INVENTORIES

Inventories consisted of the following:



	June 30, 2013			December 31, 2012			June 30, 2012
	($ in millions)
Supplies	$	40.8		$	36.4		$	36.6
Raw materials	73.1			70.5			79.2
Work in process	28.5			25.2			35.7
Finished goods	141.6			141.0			120.8
	284.0			273.1			272.3
LIFO reserve	(79.2		)	(78.0		)	(74.7		)
Inventories, net	$	204.8		$	195.1		$	197.6

In conjunction with the acquisition of KA Steel, we obtained inventories with a fair value of $36.4 million as of August 22, 2012. Inventories are valued at the lower of cost or market, with cost being determined principally by the dollar value last-in, first-out (LIFO) method of inventory accounting. Cost for other inventories has been determined principally by the average cost method, primarily Chemical Distribution inventories, operating supplies, spare parts and maintenance parts. Elements of costs in inventories included raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at June 30, 2013 reflect certain estimates relating to inventory quantities and costs at December 31, 2013. The replacement cost of our inventories would have been approximately $79.2 million, $78.0 million and $74.7 million higher than reported at June 30, 2013, December 31, 2012 and June 30, 2012, respectively.