1022671--2/22/2010--STEEL_DYNAMICS

related topics

{cost, regulation, environmental}

{gas, price, oil}

{condition, economic, financial}

{operation, international, foreign}

{debt, indebtedness, cash}

{cost, contract, operation}

{operation, natural, condition}

{system, service, information}

{stock, price, operating}

{acquisition, growth, future}

Risks Related to our Industry Our industry is affected by global economic factors including the risk of a prolonged recession. Our level of production and our sales and earnings are subject to significant fluctuations as a result of the cyclical nature of the steel industry and some of the industries we serve. The scrap metals recycling industry has historically been, and is expected to remain, highly cyclical. A prolonged period of currently low scrap prices or a further fall in scrap metal prices, such as the one that began during the latter part of 2008, could have a material adverse effect on our metals recycling operations' results. When inbound scrap flows are weak it reduces our ability to obtain, process and sell recycled metals. Imports of steel into the United States have in the past adversely affected, and may yet again adversely affect, U.S. steel prices, which could impact our sales, margins and profitability. China's current steelmaking overcapacity in relation to its steel consumption could have a material adverse effect on domestic and global steel pricing and could result in increased steel imports into the United States. The worldwide economic downturn that began in 2008 and the difficult conditions in the global industrial, capital and credit markets that resulted, have adversely affected and may continue to adversely affect our business and our industry, as well as the industries of many of our customers and suppliers upon whom we are dependent. Volatility and major fluctuations in scrap metal and pig iron prices and our potential inability to pass such higher costs on to our customers may constrain operating levels and reduce profit margins. The cost and availability of electricity and natural gas are also subject to volatile market conditions. Fluctuations in the value of the United States dollar relative to other currencies may adversely affect our business Compliance with and changes in environmental and remediation requirements could result in substantially increased capital requirements and operating costs. Increased regulation associated with climate change and greenhouse gas emissions could impose significant additional costs on both our steelmaking and metals recycling operations. Risks Related to the Business Our senior secured credit agreement contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility. We are exposed to risks associated with the current financial crisis We may face significant price and other forms of competition from other steel producers and scrap processors, which could have a material adverse effect on our business, financial condition, results of operation or prospects. We are subject to significant risks relating to changes in commodity prices and may not be able to effectively protect against these risks. We may be unable to pass on increases in the cost of ferrous materials and other raw materials to our customers, which would reduce our earnings. The profitability of our metals recycling operations depends, in part, on the availability of an adequate source of supply. Competition from other materials may have a material adverse effect on our business, financial condition, results of operations or prospects. We may face risks associated with the implementation of our growth strategy. Technology, operating and start-up risks, as well as commodity market risks associated with our Mesabi Nugget ironmaking project may prevent us from realizing its anticipated benefits and could result in a loss of all or a part of our investment. We are subject to litigation which could adversely affect our profitability Unexpected equipment failures may lead to production curtailments or shutdowns Some of our operations present significant risk of injury or death. Governmental agencies may refuse to grant or renew some of our licenses and permits. Our common stock price may fluctuate substantially. Payment of dividends will depend on our future financial condition and performance.

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1022671--2/22/2010--STEEL_DYNAMICS_INC