectively lever the strength of vertically integrated model, benefiting both steel mills and the scrap operations. Metal recycling continues to support our steel mills sending 62% of their ferrous shipments internally.

Our fabrication operations achieved record shipments for the third consecutive quarter, a continued indicator that the non-residential construction market is improving. Order backlog and order entry also remained robust.

Third quarter 2017 operating income increased sequentially to $22 million, an 8% improvement related to higher shipments and some improvements now realized sales price. During the third quarter 2017, we generated cash flows from operations of $226 million year-to-date we've generated $548 million with operational working capital growing by $231 million, based on overall market improvement.

Year-to-date capital investments totaled $128 million, we estimate full year 2017 capital expenditures to be about $190 million for the year. We maintained our cash dividend for the third quarter $0.155 per common share and we've repurchased $237 million of our common stock this year, with $99 million repurchased in the third quarter alone.

We have $188 million that remained authorized. [Indiscernible] $450 million program, which we initiated October, 2016.

We believe these actions have led the strength of our capital structure and liquidity profile and the continued optimism and competence in our future. In September, we issued $350 million of new 4.125% senior notes due 2025 to repay our existing 6.375% senior notes due 2022.

At September 30, 2017 we repaid $183 million of the existing senior notes, repaying the remaining amount of $167 million on October 13. As a result, our September balance sheet depicts excess cash and current debt of $167 million each.

As mentioned, third quarter 2017 pretax earnings were reviewed by $8 million as a result of refinancing. Given the October final call date, fourth quarter 2017 pretax earnings will also be reduced by $6.6 million related to the refinancing charges.

After giving it back to the October payment. Total debt of $2.4 billion remained consisted and liquidity remained strong at $2.1 billion with $935 million in adjusted cash and $1.2 billion of available revolver.

These transactions extended our overall debt maturity profile and provided an estimated annual interest savings of $8 million. An incredible outcome, the team did a great job and we appreciate the continued support in the capital markets.

Third quarter 2017 adjusted EBITDA with $347 million with trailing 12-month adjusted EBITDA at a near record $1.4 billion. The strength of our recycled cash generated coupled with the strong credit and capital structure profile provides great opportunity for continued organic and transactional growth.

We're squarely focused and on track for the continuation of sustainable optimized value creation. Mark?

Super. Thank you, Theresa.

As we turn in best in class financial results. The welfare of our employees remains our crucial focus of.

Nothing surpasses the importance of creating, maintaining a safe work environment. Our safety performance continues to improve and remains significantly better than the industry averages.

So far this year, we've further reduced our total recordable injury rate 19%, with 76% of our locations being incident-free. A sincere thanks go to the SDI family for an outstanding job, that challenge each and every one of us to remain focused and stride to our ultimate goal, zero-incident environment.

Steel platform performed well in the quarter. Our production utilization was 92%, once again remarkably better than the estimated domestic industry rate of 75%.

This is true in large part having one of the most diversified and value added product portfolios in the industry. In aggregate, we still have over 1 million tons of unused steel shipping capability, most of which is highly correlated to the construction sector.

The management construction sector continues to improve, energy still has a long way to go, but we assume a continued positive demand trend. We're also seeing improved demand for heavy off road equipment and more general, industrial, manufacturing at Cats.

Diversely [ph] the demand for the domestic automotive sectors turned down from a record - it still remains at historically strong levels. Fortunately, we continue to gain market share particularly at Columbus flat roll division, as they focus on automotives, direct sales and leverage our cost effective access to the Mexican market.

The forecast continue to show increased demand. Slide to market dynamics, we continue to position our company for the future through the investment in our operations and to improve and manage our destiny.

Within our flat roll operations we upgraded the hot roll galvanizing line and our Butler flat roll division, adding 180,000 tons of value added coding capability for a capital investment of only $15 million. The additional capacity came online this past May and is ramping up quickly.

We also continue to ramp up the production of the new $100 million paint line at our Columbus flat roll division, which initiated prime shipments in the first quarter of this year. The new line provides 250,000 tons of annual coding capability and further diversification into some of our highest margin products.

Complementing the two existing Indiana paint lines. This new line is state-of-the-art facility producing high quality HVAC appliance and double-wide steel.

As geographic location facilitates economic access to the Southern US-Mexican markets. We anticipate the new paint line to be running close to full capacity by mid-year 2018.

Columbus continues to be a significant earnings catalyst. The changes in the team has already made transformational and there are still more to come.

The successful market and product diversification that was achieved over the last two years, is one of the key differentiators for our improved through cycle profitability and will continue to benefit the coming years as well. Despite an improving non-residential construction trend, non-product capacity utilization remained challenged, running on average between 70%, 75%.

Much of the increased demand over the last 18 months has been absorbed by imports of standard beams and shapes along with considerable volume of prefabricated structural steel. Nonetheless our structural and merchant steel shipments increased in the quarter.

And show increase due to through cycle utilizations, we're investing in our long product steel metals. We have three specific initiatives to increase the utilization and our structural metal division, which is been running on average between 70% to 75% capacity off late.

First, we're growing production of [indiscernible] quality balloons to send to our engineered bar divisions. As it has excess rolling capacity.

This should improve through cycle utilization at both facilities. Over the next 18 months ,we plan to increase this volume through an annualized rate in excess of 150,000 tons.

This past quarter we transferred over 23,000 tons. Second, we further diversified our structured division's product offerings and recently began the production of large unequal leg angles and heavy clamps [ph].

We plan to enter the market in fall, the first of next year starting as much as 100,000 tons annually. Third, we recently announced $75 million expansion to utilize existing access melting and casting capability there.

The project will further diversify our product portfolio and market sector exposure through the annual production of 240,000 tons of reinforcing bar. Coiled custom cut to length and smooth bar.

Our intended business model should substantially enhance the current supply chain providing meaningful logistic yield and working capital benefits for the customer. In addition, we will be the large independent rebar supplier in the Midwest region.

We expect begin operations by the end of 2018. Our Vulcan operation will provide a pull-through opportunity for this rebar project.

As they currently consumed between 30,000 to 40,000 tons of smooth bar annually. In aggregate, these initiatives provide for approximately 500,000 tons or over 25% the potential traditional annual utilization of our structural and rail division over the next 24 months.

We believe this will provide a material improvement in future through cycle utilization and obviously profitability. We're also investing $28 million to utilize excess melting and casting capability in our rolling and bar division.

We are adding equipment that will allow for multi-strand slitting and rebar finishing of 200,000 tons per year. Similar to our Midwest investment, we expect to have strong market penetration as we will be the one of the largest independent producers of rebar in the Virginia area as well.

We expect commissioning in the beginning in the first quarter of 2018. The profitability of our metals recycling platform remained aligned with strong performance demonstrated in the first half of 2017.

For the third quarter, ferrous metal spread expansion related to higher prices and steady shipments. Additionally the team continues to optimize administrative and operating costs.

[Indiscernible] operating income more than doubled compared to last year. We anticipate good scrap flows that continue throughout the fall and winter months, as the areas devastated by the hurricanes began to remove debris and rebuild.

We anticipate this added supply that began impacting our chain in the coming months, further stabilizing scrap price environment. The fabrication platform also continued a strong performance achieving at third consecutive quarter record shipments.

Order backlog remains strong. The team continues to achieve great market penetration of both choice [ph] and deck.

Our fabrication operations purchased 330,000 tons of steel from SDI steel mills in 2016 and are on track to continue to purchase similar quantities in 2017. The power of pull-through volume fabrication sources steel from our own mills is a significant advantage to keeping our steel platform utilization rates higher during weaker demand environments.

The New Millennium team continues to perform exceptionally well levering our national footprint and providing quality product. The ongoing strength of its business and continued customer optimism also drives positive insight into a continued strength of non-residential construction activity.

On a macro market basis, we continue to have a positive view on domestic steel consumption. Domestic automotive production maybe coming off record levels, but we believe total mass production will continue to grow, as Mexico continues to expand production with current assets in place.

This is highly complementary to our Columbus division's automotive strategy. Additionally, we believe that we continue to grow in construction and the energy sectors.

This will be a solid foundation for a strong pricing environment as the macro market drivers continue to be persuasive. General global economies are showing some positive momentum.

Strong internal China demand is reduced absolute level of exports and driven strong price appreciation. And additionally winner curtailments will add to upward pricing pressure.

European pricing exceeds domestic pricing on a dilutive basis. So the arbitrage of domestic to global pricing has essentially evaporated with no incentive to apply foreign material.

Imports will continue to decline through the fourth quarter and demand trend is positive and inventories are on the low side and mill lead times are pretty healthy. These dynamics could create a tight market and lead to significant price appreciation as we saw at the end of last year.

In fact this could already be happening as recent order input rates have increased considerably as reflected by the recent price increases. On business model, execution in the long-term strategy continues to strengthen our financial position through strong cash flow generation.

Demonstrating our sustainability and differentiating us from our competition. Customer focus, coupled with market diversification, with low cost operating platforms supports our ability to maintain our best in class financial performance and differentiation.

The company and the team are poised for continued organic and transactional growth. The strong character and the determination of our employees provides the foundation for our success.

And I think each of them for their hard work and dedication. And remind them, safety is always our first priority.

We continue to focus on providing superior value for our company, for our customers, for our employees and shareholders alike. And look forward to creating new opportunities for all of us, in the years ahead.

So again, thank you for your time today. And Doug, please open the call for questions.

I'll start with one question on the flat roll division, please. Can you give us the better sense of the anticipated impact on flat roll volumes in the fourth quarter for anticipated outages that you've provided in the call this morning?

Seth, the $25 million collectively does include excess expense, but it also includes the impact of those reduced volumes. We specifically didn't foresee the amount of specific volume reduction in the release itself, but it does include both of those items and a significant part of that, really is the reduced volume versus the extra expense.

Thank you. Can you just give us some sense of the tonnage that might be impacted and one, I have a follow-up question to that as well.

You've flagged earlier the impact of elevated port inventory overhang on price in the last quarter. Can you give us since what the situation is like today, please?

I think Seth the impact from both Columbus and Butler is going to be in the vicinity of.

About 100,000 tons between the two facilities.

And about any extra volume that was exported.

Well I don't think there is any way true to getting sort of compensated volume. I do believe obviously people or traders themselves ahead Section 232, we do believe that volume is or has been joined over the last several months.

We believe that the market will tell you that in conjunction with the decline in order input, will tighten the market by the end of the fourth quarter.

Mark, you just mentioned that you've seen order input rates ticking up recently. Maybe could you give a little more color there?

If that in - is that more in flat products or long products or I guess how recently have you seen that tick up and what kind of magnitude is it? Thank you.

On the long product side, things are relatively flat, order input rate wise. The increase is been definitely on the flat roll sheet side of our business.

It's probably just this last week, that we've seen that, it's considerable and it's parallel the market that we saw last year. If you look back last year, I think it was September in that case.

There was a low hesitation - customers sort of order input rate, it was very short lived four weeks and all of a sudden things normalized and I think, we're seeing that same market environment today. People anticipated.

I think that the certain mark was going to come up area in October, held back their orders accordingly. And now people getting back in the market.

I think our customers are recognizing that the market is bottomed and we're seeing, as I said a very positive order profile.

Thanks, that's very clear. And if I could just follow-up with one more.

Let me ask about something. I'm sure you've been asked about it lot recently.

Maybe comment on graphite electrode prices your contract, situation inventory and maybe just an overview of the situation there. Thanks.

Well essentially, it hasn't impacted us in 2017 and we haven't - it's clear through the first quarter going in the second quarter of next year at 2017 prices. I think, there's a little bit of panic in that market price, I think people need to recognize the commodity markets, have a natural ability to balance themselves to reach kind of an equilibrium.

The recent abnormal market skyrocketing spot prices I think is abated a little and we expect more normalized pricing environment prevailed in 2018. I think people are always seeing an expanded needle coke supply availability today.

Given our longstanding relationships and some of us have been working with these folks 25, 30 years now. We will be considered a core customer, which ensures a committed supply throughout 2018, so supply for us I don't think is an issue whatsoever.

I think, one can expect the tighter market and increased raw material input cost for the electrode producer will support somewhat higher pricing. Although I'm confident that they recognize, they can put the electric arc furnace producer at a cost disadvantage to the integrated competition, as they would lose market share, so prudence will prevail.

Our expectation is for pricing to be at a more normalized level of two - in a range of two to three times, 2017 pricing. And I think, as you probably know it's not a significant impact to SDI, as electrodes are currently less than about half of percent of our cost [ph].

On the engineered bar side, the level of shipments I don't think we've ever seen these in years maybe this is even potentially a record. I was just wondering if you can discuss how you're seeing the end markets shaping up and maybe just a give a little bit more color on the strength that we've seen this year.

Honestly we added the 300,000, 350,000 tons of capacity back in, when was that. About 18 months ago and two years and that is been ramping up so that's given us - provided a new capability.

We still have quite a long way to go, to fill out that utilization which is a good news. I think in almost in every market we've seen more strength, we've been taking up automotive that's not necessarily - because the automotive strength but the expansion that we made and if you remembered on the lower diameter, smaller diameter size range which is principally the automotive range, so we've been penetrating picking up market share.

Teams have done a very, very good job there. Off-road equipment, heavy machinery is been up, the Caterpillars of the world, the John Deere's ensuring positive momentum so that's been good.

And we've also been beneficiary of the recovering energy markets. We put material into seems two markets and also into forging, for valves and those sorts of things.

Generally pretty good there, industrial and manufacturing is also picking up a little bit. The only area of weakness and it's in –weak for more than two years now and that's agriculture.

Novid just a bit reminder that 325,000 ton expansion in the smaller diameter really made for the engineered bar, both had extra rolling capacity versus melting capacity and that's the reason for one of the initiatives we'll be sending blue from a structural norm down to engineered bar so we can fully utilize that 950,000 tons of rolling capacity.

Got it, great. And then the second question is just given the strength that we've seen I guess on your long products relatively to the flat products recently, do you guys see kind of path to utilizing this million tons of latent capacity, I know we've talked about in the past and it seems like a great opportunity for you to unlock potential leverage and the model and so just wanted to see, if you guys had any thoughts about kind of, if the past to utilizing that is becoming more clear now versus six to 12 months ago.

Thanks.

I think the non-residential construction markets will continue to incrementally increase and as such we will increase with that. It's a very competitive market arena.

Obviously if there was an infrastructural build and it will be momentous for us to utilize that as additional capacity. But we always have focused ourselves on what we can do to control our own destiny, we don't manage to hope, we don't hope that markets are going to come back, we don't hope that we're going to have to trade cases to protect ourselves.

Hence the diversification projects that we've got in place. Given another 12 months, if the structural and rail division will have a total different complexion and I believe not unlike the transformation that we've had at Columbus but we'll see the same at Columbia City.

And in addition to that, we have the 500,000 tons that we're focusing which is kind of half of that volume structural and rail division. But you also have the additional 200,000 tons related to rebar at rolling and bar division, there is a lot of things internally that will start to hopefully unlock in the next 12 to 24 months.

Mark, it's interesting you were talking some improvement last week, but I guess I wanted to ask you why we've seen the slippage in the spot price because in hot roll, right as you say your imports have been slipping and they haven't been competitive, we've heard that for the last month or so and yet we've seen the spot price slipped, we just hear that the mills are calling around looking for business, is that typical seasonality or is there something more to be concerned about there is that just with scrap prices. Can you tell us why maybe we can [indiscernible] a bit?

Well Timna I think we are actually a little confused by it as many of our customers are. And again it parallels last year.

and if you can answer why we saw four weeks of the industry, not just SDI but the industry saw a four week low, back then I think it's the same this year. My only explanation will be again anticipation of lower spot pricing in October just like take the foot off the pedal.

You see underlying demand. Underlying demand just doesn't change overnight.

I believe underlying demand into October last year, continue to on this path and that demand is in place today, this year as well.

Okay, so some seasonality you're saying is a contributing bidding factor.

Seasonality to me is seasons, which is two to three months or a quarter. This literally is four weeks.

Okay, fair enough. And then my other question was really about you and several of the other mills have been talking about targeting the Mexican market with new galv lines and so on, it's been quite a lot of activity in Mexico or near the Mexican border.

I just want to ask, I'm getting this questions from clients but are you hearing any - are you getting any concern over the NAFTA rework and what that might mean for your business in the region going forward?

I don't see any renegotiation in NAFTA impacting our business. The US, the Mexican are both incredibly dependent on each other.

There's a massive expansion of demand, of industrial activity in Mexico that the US is dependent on. So I don't see any inhibition of flow between the two country.

I just had a question on the merchant bar in B markets. Obviously pretty substantial price cuts at least in terms of the list pricing.

I know part of that was for pricing transparency, but wondering if we should think about any modest realized pricing pressure for you in Q4 or are you anticipating those prices are going to be reasonably stable versus where they were because pretty draconian kind of cut from our perspective.

I would agree that was draconian, but the impact will be somewhat flattish there could be some off the smaller consumers that see that drop, but there will be kind of an averaging out of just the pricing meeting whether the actual pricing is playing out.

I appreciate that Mark and follow-up from me is on the side of rail. I know that's tucked in the structural division right now and we don't have as much visibility on it, but just curious in terms of what you're seeing in that market in terms of demand and pricing dynamics.

Thanks very much.

Phil, this is Glenn Pushis. I would tell you that we're seeing it to be solid still through the year, but flat through the four quarter.

We anticipate next year to still see the standard stability that we've seen in the last two years. Obviously rail has it's challenges right now to rail roads on endeavour [ph] challenges, so they look to have basically a flat line through 2018 as what they're telling us.

So Phil from, actually an interesting point if you look at the structural and rail division shipment. You would have seen the typical there is seasonality within rail.

So the third quarter is always the weakest quarter in rail volume that the rail roads determine what they're going to be needing for the coming year. And so that additional bump in volume is really on the construction side, it's on the [indiscernible] which again points to the strength of the construction market itself.

So we would expect both rail and shipment back to improve.

I just wanted to ask, what your view was on the recent price from a competitor again to beat a dead horse, but do you think that we're just exiting this kind of one month air pocket and there is rationale in the market to take pricing higher?

Again not to be redundant, but the maximum environment at least would suggest to me that the pricing should already be higher than where we're today. We've seen this low, the aftermarket pricing came up some and softened.

It didn't come to the same sort of debt to softening that we saw last year that came up, not as much. And everything seems to be in place for a stronger market again.

China is reversed they've got sort of a better internal demand. They're absolute export levels of triple down and not just tripled down or probably I don't know half what they were last year, year-over-year and their pricing is, Asian pricing in general is appreciated.

View that's kind of come out of the debt of steel recession where they're seeing some positive movement, their pricing on a dilutive basis to the US is at par not more expensive than domestic pricing. And so the arbitrage really is just as I said earlier is just evaporated and if you look at the historic range of spread between domestic pricing and global pricing we should be much higher than where we are today.

Given the demand trend is positive, so the centers have come up a little, they're not at that historic low that they were two or three months ago, but they're still at a reasonably low level. And imports should be moderating, continue moderate and decline through the fourth quarter.

So I just see it setting up a very, very positive pricing environment for the first quarter of 2018 and all the way through 2018.

Right, so the global set up is great. But what about domestic recent scrap weakness being down $30, $40 a month.

Do you think that there is a little bit of pause in the market as clients might be waiting to get some of that benefit of the lower raw material cost passed onto them?

I think they have waited, but they are now returning to the market place. Russ, do you want to give some color on scrap?

Yes. I think certainly we saw a production in October, but our outlook is, we did fourth quarter here, it's going to get marginally stronger on the scrap side.

It will take a little bit of time with the outages that are out in the fourth quarter from the steel mills, we'll see a trend upward verse the fourth quarter. Certainly will add all steel mills.

I've noticed one of your potential suppliers is putting up $700 million towards plant in Toledo which resides on the Indiana border and spending another bit of money to expand production capacity in Canada. As you guys look as SBQ and flat roll and that sort of thing, sort of forward towards the future.

You see yourselves picking up market share in little end products a little flat roll, SBQ relative to integrated in the next five to 10 years.

Well I think we've shown that we've been picking up market share already and that will certainly continue, but obviously getting to sort of capped out position relative to volume, it's that three one-ish today and I think still tweak a little, but it's - those guys have been tweaking for 20 years. Amazingly tweaking for 20 years and I think we're sort of capacity there.

The Columbus sort of 3.4 million ton production capability today. So that mill really hasn't sort of pressed, we spent the last two years since we pushed the reconfiguring the product portfolio diversifying the market exposure and team's done a phenomenal job there.

They've done a phenomenal job developing new products and part of the shutdown here in fourth quarter is to change it according capability so that we can coil thicker, wider, higher strength materials so it's going to be expanding a product mix. So that mill will go into sort of optimization of productivity, so I think this is certainly volume growth there.

We will continue to penetrate and increase market share.

And Brett, we can't forget the tax as well, there is another probably 250,000 tons of capacity available at Texas [ph] so there is still room in the flat roll.

All right, so I mean sort of kind of point down at [indiscernible] degassing and various things added perhaps in the future what's with, they have 10 years from [indiscernible] dynamics [indiscernible] before.

Well we have degassing capability at the Columbus facility again we continue - industry continues to work its way up the quality curves so to speak, but we are able to supply pretty much anything on the car, today with the exception of the exposed skin. The exposed skin volume actually is kind of deteriorated over the last five to six, 10 years as plastics and other things have become dominant there.

And so the exposed volume total is not a massive part of the automotive segment and so we're really not missing add on much. Most of the car to be supplied by Butler and SDI phase.

Two questions. Just one on the electrode dynamic, you talked about sort of normal market pricing roughly 2X to 3X above, this year.

But we're clearly not in a normal market. So do you think that the contract price for next year would settle something meaningfully above that and have you guys thought about implementing electrode surcharge, to I think some of your competitors out?

We got someone [technical difficulty] but I think, when I say 2X to 3X. I believe that's probably the pricing range for 2018.

But again there's going to be a bifurcation I do believe between cold customers and sort of new entrants and probably folks in Europe and Turkey they might see a very, very different price. But I think two or three times could be an expectation for next year.

Okay and then with regards to capital deployment running pretty low leverage in balance sheet generating a lot of cash, do you see the potential for something more transformative in terms of the acquisition opportunity for you guys this year and what would be your comfort level in terms of I guess in the short run how much leverage you're willing put on the balance sheet?

You never know when opportunities arise, so timing wise I would say we - it will happen when it happens. I think, it should discipline in the past, we're not emotional and going and spend the cash because we got it on the balance sheet.

So we are going to be prude. I would tell you that the last 18 months the pipeline has been relatively full of opportunities and the pipeline remains full and we keep assessing different projects in three principal areas, one obviously steel, we can't forget that we are steel producers and teams have done a pretty damn good job at that.

They also do a phenomenal job at things processing sort of value add opportunities and then thirdly, there is a focus on manufacturing where we could increase our pull-through volume from our mills.

Curt regarding the leverage, we just add to that our there are preference for recycle, not leverage less than three times so obviously the capacity on the balance sheet with EBITDA $1.4 billion is significant enough for us to be able to do something transformative and yet, still be very strong I think from a credit profile. And in addition to that, as we are looking at all these M&A opportunities which are several, we also are still redeploying our resources through both positive dividend profile which we kept over the last numerous years as well as levering the repurchase program which you saw we utilized that more aggressively in the third quarter and then we were thinking that, that could be something that we do on a go forward basis as well.

My question is more about the infrastructure market. Obviously the US dollar was very strong making it attractive for Turkey to export over here on the long product side.

Obviously with the weakening of the US dollar become less attractive to them. Have you seen pricing began to expand in the infrastructure market and do you think that there is plausibly some demand some additional demand coming from the rebuilds and even on the auto side with all the cars that were lost in the storms.

Thank you.

But I believe certainly on the auto front. If the slide was up, different people report different numbers, but anywhere from 500,000 to 800,000 cars are lost.

Those folks will come back to market. Obviously there's a certain timing for insurance sort of reconciliation on all that process for them to come back.

So I would say, on the automotive side we're - asked to unfortunately we'll bring a little bit of bright light there and the rebuild we'll have an incremental impact on just construction volume themselves. I think we're forecasting just incremental growth in the products for 2018, no hockey stick.

Unless there were to be an infrastructure build and then it would be quite considerable.

Aside from the things that we're doing internally with the initiatives that we mentioned in structural and rail division.

Yes, that's just meaning that the market plays itself.

Right and have you begin to see pricing move up in those markets at all?

That thing is still relatively flat there.

A few more follow-up questions please. When it comes to the beam market given the continued import pressure that you've seen and the recent price cuts that had to be taken.

I was wondering if you can comment on why there is been no trade action here to-date. Is an area that you might be doing some work on, we could expect some progress into 2018 or is there a reason why there is going to be less progress in this direction for being what we've seen on the flat side to-date.

Within the beam market, it tends to be much more complicated process to prove injury. It's a very diverse fragmented industry about hundreds and hundreds of different fabricators out there.

And so just the process that bring a trade case is difficult, there is work being done on that. That's where in almost the sort of Section 232 could probably bring most benefits, certainly the most benefit to SDI because I do believe that the prefabricated structural and what I call straight - imports are going to be included, we believe.

It's great, thank you. And one more please.

I remember last quarter you had some challenges in the ramp up of Butler galv line and also the paint line in Columbus. Can you just confirm what are the status of these two projects and perhaps expected ramp up schedule into 2018?

On the galv line and Butler it was anticipated start up progress, it's actually moving along very well still, we expanded the capabilities of alliance. So as we get more experience, we will allow the sales force to go out and take advantage of that and that's proceeded exactly as we had hoped.

The paint line in Columbus is also doing very well. There is a lot of trials and approval processes that are involved as we enter into new markets in the Southern US and those trials are doing very well today as well, these are very complicated products.

So we've been having our customers in shops helping us and it's really been great opportunity for the team and all of our paint line folks have been circling back and forth between the various lines we have, so it's a great time and we think we are on a good progress to earn some awards for next year. So more and more of these are approved, we see the ramp up picking up.

So we kind of to the side, space for these as we get products approved and then we grow into them. So we don't want to let people down, but we're also pushing the team pretty hard.

Thing about timing perspective the paint line in Columbus we believe will be at basically full run rate by mid-2018 and I would expect that market depending you can utilize as much of that additional 180,000 tons of galvanized line capacity in Butler next year as well.

That's the plan. And the specific start up issue we had on the galv line painted product in the second quarter is absolutely totally behind us.

Recently the Chinese have really ballooned their exports of steel scrap, over 400,000 tons in August less than 900,000 for the eight months. Are you seeing any of that material coming here?

And in the past, there's been quality issues by grade and what have you with Chinese scrap? Can you talk about that a bit?

Well I don't think we've been a major consumer of Chinese scrap. We certainly have been a consumer of import of scrap from other countries at our Columbus, Mississippi market.

Russ?

We aren't getting any Chinese scrap at least in our regions, we may have seen some on the West Coast, but if any I think most of that stuff is going on Southeast Asia.

What about the quality? I guess if you haven't seen any, you wouldn't know how good they're doing as far as dividing up the different grades and what have you?

Chuck we haven't seen it to say one way or the other.

Thank you.

Well thank you, Doug. And again once again thank you for your time today and thank you employees for doing a phenomenal job in the quarter.

Again quarter-over-quarter the performance relative to all our peers was I think significant, shows the differentiation in our company. We are dependent on our loyal customer base, so thank you customers that may be listening and to the shareholders.

Again thank you for your support, we endeavour each and every day to make sure that we have a better shareholder appreciation than anyone else on the planet in the steel sector, so. Thank you.