Steel Dynamics, Inc. has adjusted its outlook for the first half of 2005. The new guidance forecasts lower than previously expected first quarter results, but a stronger and substantially improved second quarter.

Steel Dynamics now expects first quarter 2005 diluted earnings per share to be in the range of $1.10 to $1.20. — well above the $0.58 earnings per diluted share reported in the first quarter of 2004. Expected results have been downgraded below previous guidance due to soft market conditions lasting longer than previously expected; higher than expected raw material costs; and unplanned production outages that will result in reduced shipments.

The company expects second quarter 2005 results to be substantially stronger than the first quarter, up some 30 to 40%. With an outlook including lower imports and sustained strength in domestic steel markets, full-year 2005 earnings could match or exceed 2004's performance.

Steel markets have been slower to rebound than what would be expected for the season. As a result, average selling prices and shipping volumes will be somewhat lower for the quarter than previously projected. Soft market conditions have persisted as service centers and end users of steel products have been working off excess inventory created by substantial imports in the second half of 2004. SDI continues to believe that steel markets will improve in the second quarter as inventories are consumed and end-user demand remains strong in the domestic and offshore markets.

Lower prices paid for scrap purchased in the first quarter will begin to have a significant positive impact on the company's production costs in the second quarter, thanks to Steel Dynamics’ use of the FIFO (first-in-first-out) method of accounting for inventories. The unplanned production outages that occurred due to equipment problems at flat rolled and bar products production facilities have since been corrected.