CHARLOTTE, N.C., June 20 /PRNewswire-FirstCall/ -- Nucor Corporation announced today that weakened demand, primarily for sheet steel, accompanied by significant decreases in scrap prices and the accounting for inventory acquired during the purchase of the assets of Marion Steel Company during the quarter have resulted in a revised outlook for its second quarter ending July 2, 2005. In April, Nucor had estimated second quarter earnings to be in the range of $1.95 to $2.15 per diluted share; however, we currently expect to be near the lower end of that range. By comparison, Nucor earned $1.58 per diluted share in the second quarter of 2004. Our revised outlook for the second quarter now includes a positive impact from valuing inventories using the last-in, first-out (LIFO) method of accounting that is significantly higher than originally forecast.
The significant decrease in scrap prices has resulted in decreased spot and contract pricing for finished steel products delivered in the latter part of the second quarter. In the short term, as scrap prices fall, there will be timing differences between the decrease in our raw materials surcharge (i.e., decrease in selling prices) and the expense associated with the usage of higher priced scrap; however, the decline in scrap prices will favorably impact production costs in the third quarter as lower cost scrap inventories are consumed. As pricing declines are offset by the decrease in scrap prices, our competitiveness will be significantly enhanced going forward.
Although market conditions have softened in the sheet market, we expect that demand will improve over the remainder of the year. While the inventory overhang in the sheet market has lasted longer than anticipated, we expect that inventory levels will decrease throughout the third and fourth quarters. In addition, Nucor continues to benefit from product line diversification and the fact that approximately 65% of our sheet mill volume is committed to contract customers. Nucor still views 2005 as one of the best years in its profitable history, with a strong opportunity for a second consecutive record earnings year.
Nucor and affiliates are manufacturers of steel products, with operating facilities in sixteen states. Products produced are: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler.
Certain statements made in this news release are forward-looking statements that involve risks and uncertainties. Factors that might cause the Company's actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) competitive pressure on sales and pricing, including pressure from imports and substitute materials; (4) the continued high level of imports in conjunction with high inventory levels; and (5) capital investments and their impact on our performance. These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2004 Annual Report on Form 10-K.