Nick Harper - Manager of IR John P. Surma - Chairman and CEO Gretchen R. Haggerty - EVP and CFO

David S. Martin - Deutsche Bank Michael Gambardella - J.P. Morgan Securities Inc. John Hill - Citigroup Timna Tanners - UBS Aldo Mazzaferro - Goldman Sachs Charles Bradford - Bradford Research Michael Willemse - CIBC World Markets

Ladies and gentlemen, thank you for standing by and welcome to the United States Steel Corporation's First Quarter 2008 Earnings Conference Call and Webcast. At this time all phone participants are in a listen-only mode. Later there will be an opportunity for your questions. Instructions will be given at that time. [Operator Instructions]. As a reminder, today's conference is been recorded. I would now like to turn the conference over to Nick Harper, Manager of Investor Relations. Please go ahead sir. Nick Harper - Manager of Investor Relations: Thank you Gayle [ph] and good afternoon and thank you for participating in United States Steel Corporation's first quarter 2008 earnings conference call and webcast. We'll start the call with some brief introductory remarks from U.S. Steel's Chairman and CEO, John Surma. Next I'll provide some additional details for the first quarter and then Gretchen Haggerty, U.S. Steel's Executive Vice President and CFO will comment on the outlook for the second quarter. Following our prepared remarks we'll be happy to take any questions. Before we begin however, I must caution you that today's conference call contains forward-looking statements and that future results may differ materially from statements or projections made on today's call. For your convenience the forward-looking statements and risk factors that could effect those statements are referenced at the end of our release and are included in our most recent Annual Report on Form 10-K and updated in our quarterly reports on Form 10-Q in accordance with the Safe Harbor Provisions. Now to begin the call, here is U.S. Steel Chairman and CEO, John Surma. John P. Surma - Chairman and Chief Executive Officer: Thanks Nick. Good afternoon, everyone. Thanks as usual for joining us. Earlier today we reported substantially improved first quarter earnings $1.98 per diluted share compared to fourth quarter 2007 earnings of $0.29 per diluted share. Other items not allocated in the segment results included a previously disclosed $45 million pre-tax litigation reserve and a $17 million pre-tax charge for inventory transition effects, related to the acquisition of U.S. Steel, Canada. These two items reduced net income by $45 million or $0.38 per share. In addition, net interest and other financial costs in the first quarter of 2008 included a foreign currency gain that increased net income by $70 million or $0.59 per diluted share, that was on the re-measurements of a US $1.1 billion denominated inter-company loan to a European affiliate and related euro, US dollar derivative hedge positions. We are disclosing this separately because it is a new item, and we will have continuing re-measurement effects for sometime. Now turning to our segment results, we had a solid and much improved quarter with operating income of $327 million or $48 per ton. We operated at 92% capability in North America and 103% in Europe, a significant improvement over fourth quarter operating rates of 82% and 79% respectively. Our Flat-rolled segment earned operating income of $120 million, more than double fourth quarter results. Compare to the fourth quarter, first quarter average Flat-rolled pricing increased by $19 per ton to $646 per ton, this reflected the initial effects of rapidly increasing spot prices as well as a full quarter of shipments from U.S. Steel, Canada. Our Canadian business includes a higher relative proportion of semi-finished and hot-rolled products which have lower absolute selling prices than cold-rolled or coated, but health and growing margins. Raw materials and energy costs also increased. The integration of U.S. Steel Canada is progressing as planned, and we are on track to achieve over $100 million of run-rate synergies by the end of 2008. As discussed on our last call, we experienced some production issues in Canada in the fourth quarter. Those issues are now well behind us as we operated at 93.5% of capability at U.S. Steel, Canada in the first quarter, the highest operating level for those facilities in recent years. We have also now completed most of the order book we inherited with the acquisition. North American steel market fundamentals continue to improve during the first quarter with spot hot-roll pricing increasing dramatically by as much as $110 per ton from December to March, including $30 per ton in both January and February, and $50 per ton in March. As widely reported by industry publications, spot hot-roll prices are now moving well above previous record highs in the second quarter. We anticipate that our second quarter flat-rolled average realized price will track a sharp increase in spot market pricing which affects about 50% of our shipments. Flat-rolled inventory and imports are both at historically low levels. Imports continue to be affected by high ocean freight rates, the relatively weak US dollar and the strength of global steel markets. The sustainability of this trend will depend to some degree on the strength of the North American economy, particular for the second half of the year. Given our more attractive cost position in dollar terms, compared to the rest of the world and strong export market conditions, we should be able to operate at higher levels than in the recent past and our North American raw material position should insulate us from a portion of the raw material cost increases, particularly scrap that impacts many of our competitors. Our first quarter European segment operating income was 161 million or $98 per ton, a significant improvement compared to fourth quarter. First quarter European shipments increased by 250,000 tons and average realized prices increased $39 per ton, including favorable currency effects. Cost efficiencies from a record operating performance of 103% of capability helped to offset the rapid rise in raw materials cost. First quarter our European end markets remained stable. While fewer imports and a surge in steel making costs helped drive spot steel prices to much higher levels. These factors, particularly significant increase in raw materials costs have some market observers predicting additional price increases in Europe. We continue to monitor the commercial environment to ensure that our pricing remains in sync with the European market. In Europe we are more affected by purchased raw materials cost, but our spot market exposure at approximately 70% is also higher than in North America. Turning to our Tubular segment; during first quarter we earned $51 million or $170 per ton on shipments of 433,000 tons. A decline in first quarter results compared to the fourth quarter is mainly due to the rapid increase in costs for semi-finished steel which outpaced the price increases announced during the quarter. Since November of the last year we announced a series of tubular price increases for most sizes and applications, ranging from $430 to $675 per ton. In addition, recently we announced a $250 per ton second quarter surcharge for all tubular products. The surcharge is effective with May 1st shipments. The increases were intended to recover sharply higher costs primarily for semi-finished steel and in particular for the high-alloy components of our product line. The higher prices are supported by market fundamentals as tubular demand has picked up with the starts of 2008 drilling programs. Now I will turn the call over to Nick, for some additional information about the reported results. Nick Harper - Manager of Investor Relations: Thank you, John. Capital spending which is detailed by segment in the earnings release total $127 million in the first quarter. Our current plan for 2008 has total capital spending at approximately $940 million, with $675 million from North American operations, and $265 million for European operations. Depreciation, depletion and amortization cost totaled $156 million in the first quarter and are expected to be about $635 million for the year. Defined benefit and multi-employer pension and OpEx cost for the quarter totaled $48 million. We made cash payments of $78 million for benefits primarily for retiree healthcare during the first quarter and $21 million in required pension contributions. Also during the first quarter, we made a $35 million voluntary contribution to our main defined benefit plan and a $30 million contribution to AVIVA. Additional details will be included in our 10-Q which should be filled later today. First quarter net interest and other financial income totaled $32 million including $76 million of favorable foreign currency effects. Net interest and other financial costs will continue to be impact by foreign currency accounting re-measurement effect, partially offset by the use of euro, US dollar derivatives. At March 31st, 2008, U.S. Steel had open euro, US dollar forward sale contracts with a total notional value of approximately $571 million. Excluding foreign currency effects we expect second quarter net interest expense to be about $45 million. Our annual effective tax rate for the balance of 2008 is projected to be approximately 25%, although some discrete items lowered our rate in the first quarter. Lastly for the quarter we have reached 118.5 million fully diluted outstanding shares. Now Gretchen will review some additional information and the outlook for the second quarter. Gretchen R. Haggerty - Executive Vice President and Chief Financial Officer: Thank you, Nick. As noted in the earning released, we re-purchased 305,000 share of common stock in the first quarter for a total cost of $33 million. This brings our total repurchases to 14.5 million shares or approximately $850 million and represents more than 11% of the balance of fully diluted share outstanding, when we authorized the original purchase program in July of 2005. As of March 31st, 6.2 million shares remained available for repurchase under the current authorization. Turning to our outlook, we expect that segment income from operations will increase substantially compared to the first quarter of 2008. As realized price increases are expected to surpass the continuing increases in scrap and other raw material cost. Second quarter flat-rolled results are expected to improve significantly from the first quarter as high... higher spot prices are realized throughout the quarter. Operating levels and shipments are expected to be comparable to the first quarter, while raw material and energy costs are expected to increase. For U.S. Steel Europe, we expect second quarter results to be higher than the first quarter on increased prices and comparable operating and shipping levels despite higher raw material cost. We expect second quarter tubular results to be improved over the first quarter as higher prices in shipment are partially offset by further increases in cost, principally for semi-finished steel. And then finally results for other businesses are expected to increase primarily due to normal seasonal improvements at our iron ore operations in Minnesota. With that Nick, I'll turn over to you. Nick Harper - Manager of Investor Relations: Gayle [ph], could you please queue the line for questions. Question And Answer

[Operator Instructions]. We have got David Martin with Deutsche Bank. Please go ahead. David S. Martin - Deutsche Bank: Yeah, I wanted to start by coming back to your comments about the ability to capture higher spot prices in the second quarter. I think there continues to be quite a bit of confusion about how pricing trends in the market will roll through your books. And based-off of John's comments about the kind of pricing trends... late in the first quarter into the second quarter, looking at your published prices from say at the beginning of the March until now, prices in the spot market may be up $300 plus per ton. Is it accurate to think that 50% of your business, those types of price increases will be realized? John P. Surma - Chairman and Chief Executive Officer: Hey David, this is John. I think the spot mix in the North American flat-rolled sector is about 50, 50 and by spot, I am saying we are into a monthly spot transaction pricing or shorter-term index based pricing, but about half would be spot based. And I just think, it's important to remember that even in the first quarter, there were a series of price changes that were effective throughout the quarter and even though there were prices announced that were effective in March, they would affect only March business. Likewise there were price increases announced and price increases we were putting through in the marketplace, in May and June, it will be effective just for May and June. And so important to weight those for the period during which they are effective but having said all that we are about half-spot, while half-market [ph]. David S. Martin - Deutsche Bank: Okay, and then secondly, I know you commented that production levels and operating rates in the second quarter should be similar to the first. How about for the balance of the year? Do you have any significant outages planned or will that basically depend on market conditions? John P. Surma - Chairman and Chief Executive Officer: The only think that we're working on in... at this point is last furnace outage in Slovakia, one of our three furnaces that is ready for it and probably would be in August start all though we could move that around depending on what happening and our point of view do the job, but nothing of great consequence right now in North America. It could change but nothing right now on the one larger project in Slovakia later in the year. David S. Martin - Deutsche Bank: Okay, thank you. John P. Surma - Chairman and Chief Executive Officer: Thanks.

And we will go to Michael Gambardella with JP Morgan, please go ahead? Michael Gambardella - J.P. Morgan Securities Inc.: Yes, good afternoon and congratulations. John P. Surma - Chairman and Chief Executive Officer: Thanks Mike. Michael Gambardella - J.P. Morgan Securities Inc.: Couple of questions, one in the fourth quarter you had a lot of production outages and you haven't... you didn't declare force majeure on those outages. So, I assume that when you ship that product in the first quarter, that it was priced at the old fourth quarter pricing, is that correct? John P. Surma - Chairman and Chief Executive Officer: Generally that would be correct, Mike the... some of the outages that we had that were planned and we make provision for that and ensure that we can serve our customers needs and make the order dates in those cases. Where we had something that was not planned which was particularly in Canada, there some of the order booked would have carry over, in fact did carry over and that really had dampening effect on our first quarter realized prices. Michael Gambardella - J.P. Morgan Securities Inc.: Can you quantify the impacts from Canada of those outages and the flow through of the tons as well as the -- they had pre-booked I guess some lower priced product that you are just about done with now? John P. Surma - Chairman and Chief Executive Officer: We are... I mean there is a little bit of carry over perhaps into the current quarter. But it will be, I think lost in the larger scheme of things. I can't give you any real numbers, Mike accept to say that there were certainly some commitments on finished products as well semi-finished that were quite a bit below what the pricing structures were to prevail during the first quarter. Undoubtedly had a dampening effect but that's behind us I think the full impact of these spot prices on our Canadian book, which is largely more spot oriented book than the U.S. business will have a quite of positive impact. Michael Gambardella - J.P. Morgan Securities Inc.: And the next question, Just on... you mentioned that you are going to implement a $250 per ton surcharge on your tubular product as of May 1st shipments? John P. Surma - Chairman and Chief Executive Officer: Right. Michael Gambardella - J.P. Morgan Securities Inc.: One of your big competitors, Mittal [ph] has already, publicly stated they are going to do the same for their flat-rolled business. What you are doing with your flat-rolled contract business? John P. Surma - Chairman and Chief Executive Officer: In the flat-rolled-- Michael Gambardella - J.P. Morgan Securities Inc.: In regard to surcharges. John P. Surma - Chairman and Chief Executive Officer: With respect that matter, across the tubular market and sector much different than the flat-rolled sector but with respect to flat-rolled our policy is... has been to attain the market price... in as rapid manner as is consistent with our arrangements with our customers. We think this requires a customer-by-customer discussion to insure we get to the market price in a time that's appropriate, but also considers our relationships with our customers. And we are going through that right now, customer-by-customer, it would be I think [indiscernible] for me to get into too many details on that. But I would just ask you to remember, in 2004 the market went through a similar period of adjustments, percentage wise maybe even of greater magnitude and it took a while for that process to take hold, work it's way through, re-work it way... all the way through and eventually got to market price in all of our sectors. We are about there right now. We prefer to do it customer-by-customer and that's really is as far I want to take that. Michael Gambardella - J.P. Morgan Securities Inc.: And just last question, what you are going to do with all the cash you are generating? John P. Surma - Chairman and Chief Executive Officer: I will turn that over to Gretchen, she is much better to address the line. Gretchen R. Haggerty - Executive Vice President and Chief Financial Officer: Mike, I think that we are going to keep doing what we have been doing. And of course using it in as balanced a fashion as we can and that's going to involve spending some capital. We expect that we would be spending $940 millions on capital this year which is substantially up from last year and we continued our share repurchases, we have dividend increase, will probably pay down some debt this year and associated with the acquisitions that we made last year and we do have $140 million of pension funding plans for this year we did $35 million of that in the first quarter and we will do the balance over the balance of the year as we think appropriate... but I just would say probably more the same and we will tend, we will tend to do that just kind of bit by bit over the quarter and so cannot may be anything to dramatic in any one quarter.

And we will go to John Hill with Citi. Please go ahead. John Hill - Citigroup: Yes, thank you and good afternoon and thanks for great call.

Thanks for us. [ph] John Hill - Citigroup: Well as it's nice to see a down payment on all the hard work you guys are been doing.

Thank you. John Hill - Citigroup: I was wondering if we could just talk about Europe for a moment our results were quite solid in terms of expansion of that segment income per ton yet the news media seems to be filled of stories in Europe of that illuming slow down with auto sales and homes in tax distributors and heavy equipment demand down etcetera. What do you see in Europe on the demand side, how is the order book... how lead times etcetera.

First demand and order book and lead times are all essentially as they were in the first quarter for a little bit of last year demand has remained reasonably firm in all part of Europe, central and south toward the Balkan's demand is construction oriented industrial manufacturing in growth oriented auto sector in particular in Slovakia. So we have a number of positives working for us about maybe quite a sensitive where we are on the export front or the higher Europe might be a little bit more of a, of the problem so, demand has remained pretty good, order rate has been fine, at lead times everywhere for almost everything are not for out just because with the high prices and inventories where they are customers particularly in intermediary customer service centers, stockiest in Europe tend to be trying to keep inventories at minimum they got perfectly fine so, order fronts [ph] are not far we don't think we see much double ordering those kind of things, so I would say the commercial conditions in Europe are okay. John Hill - Citigroup: And a great perspective...

And again our part of view. John Hill - Citigroup: Understood, and then [indiscernible] just swinging over to Canada and the Stelko acquisition despite that they will roll through some of those inventory effects and it will now going to see what that can contribute to their company but how should we think about the margin objective there in terms of EBIT per ton it has a lower price, a product that you indicated that you are quiet pleased with the margins, is it superior operating income per ton to the average in North America or in line with it?

That's a good question guy, I think you have to be within the context of the current market conditions, the current market conditions higher spot prices and ability to export or land some are finished in locations that are yield back quiet a reasonable margins to us, they set up these condition setup extremely well for our operation Canada and in each particular market conditions which higher spot exposure and more basic product mix on the hot-rolled side, we can probably do very-very well on Canada maybe if we compare to that way, perhaps in these particular conditions a little bit higher than in our traditional U.S. business but I mean, both are going to do quite well in the second quarter. But these conditions setup extremely well for our Canadian position. John Hill - Citigroup: Thank you.

And we got Michele Applebaum [ph] with Mortgage Asset Research Institute. Please go ahead.

Sure that sounds good.

Hi, Michele.

Hey listen, a couple of questions. I think we all completely get that sitting here debating your contract customers 20 years I know we don't talk about that on the conference call. But if we could move up a little bit and try to talk conceptually I think we are seeing a kind of reversion back to the days of what we used to call pricing effect. Wouldn't meant pricing effect on they have shipment, so if an order was placed here when I got in to the business if the order was placed three months in advance like it is today the pricing would be whatever the price was when the order where shipped its contract business, its kind of new ankle [ph] its only been around since the mid 80s. And it's a very deflationary construct that came about in a very different environment. What are your competitors AK as when as far and obviously there are more waited to contract pricing than you are. They went as far as saying this is probably going to be a thing of the past, in the near future. And you are seeing particularly in the fleet side the surcharges instantaneous surcharges create that effect in the market and you are not seeing a lot of resistance at the consumer side because they are tangents [ph] and what's going on, can you talk conceptually about that and just gives us your thoughts on pricing mechanisms in the next few years? John P. Surma - Chairman and Chief Executive Officer: It's a very interesting subject, Michele there is been lots reported in the trade press about, not anything we said of course, we don't want to talk about that, just in this environment. I would say that these are quite turbulent times in the marketplace, major changes on inputs, major changes on market price levels. As we did back in '04 when we had a major change in construct, we went through and explored some different pricing mechanism, some of which are quite useful for us today on the index and otherwise. But just in generals [ph] we go through a customer-by-customer, sector-by-sector, we need to make sure we can find a way that allows to get the market price for our product because that's we're about, and our customers need to find way to get their product, into their markets at a price that allows us both to do well. That's, I think an objective we would all have. And it might well end up with some different kinds of pricing mechanisms in certain sectors that are different than what we used today, there is been some, talk about, in Europe, particularly on the packaging side about how at least the timing or the nature of those price forward commitments might be made. I think that's reasonable discussion that we'll have with our customers, customer-by-customer overtime at the end of it, there is new or different mechanism or one that we expected your memory better than of mine. I don't know Michelle, but I think it's probably a matter that will have some discussion, I think that's fair point.

And, would you go as far as saying a year from now, if things stayed the way stay we won't have this risk where you're kind of bearing the commodity price risk, that risk flow, at least be appropriately shared? John P. Surma - Chairman and Chief Executive Officer: I couldn't put a timeframe on how or what shape of discussions might Michelle. But I think when we do have this type of commodity price risk on the input side that we all are bearing these days, there needs to be a mechanism to ensure we think for our product at least that we can get the market price for our product and again that may well yield a different mechanism, whether it's a year or not I really don't know, its kind of hard to say.

One more question unrelated, on the operating profit per ton side in the flat-rolled business, to the extent that I do acknowledge and see to your point that we don't know exactly what the sheet -- carbon sheet results are for any of your peers because they are not broken up publicly how do you think U.S. Steel flat-rolled did in the quarter given the integrated positions and what would I guess just how would evaluate that? John P. Surma - Chairman and Chief Executive Officer: I think our operations is performing extremely well, I think our plants are running well our operator responds to job, our cost because of the higher utilization rates and because of some raw material stability were quite favorable particularly if you look at it in dollar terms compared to the rest of the world. I think we can do better in terms of our commercial position and with some of our product groups in some our broader allocations in material of different sectors have yielded us and that's going to be part of our job to ensure that we have our products in the right markets over the long-term. Strategy doesn't just involve acquisitions, depositions and building plants it also involves commercial positions and I think that's a subject we are going to be looking at. But I think in general our first quarter performance was quite good, I think our second quarter performance might be worth another look, once we actually make 3 or 4 million more tons of steel and sell that like we intent to you might just hold that thought, see how we look at second quarter.

And we will go to Timna Tanners with UBS. Please go ahead. Timna Tanners - UBS: Yes, good afternoon. I wanted to ask two questions one was about the labor agreements to the labor discussions that should be upcoming as I understand you are already kind of looking to prepare for that. Can you tell us what you are hearing the unions talking about in terms of things they are looking for and what you might be looking for into those negotiations and then the second question really relates to -- you can talk to us about your metal [ph] and coke positioning vis-à-vis in the 2009 contracts and 2010 positioning. Nick Harper - Manager of Investor Relations: Okay, with respect to the labor contract, it's very early there are some sort of defined mechanism where we share higher level of conversation about objectives and plans. That really won't take place for little while yet. I think the discussion will no doubt around thing like economics and productivity and all the things we normally talk about. I think it's too early to really have anything definitive on that subject I think we will do -- have a good discussion, but our objective is to have a fair and competitive contract which we think we have something like that today that worked quite well for both employer and employees, since 2003 and our objective will be to have a competitor contract going forward for whatever period we have negotiate. So it's little too early. I think the next time we get together and this forum we would be in a position to have a... I hope a more certain discussion about it. But I think what we want is competitors contract of where our employees are fairly compensated in a safe work environment and with both do well over time. That's what our objectives is, I think we have had for the last five year and [indiscernible] respect, but respect to coal and coke, I will just speak North American for a moment... don't have the number actually absolutely fixed in my head but we do have some commitment on coal in to 2009 and it would be less than half probably of our consumption requirements and less than that in the 2010. May be its plus or minus around the number, but less than in 2010, we do have coke requirements committed throughout 2008, but very little in terms of priced coke in 2009 and very its not that I am so I could think of coke for 2010. We do have some suppliers to work with for decades and we are quite comfortable with them and they are comfortable with us. But for most carbon for us 2008 is pretty well looked after, we still exposed the bid on some pricing on coke 2009 some coverage lesser in 2010.

Okay, so better leave [ph] with discussion, just on clarify that there is some out there with the view that there could be labor stoppages with all the upcoming discussions again more in the third quarters as you mentioned. What would you say to that kind of concern I mean do you think that you are that far positioned, I mean that you are that far part on the topics at this time going into the negotiations?

Well, the one thing I know with complete respect is that whoever saying that is doesn't work for our company or for the unit. So I think that discussion really is between us and are we need to represents our employees and their objective is on our fair contract. And they wanted to be working we want them for. So I'm just not prepared to engage, in that kind of hypothetical at this point I don't think it's productive for us or employees or anyone else.

But I think John for last number of contracts that we had three or four weeks finished early?

Yes.

And we will go to Mark Prior [ph] with KeyBank. Please go ahead.

Hey thanks very much. Good afternoon.

Hi Mark.

Hey John I was wondering if you could give us an update on the refreshing of the iron ore or the taconite situation going on up in Minnesota and just a follow-on Tim's comments around met coal and coke could you give us your view on iron ore exposure globally as you look into '09 and 2010? John P. Surma - Chairman and Chief Executive Officer: Sure, we are on, in the first instance with respect to the expansion at our [indiscernible] plant we have what amounts to a mouth [ph] fold [ph] in to rating line tell us line and we are in the process now doing some engineering on being able to restart that line refurbish it and then do all the environmental emissions requirements that go with it, and that would yield us about 3 million tones per year of additional pellet capacity, the really the governing factor of how rapidly we can bring up the provision is going to be the permitting program process which is very important and we are going to play by the rules or even beyond the rules and that is under weight, we are working hard on that and I think we have given some disclosure about that in our 10-K as well but I think the permitting process which is necessary we need to go through and that will have a some lengthy time line to it, in the mean time we are going to be doing engineering and to the extent necessary ordering some long way time equipments some of the processing that we have more then sufficient tech and I [ph] reserves to develop the real issue is getting the inner rating line refurbish back in business and then take is the is the question on the permitting which were about so I cant give any specific dates but that's where we stand, on the... with or without that North American position with our two very productive facilities in Kuwait and mid tech [ph] together with our equity interests in and till [indiscernible] depending on how heavy we are writing it before spinning out a little of the consumption, we are imbalanced if we are running very high we might be slightly short if we are not running full we might be slightly long that North America were in very good shape, this additional 3 million tones of very high levels will keep us completely on our own material and if we are long we can I am sure sell it and at least some prices in this market. In Europe we are essentially working on annual commitments with suppliers to the ease with typically quarterly pricing no real fixed commitments on pricing there over long periods of time we generally have quarterly some times a bit longer and the supply relationships have been very good for a very a very long period of time and we would expect them to remain that way in the future.

Is your pricing in Europe more comparable to the, to the ocean bond price or the spot market price.

It would be really not comparable either but it would be established certainly by reference to the sea born price lesser served than spot price and we typically have had a metallic pricing into our plans and transportation included that might be a bit below the sea born material as we would measure at least into the custom plans in Europe and Asia just because the transportation is little bit more efficient but as those prices sea born prices are higher ours will be high as well.

Okay if I could just say as one other cost on the input side and I appreciate all that color, natural gas prices have not been kind of rolling over or like they many times do into the spring heading out into the summer and I am just wondering if, if you have thought or given much thoughts strategically or at a high level to vertical integration in natural gas or if just in addition to that if you could talk a little bit about the potential impact of higher natural gas costs in the next several quarters?

Sure, as you know we are large gas users now if I roll in Canada and Europe I Probably 100 million mmbtu or something like that so a dollar on the strip for us will be $100 so its an important issue for us we haven't given any serious thought to getting back in the oil and gas business, we off course were there at the [ph] the colleges from Athon [ph] for several decades we are I think reasonably positioned at what we do, making and selling steel by getting into exploration production taking on reserved risk in the like I'm not sure is something that we have much of an appetite for although we have so much capital left would be in the purpose used for us, we do try to measure ourselves a bit by buying forward and the fiscal market to much paper work, in a physical market we try to make sure we shave [ph] off a little bit of the exposure on the natural gas inputs, remember of course though that our [indiscernible] positions the largest CDG [ph] position in North America is largely a gas oriented position in those strong gas prices are now moving to drilling programs a long quite rapidly and we expect that would be a good reward for us [indiscernible] side as gas prices if they stay high, we are likely to get some of that back and we like that, so the internal hedge we have built into our position.

We will go to Bob Richard with Longbow Research. Please go ahead.

Good afternoon and thanks for taking our call.

Hi Bob.

Are you able to answer what your domestic flat-rolled sales mix was for the first quarter hot roll versus cold rolls versus [indiscernible].

We really look at in the 10-K on an annual basis and we don't stage relatively stable if you look through the 10-K outline that we give you probably it would be a whole lot difference in that some seasonality I think in the current environment with some of the higher valued products appliances and automobile and others being down a bit, we probably have a 2% on the mixed of the swung more into hot rolls or [indiscernible] and that's we are trying to be helpful from a released price stand point but overall mix in our traditional U.S. business would be a whole lot difference saying that just marketing this change, Canada would have a higher exposure on hot roll and trade cold roll and we would have had in the U.S traditionally and those two are coming together now, you will begin to see comparable quarters from now on because we had a full quarter of those operations running forward in the first quarter.

Okay, thank you for that and one follow-up, I appreciate your point 50-50 that's what spot versus contract, is that pretty much the same across all product types -- I would have imagine more hot rolled sold in on spot than cold roll over gallon and 10 of course the small part is all contract are you able to share may be qualitatively, how those are different.

I think your assessment is value is too little [ph] in correct starting at the top most 10 play which versus going down to your business is largely on contracts or -- contract types and more of the because almost all the electric galvanized much of the entire and hot-dip would be on automotive and other sectors that would be more contract oriented. This spontaneous [ph] would be more in the hot-rolled and trade cold roll but they would also be particularly galvanized or they going to the construction sector which would be either spot or shorter-term contracts and indexes but your general thought I think is intuitively correct.

Hey thanks a lot and best of luck.

Thank you.

We go to Aldo Mazzaferro with Goldman Sachs. Please go ahead. Aldo Mazzaferro - Goldman Sachs: Hi, thanks John. How are you?

Hey Aldo how are you doing. Aldo Mazzaferro - Goldman Sachs: See why don't you just help me clarify little on the Tubular. I taught I heard you say that you raised prices 400 to 465 and I am wondering when that is effective and I am wondering whether that's in addition to the 250 surcharge.

I guess the effect would be to say correct the two fifties in addition to those, those price increases for per again different products, different markets they were begin late last year probably November, December something like that and there was series and then the 250 surcharge effective May 1st on shipments was really on top of that those in portions in realize the different levels in the market depending on the product and new arrangement of the customer to 250 is on top again. Aldo Mazzaferro - Goldman Sachs: Great, and do you think of that, those November, December prices you served a portion of that in the first quarter or all of that over?

Some, but on some of the drilling programs we might have committed to, may be not all [indiscernible] is necessary to cover our increased cost and impart at least the surcharge design that get us to what we perceive at the market more cleanly and more evenly. Aldo Mazzaferro - Goldman Sachs: Great, and then a similar question on Canada John could you, I mean, I noticed how your domestic fiber pricing was below my estimate, yet your profit return was above and I am wondering like how much of your, of that Canadian mix would be impacted by those old pricing that are rolling over now?

Well, I actually, don't have because we don't sort of keep track it with that way but there was some portion of our business in Canada whatever the number would have been, if our shipments in Canada were a billion tones or something like that, it probably was a sort of bit or something that would have been carried over because some commitments carried over, but also we didn't make and ship everything in the book December because of the production disruptions. Aldo Mazzaferro - Goldman Sachs: Great. And then just a quick one on the retiree benefit line that $1 million credit you ended up with, is that likely to continue through the year as a result of funding I take it?

Well, and I see other change there, Aldo that that we talked about last quarter was as result of the national benefit trust agreement that, well, we continue our funding related to that, it was running about 15 million in quarter or like that, that expense will no longer continue. Aldo Mazzaferro - Goldman Sachs: I see. Okay, then finally, just one last one, on your, on the strategy you undertaking, I noticed you made some changes in the commercial side, and does that have any applications on your ability to realize prices more quickly, do you think?

We hope so, when you step back and look at what we did, last year we added what amounts to a very large consuming location in Texas and the related facilities a million tones per year overall plus or minus and now we have a large, two large producing locations one of which has a long position of about 500,000 to a million tones of slab, in Canada and with the world market now we are because we really are in Canada and our access position we are in reach of export markets logistically in a much better way then we might have been in other locations, having a separate global marketing position is designed to allow us to optimize our global steel make every day as we go through it and ensure we are getting raw material on the highest yielding markets with what we are making, we are just going through the process now of optimizing help us to do that its largely a North America exercise but because of the much different position with the dollar, Europe is not as far away, or even Latin America as might have been before from a cost end point, so our new position, our new organization is designed to allow us to ensure that we are getting the highest optimum values for our steel make each and every day and we are just are working our way through that right now, its much better be doing at part of [ph] like this.

We will go to John Tomasus [ph] with John Thomasus Independent Research. Please go ahead.

Congratulations to the plant people, that around almost [indiscernible].

I agree with you John and I will pass your comments along, because it's spent after job building.

Could you venture I guess as to trying to make this simple of corporate average cost per tone in the second quarter, do you think it will rose $20 or $40 or just a with the [indiscernible]?

I am not sure just on a total corporate basis, John.

In other ways easy for you, John.

Let me just say for the record first, lets keep sort of exchange rates where they are because we get things in to dollars that could have an effect in our routine of and we see them in a dollars higher just because of the much strong as euro even though they are extremely competitive cost in the local market, but holding that aside for a minute, the cost will certainly be up in Europe will also be up in the U.S. for gas for alloys which did used to be big deal but are today and also for subscribers will be the three things that I think would be the most significant cost increases, how much I just can't say I think I can say with some confidence that will be up a lot less than price will be up. [indiscernible]

And honestly I think directionally it's probably more than your 20-40 the way the input cost are been looking.

This was scrap in gas loan if you take with the movements in the market prices are with the requirement per ton for what we make it probably would be bit more than that.

Thank you.

We will go Charles Bradford with Bradford Research. Please go ahead. Charles Bradford - Bradford Research: Hi, good afternoon.

Hi, Charles. Charles Bradford - Bradford Research: I've couple of questions to lay off, what's the situation up in Canada would rather once Telco [ph] and cost triggered by the first is seasonal does that become reversible at any point or what's the situation obviously I understand about the loses?

Sure. Charles I think its probably best that I refer you to the 10-Q we are going to file a little while as soon as we push the button on it we have I think quite a several disclosure there that will give you our best view of what that is. As you pointed out there's a different opinion on that at the moment while [indiscernible] and we sell the [indiscernible] and I would just suggest that rather me talking about litigation are getting my various, it's probably best us to direct into what's in the 10-Q because I think you will find it to be a thorough disclosure that will address specifically the question you asked. Charles Bradford - Bradford Research: What's the status of the large diameter pipe mill that you are building out in U.S.?

It is under construction, I was out in California once or two ago for the ground breaking. Its going to be a nice facility we have two excellent partners past of course [ph] we done for many years, we just celebrated 20 years with them, next door at UBI and Sayers which is a an outstanding export company in this particular type of pipe, we are underway in... I forgot that what exact construction timeline is, but year and year and half something like that have to make a pipe so that's underway, construction on way and we're busily talking to the customers.

One of the trade papers, this morning talk about an investment they say you made in Brazil in pilot tubular, this was the 50:50 JV with Lone Star can you tell more about that. John P. Surma - Chairman and Chief Executive Officer: There is some disclosure about that in our 10-K, I think is not a lot but I am not quite sure why that was new, that project was underway and joint venture had already been formed under Lone Star technologies leadership we essentially acceded [ph] to the ownership position. Its an excellent venture, good partner a family which is well established project, there is a number of things underway some additional facilities being put in there including its moving along well. So we think it going to be a good venture but it's fairly modest and fairly early in its development, but they are good partners and we look forward to a prosperous future with them in Brazil. There was new development at least as far as I know I think it was just perhaps someone became aware of the reported, but that really was underway established, and part of what we got when we acquired Lone Star.

We will go to Michael Willemse with CIBC World Markets. Please go ahead. Michael Willemse - CIBC World Markets: Thank you. Just wondering if you could go back to all those question on the global strategy. Give a sense of what your exports were at North America in the first quarter? John P. Surma - Chairman and Chief Executive Officer: That's not a whole lot in the outside of North America, moving exports within the NAFTA region but they are more traditional flows for specific customer's reasons. There was a bit out of non-NAFTA but not very much. There will be probably some more in the second quarter to make sure we can continue to ride at strong rates and keep our facilities full if our best of customers don't require a product. We find we can do something else it with. So, but even having said that Mike, it won't be a huge quantity it will be as much as we need to balance the book. We would much prefer to be selling to our domestic the North America customers. We'll like to see them doing well and buying more than price are generally better after transportation here, than for exports. But if necessary we can still export at very good price for those market. Michael Willemse - CIBC World Markets: If I saw to look at past price cycle generally on the lower end U.S. Steel doesn't cut price too far on the low end. And I was always assuming that U.S. Steel didn't really chase price too higher end as well. Would it be fair to say that you are probably not chasing the hot-roll maybe as high as the presses or would you say your rate inline with the market? Nick Harper - Manager of Investor Relations: I think... we are, our intension is and for their family sake, I think I hope our sales people see it same way that our intension is to be at the market. And that doesn't mean at what the trade press is the market is, but mark-to-market as we see it in field with our customers. And now our intensions to be at the market in consideration of the all of facts. But we are not taking a position or have any policy to be anything front market that's what our general respect and that's what we do. Michael Willemse - CIBC World Markets: And then last question on the tubular business. Last couple of quarters you been at around 430 tons per quarter of tubular shipments and I can't remember for sure what the capacity is there. I'm just wondering as that business improves what do you think your kind of maximum shipments in the quarter could be, you really wanted it to expand that tubular business as far as it could go. This is excluding the large diameter pipe venture.

It can go quite a bit beyond where we are, if we're... let just say to make it simple, 400,000 to 500,000 tones of, that's not quite too, and we think we say our weighted leading capacity is 2.8 or something like that. But we can go quite a bit higher but it requires additional turns which requires additional employment and training etcetera which is not impossible and some of the operating units right now. We're working through that very process because certain size and type of products are quite good demand. So, we can make more if the market is there, we can do that overtime... not... next week. But overtime and we have the advantage of course, and I think our customers see at this way, at least I think they should, that we have a steady supply of steel from our flat-rolled operations. So we are well positioned to take advantage of that market as it develops and we intend to.

Next we go to Marty Pollack [ph] with NWQ Investment. Please go ahead.

Yes, few questions, if I may. Just, I guess from the previous questions and I was off and on the other line for couple of minutes. So, if you look at the average price, March and obviously you've got the stock going there, but March versus December, do you see described $110 price increase to the average price is higher, how much of this price is effectively impacted by stock [ph] mix? John P. Surma - Chairman and Chief Executive Officer: We did talk about that a bit and I can't give you an absolute number. But if we have in Canada a million tones roughly, may be a part of it was, business that was or may be more that was priced and carried over from the earlier book, either prices that we're committed or material that was supposed to be made and delivered in the fourth quarter, that wasn't because of short fall on the production side. So, it had an impact, but then also our absolute product late in Canada is more... geared towards flat-rolled and some semi-finished which will have lower absolute prices. And just looking at that one average realized statistic, might give the illusion of it not being a good thing, but the margins on that product even though the prices are relatively quite attractive.

Yes, in addition, I know... this is Ralf [indiscernible] I had to get off the line but, I heard the word $3 million that's on perhaps as a there is the prices... price increases in ultimately dollar more than finishing that quarter, the March number. Did you indicate at all what percentage of the price increase you can capture via above cost? I mean I don't know whether the cost to some extent your... your are experiencing higher cost on the other hand you have indicated coke and coal your previous discussions, just going to be up fairly... fairly small amount. So I mean should one assume in modeling whatever we are going to see in the June quarter, the escalation, $110 [ph] might be their current price, but what is sort of the April, May type numbers that are implied already in this, just so we can understand whether we are talking about an average price of 640, going up to $950 or is it obviously a some average below that? John P. Surma - Chairman and Chief Executive Officer: Well, just looking at what sort of a score card was as the quarter proceeded, we had price movement of about $30 in April and 100 for May and may be another 200 for June. So, I can tell you for sure that the 200 for June doesn't apply to April to May. So just understand that even though they happen over time. So to add all those up because they were announced at a particular time and multiply that times of quarter numbers not the way to do it, of course they commit over time. And we are seeking to get the market for our products as we make them and sell them and I think if you saw our outlooks I said we expect there would be improvements in our margins for the second quarter or the first quarter.

It does imply though that come July 1st of these prices are at stake effectively, you are saying you could be $300 of price higher than you are in the March quarter. John P. Surma - Chairman and Chief Executive Officer: A ton we would book for July.

Weakening of the pipe [ph] business. John P. Surma - Chairman and Chief Executive Officer: Yes, by the time we book for July or we would be booking for June now versus what might booked a ton for January that possible.

Okay, with regard to the whole issue contract pricing as go to current customers presumably your customers do know that you have a favorable position vis-à-vis iron ore and also the lack [ph] of contract position versus coke end of this year as well. I mean is that issue in terms of why you want to go clearly... you want to be in your market, but is the reality in target to this customers that they know your class and in the sense that they are likely to resist and so what you get, we will get some number much lower than what the Metal [ph] is asking, and I don't know where Metal itself as the same situation. I mean it is that the resistance because effectively you have a favorable cost position and through entire year. John P. Surma - Chairman and Chief Executive Officer: Marty that that general subjects is not what I want to get in to on this call, or really anywhere for that matter, what our competitors is doing is up to them and their welcome to do it. I'm not going to really acknowledge that discussions took place. But I think what we're doing trying to get the market price and in a market by sector, we're go after the market price, our cost are what are that's really are responsible to manage our customers we are interested in market price and what our cost as far as unconcerned really have nothing to do with that.

Now we'll go to Chris Owen [ph] with Cleveland Research [ph], please go ahead.

John, are you seeing anything different in terms of the quality of the Asian tubes products, I know this was minor issue last year, I just wondering if that changed. John P. Surma - Chairman and Chief Executive Officer: Well, we don't see much of it now, whatever we have we disposed off largely, because we thought the quality was inappropriate for its intended use. In certain sectors the imports have moderated, sound but decent quality. But most of it I think were customers who were into important drilling programs really are much better served than and I think we are understanding they are much better served to be dealing with first class producers like us without the uncertainty of where it come from, and sort of stencil [ph] will be on it [indiscernible] who might stencil might be. So I'm not sure I have seen any change in the quality, but I think our customers particularly in some of the more challenging tight gas plays, whether it's Marseilles Shale yet to come, or Barnett Shale whatever it may be. I think domestic produced product first like we do it we think has a good place in the market and we'll compete with the Chinese and others. But I can't tell you I have actually seen any real major change in the product ore [ph] because we don't see much of that right now.

Okay and lastly I not sure if you could touch on it. But it looks like we could be getting to a point where there is a potential shake out with distributors may be some of these guys going under. Are you concerned at all about your exposure to this or is that something you are watching today? John P. Surma - Chairman and Chief Executive Officer: Well I think philosophically and strategically and in the world today where credit is tight and difficult and inventory carrying cost are much, much higher for everybody including us and there were a year ago some credit pressures is probably inevitable but I will turn to Gretchen you may want to add something to that Gretchen? Gretchen R. Haggerty - Executive Vice President and Chief Financial Officer: I mean I think we keep a close eye on all our major customers and the level of exposure that we have to them, but I think we have a pretty good group of customers on the tubular side and we really hadn't seen any issues there. But I do think to John's point... what happened it does have the effect of keeping inventories some what under control because people aren't probably managing their credit availability more. And but I think that we are in good shape, really not concerned.

Yeah, thank you.

And our final question will come from Justin Fitcher [ph] with Goldman Sachs. Please go ahead.

Good afternoon. John P. Surma - Chairman and Chief Executive Officer: Hi.

The first question that I have is for Gretchen, it just on the debt repayment side. I know there is obviously the usual laundry list of uses of cash to go through as far as share repurchases etcetera, but is it possible at all to give us any more clarity as to what priority debt repayment is and also are you guys looking to refinance some of the secured debt with additional unsecured financing. Do you see some of your peers do some unsecured bond yields more recently? Gretchen R. Haggerty - Executive Vice President and Chief Financial Officer: Yeah, I guess I would just say that our priorities is kind of the easy step first, that... which we do have our receivables facility which is... we have that structure facility just because it was good low cost form of financing that we could be... that we could arrange. But our preference would be to repay debt, that's actually what we have done even in the fourth quarter, we reduced our facility there as we could. So, that will be our first preference that just enhances liquidity and gives us more flexibility going forward. After that probably the easiest debt that we have to get our hands on are the term loan that we put into place in conjunction with the acquisition. We have three year and five year term loans and we could repay those without penalty, we will probably look at those. But honestly I have to say that there is a little bit of... we just... we give a little bit of consideration to liquidity and timing because for example if you pay-off one of the term loan on the date when there is a payment due then it comes off there rather than the back-end of the scheduled. So we get into a little bit of that kind of what I call treasury discussion. I know that's the best thing to do. So those are our easy options right now on debt to repay, so I think that's what's we will be looking at over the next year.

Okay and then just one more question on the surcharge issue. I think most of the customers of your... as you see iron ore prices and coal prices and alloy costs going up certainly, standard a decent percentage of the surcharges that have been announced. But when you go through the map on some, the steel price increases are now pretty significantly beyond what the cost of some of the primary raw materials are. Are you hearing any push back from customers saying look we sort of get part of the surcharges, but at some point this is getting a little crazy, are people just taking whatever level of surcharge possible because of limited supply? John P. Surma - Chairman and Chief Executive Officer: It's hard to say because there are so many different surcharges floating around. We've got the scrap surcharge for certain types of products and producers and customers. And then I've read about a surcharge about by another major producer in North America. We have done a surcharge for our tubular customers for a specific cost impact that we think is quite justifiable. So, its hard to respond, because there is many, many different surcharges, but fundamentally, I think everyone understands as we went through in this adjustment period back in 2004, that eventually our... at least as speaking for our company only, our material needs to be in the market at the market price. And how quickly we get there, how we assist our customers in working with whatever downstream issues they have that takes many different forms customer-by-customer. But at the end of the day we have got to get to the market and there is plenty of the mechanism to get there we choose to do our more individually with customers. Gretchen R. Haggerty - Executive Vice President and Chief Financial Officer: And the only thing that I would add to that we have got a lot of our cost increases at the beginning of year earlier on as some of our price increases were being phased in. So, we certainly feel that we need to be recovering those costs. I believe your co-supplier approached you renegotiate in that context to some of the coal companies are certainly starting to try to do with their utility customers or are they coming back to you and saying, we shouldn't have sold you the coal at lower pricing can we renegotiate? John P. Surma - Chairman and Chief Executive Officer: We have long and very good relationships with our co-suppliers and we fully expect them to live up to their commitments.

Thanks very much. Nick Harper - Manager of Investor Relations: We would like to thank everyone for participating and we look forward to talking to you next quarter.