Steel Industry Update/277

August 2012

Locker Associates, 225 Broadway, Suite 2625 New York NY 10007

Tel: 212-962-2980

Table 1: Selected U.S. Steel Industry Data, June & Year-to-Date, 2012
Month of June
2012
2011
Raw Steel Production ........................7,979
7,987
(000 net tons)

% Chg
-0.1%

2012
50,918

Year-to-Date
2011
47,054

% Chg
8.2%

Capacity Utilization .......................... 74.8

76.2

--

78.8

74.4

--

Mill Shipments ...................................8,017

7,639

4.9%

50,117

44,780

11.9%

Exports ..............................................1,171

1,095

6.9%

7,277

6,408

13.6%

Total Imports......................................2,820

2,706

4.2%

17,632

14,645

20.4%

Finished Steel Imports .....................2,204

2,145

2.8%

13,605

11,092

22.7%

Apparent Steel Supply* ......................9,050

8,689

4.2%

56,445

49,464

14.1%

Imports as % of Supply*................... 24.4

24.7

--

24.1

22.4

--

Average Spot Price** ($/ton) ............... $744

$882

-15.6%

$800

$917

-12.7%

Scrap Price# ($/ton) ............................ $373

$440

-15.2%

$429

$440

-2.5%

Sources: AISI, SteelBenchmarker

*Excl semi-finished imports

**Avg price of 3 carbon products

#shredded scrap

Table 2: U.S. Spot Prices for Selected Steel Products, August & Year-to-Date, 2012

Hot Rolled Band....

Cold Rolled Coil........
Coiled Plate..................

Month of August
2012
2011
% Chg
$647
$664
-2.6%
751
778
-3.5%
796
1021
-22.0%

2012
$675
774
893

Average Spot Price....

$731

$821

-10.9%

$781

$898

OCTG*

$1,925

$1,963

-1.9%

$2,002

$1,859

7.7%

#1 Heavy Melt...
Shredded Scrap...
#1 Busheling.

$354
393
397

$406
436
481

-12.8%
-9.9%
-17.5%

$372
412
428

$404
440
475

-7.8%
-6.3%
-9.9%

($ per net ton)

Year-to-Date
2011
$794
889
1,011

Sources: World Steel Dynamics, Spears Research, 8/12; *OCTG data is July 2012

Email: lockerassociates@yahoo.com | Website: www.lockerassociates.com

% Chg
-15.0%
-12.9%
-11.7%
-13.1%

Steel Industry Update/277

Table 3: World Crude Steel Production, July & Year-to-Date, 2012

Month of July
Year-to-Date
(000 metric tons)
2012
2011
%
Chg
2012
2011
Region
European Union.
14,227
14,953
-4.9%
103,212
108,133
Other Europe.
3,261
3,070
6.2%
22,337
21,171

% Chg
-4.6%
5.5%

C.I.S.

9,515

9,278

2.6%

66,178

65,933

North America

10,235

10,108

1.3%

73,305

69,207

5.9%

South America...

4,010

4,269

-6.1%

27,770

28,738

-3.4%

0.4%

Africa/Middle East.....

2,689

2,726

-1.4%

20,094

20,228

-0.7%

Asia..

85,302

82,191

3.8%

580,695

570,364

1.8%

Oceania......

500

616

-18.8%

3,353

4,623

-27.5%

Total

129,738

127,210

2.0%

896,944

888,396

1.0%

China.......
Japan...

61,693
9,259

59,188
9,152

4.2%
1.2%

419,458
63,323

410,912
63,225

2.1%
0.2%

United States..

7,433

7,368

0.9%

53,625

50,055

7.1%

India(e).

6,590

6,252

5.4%

44,567

43,106

3.4%

Russia..

5,900

5,696

3.6%

41,556

40,437

2.8%

South Korea.......

5,911

5,660

4.4%

40,871

39,615

3.2%

Germany...

3,590

3,667

-2.1%

25,509

26,863

-5.0%

Turkey

3,135

2,858

9.7%

21,059

19,262

9.3%

Brazil...

3,001

3,129

-4.1%

20,404

20,957

-2.6%

Country

Ukraine(e)...

2,970

2,811

5.7%

20,146

20,513

-1.8%

All Others....

20,256

21,429

-5.5%

146,426

153,451

-4.6%

Source: World Steel Association, 8/12; e=estimate

Graph 1: World Crude Steel Production, July 2012

Source: World Steel Association, 8/12; in million metric tons

-2-

Steel Industry Update/277

Graph 2: World Steel Capacity Utilization, July 2012

Source: World Steel Association, 8/12

Table 4: Chinese Steel Exports, June 2012

June 12
781,104

May 12
889,435

Singapore

262,817

136,708

99,919

Vietnam

252,550

153,206

118,082

Thailand

214,275

206,065

177,714

India

187,689

210,974

121,652

Philippines

146,052

140,184

55,698

United States

123,898

125,324

124,739

Hong Kong

118,239

135,130

82,909

Indonesia

106,693

133,909

68,741

Russia

98,020

70,705

60,589

Brazil

54,089

99,813

121,847

Other

1,767,087

1,767,031

1,537,812

World Total

4,112,513

4,068,540

3,388,183

Country
South Korea

Source: American Metal Market, 7/30/12; in tonnes

-3-

June 11
818,481

Steel Industry Update/277

Table 5: South American Crude Steel Production, June & Year-to-Date, 2012

Argentina
Brazil
Chile
Colombia
Ecuador
Paraguay
Peru
Uruguay
Venezuela

2012
445
2,749
155
125
35
5
80
10
160

June
2011
470
3,004
139
113
50
3
81
8
261

% Chg
-5.3%
-8.5%
11.5%
10.6%
-30.0%
66.7%
-1.2%
25.0%
-38.7%

2012
2,726
17,390
887
708
210
19
481
59
1,143

Year-to-Date
2011
2,713
17,828
874
658
248
13
426
33
1,677

% Chg
0.5%
-2.5%
1.5%
7.6%
-15.3%
46.2%
12.9%
78.8%
-31.8%

South American Total

3,764

4,129

-8.8%

23,623

24,470

-3.5%

(in 000 tonnes)

Source: Worldsteel.org, 7/25/12

Table 6: Eurofer Economic and Steel Market Outlook, 2012e-2013f

%*

2011

q112

q212

q312

q412

2012

q113

q213

q313

q413

2013

Construction

27%

3.8

-5.5

-2.5

-0.6

-0.1

-2

2.7

1.9

2.3

2.2

Structural steelwork

11%

3.5

-2.7

-4.5

-2.7

-2.3

-3

-0.8

1.3

1.9

2.3

1.3

Mechanical engineering

14%

10.4

3.9

-0.5

-1.8

-1.7

-0.1

0.1

1.7

4.9

2.7

Automotive

16%

10.8

1.7

-2.1

-4.2

-4.3

-2.1

-2.8

0.8

3.4

6.3

1.8

Domestic appliances

4%

-5.6

-1

-3.1

-1.9

-0.2

-1.5

1.7

3.9

2.2

2.4

Shipyards

1%

-3.3

-0.4

-5

-5.8

-5.9

-4.1

-7.9

-3

0.5

2.6

-2.3

Tubes

12%

10.4

-3.8

-2.1

-3.8

-0.1

-2.5

1.5

1.1

3.6

3.7

2.4

Metal goods

12%

7.9

0.6

-0.8

-0.1

0.6

0.1

0.7

2.4

3.3

2.6

3%

0.6

-0.3

-1.1

0.1

1.4

0.9

1.8

4.1

4.9

2.9

100%

6.4

-1.2

-2.1

-1.9

-1.2

-1.6

0.3

1.6

2.9

3.8

2.2

Miscellaneous
Total

Source: Worldsteel.org, 7/25/12; *% in total consumption; e=estimate, f=forecast

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright 2012 by Locker Associates, Inc. All
rights reserved. Reproduction in any form forbidden w/o permission. Locker Associates, Inc., 225 Broadway Suite 2625 New York NY 10007.

-4-

Steel Industry Update/277

Table 7: US Steel Consumption & Shipment Outlook, 1995-2013f

1995

2000

2005

2009

2010

2011

2012e

2013f

First quarter

24.9

28.6

27.1

13.3

20.5

22.5

25.0

25.5

Second quarter

24.4

28.5

25.6

13.5

21.7

22.3

24.5

26.0

Third quarter

24.0

27.3

25.7

16.8

20.8

23.7

24.0

25.5

Fourth quarter

24.2

24.7

26.6

18.6

20.4

23.4

24.5

25.1

Shipments

97.5

109.1

105.0

62.2

83.4

91.9

98.0

102.1

Plus: Imports

(million short tons)

24.4

38.0

32.1

16.2

23.9

28.5

31.5

33.0

Less: Imported semis converted to

finished products*

5.0

8.6

6.9

2.0

5.1

6.7

8.0

8.5

Less: Exports

7.1

6.5

9.4

9.3

12.0

13.5

13.5

14.0

109.8

131.9

120.8

67.1

90.2

100.3

108.0

112.6

Subtotal: Apparent steel demand

Less: Est. user/buyer inv. build

-2.0

-2.0

-6.4

-10.0

4.0

1.5

2.8

2.0

Equals: Actual steel consumption

111.8

133.9

127.2

77.1

86.2

98.8

105.3

110.6

% Change

2.0%

3.1%

2.8%

-32.9%

11.9%

14.5%

6.6%

5.1%

98.6

116.2

101.9

75.4

79.3

84.3

88.0

91.4

% Change

4.3%

5.8%

1.9%

-24.8%

5.2%

6.3%

4.3%

3.9%

Steel Consumption**

1.134

1.152

1.247

1.022

1.088

1.172

1.197

1.210

Index of activity (IDX) in 15 steel

consuming industries (2004 =100)

Source: World Steel Dynamics, 6/12; *AISI-reporting companies; **per point of activity index (million tons)

Table 8: World Steel Dynamics Mid-High Crude Steel Forecast, 2011-2013f

(in million metric tonnes)

Japan
Western Europe
United States

2011
108
148

2012e
108
142

2013f
113
150

% Chg
12e/13f
4.2
5.6

86

93

97

5.1

Small Cap

133

133

140

4.8

Advanced Countries

474

476

499

4.9

China

680

725

755

4.1

Africa
Brazil

7
35

7
35

7
38

0.0
6.8

113

115

118

2.6

Eastern Europe

13

13

13

2.7

Developing Asia

22

22

24

7.1

India

72

73

78

7.4

Latin America

33

33

35

6.1

Turkey

34

36

37

2.8

MENA

28

28

30

7.1

357

363

380

4.9

1,511

1,564

1,636

4.6

CIS

Developing World, ex-China

World Total

Source: World Steel Dynamics, June 2012; e=estimate, f=forecast

-5-

Steel Industry Update/277

Table 9: US Steel Financial Results, 2nd Quarter 2012
(in US$ millions, except per share amounts)

Net Sales
Segment income from flat rolled
Segment income from US Steel Europe
Segment income from tubular
Segment income from other businesses
Total reportable segment*
Postretirement benefit expense
Other items not allocated to segments
Income from operations
Net interest and other financial costs
Income tax provision
Net income attributable to US Steel
Per basic share
Per diluted share

Q2 '12
$5,017
177
34
103
16
330
-77
253
82
70
101
0.7
0.62

Q2 '11
$5,120
374
-18
31
9
396
-96
300
13
65
222
1.54
1.33

% Chg
-2.0%
-52.7%
-288.9%
232.3%
77.8%
-16.7%
-19.8%
Na
-15.7%
530.8%
7.7%
-54.5%
-54.5%
-53.4%

Q1 '12
$5,172
183
-34
129
17
295
-77
-291
-73
50
96
-219
-1.52
-1.52

% Chg
-3.0%
-3.3%
-200.0%
-20.2%
-5.9%
11.9%
0.0%
na
-446.6%
64.0%
-27.1%
-146.1%
-146.1%
-140.8%

Source: SteelGuru.com, 8/1/12; *and other businesses income from operations

Table 10: AK Steel Financial Results, 2nd Quarter 2012

Operating profit

Q2 '12
56.7

Q1 '12
4.1

% Chg
1,282.9%

Net income*

-724.2

-11.8

6,037.3%

(in US$ millions, except per share amounts)

Adjusted net income*

Earnings per diluted share, as reported
Adjusted earnings per diluted share

11.4

-11.8

-196.6%

-6.55

-0.11

5,854.5%

0.1

-0.11

-190.9%

% Chg
-10.5%
-28.2%
-51.1%
na
-37.5%
-37.4%
9.9%
17.1%
-6.6%
-2.3%
-26.6%

Q1 '12
$22,703
1,972
663
11
0.01
13.2
6.8
22.8
22.2
89

Source: SteelGuru.com, 7/25/12; *attributable to AK Steel Holding

Table 11: ArcelorMittal Financial Results, 2nd Quarter 2012

(in US$ millions unless otherwise shown)

Sales
EBITDA
Operating income
Income from discontinued operations
Net income
Basic earnings per share (USD)
Own iron ore production (mt)
Iron ore shipments at market price (mt)
Crude steel production (mt)
Steel shipments (mt)
EBITDA per tonne (US$/t)

Q2 '12
$22,478
2,449
1,101
959
0.62
14.4
8.2
22.8
21.7
113

Source: SteelGuru.com, 7/26/12

-6-

Q2 '11
$25,126
3,413
2,252
1,535
0.99
13.1
7
24.4
22.2
154

% Chg
-1.0%
24.2%
66.1%
na
8,618.2
6,100.0
9.1%
20.6%
0.0%
-2.3%
27.0%

Steel Industry Update/277

Table 12: Turkish Billet Exports, June 2012

June 12
215,910
25,779

June 11
33,478
27,304

1st H 12
850,813
94,121

1st H 11
325,388
154,573

1,241

21,574

64,247

106,568

na

6,500

50,085

105,040

Sudan

20,500

na

44,491

5,001

Bangladesh

40,000

na

40,000

47,846

UAE

2,194

41,330

26,974

124,388

Peru

25,928

na

25,928

53,875

Oman

15,600

na

25,096

na

Israel

7,798

2,379

23,861

17,937

Country
Saudi Arabia
Egypt
Iran
Morocco

Source: SteelOrbis.com, 8/9/12; in tonnes; na=not available

Table 13: Turkish Rebar Exports, June 2012

June 12
102,989
53,306

June 11
73,371
168,381

1st H 12
577,325
464,366

1st H 11
379,563
768,141

101,712

12,214

354,417

146,727

84,403

38,958

308,589

131,125

6,215

32,708

275,688

171,128

Israel

59,234

19,436

263,943

189,180

Yemen

26,500

21,748

238,335

107,701

Ethiopia

32,259

2,496

186,863

57,006

5,198

31,980

164,953

51,831

29,680

9,428

133,563

94,647

Country
Iraq
UAE
Saudi Arabia
Egypt
US

Libya
Canada

Source: SteelOrbis.com, 8/9/12; in tonnes

-7-

Steel Industry Update/277

Locker Associates Steel Track: Spot Prices

U.S. Flat-Rolled Prices

U.S. Scrap Prices

($ per ton)

500

1100

($ per ton)

#1 Busheling

Plate
1000

450

Shredded
Scrap

900
400

CR Coil
800
350
700

#1 Heavy Melt

Rebar

HR Band

300

600

250

500

400

200
'07 '08 '09 '10 1q

2q 3q

4q

'07 '08 '09 '10 1q

2q

3q

4q

Locker Associates Steel Track: Performance

U.S. Raw Steel Production

10.0

(mil net tons)

9.0

2012

80%

7.0

70%

6.0

60%

5.0

50%

4.0

40%

2011

90%

8.0

3.0

U.S. Capacity Utilization

100%

2012
2011

30%

2012 8.5 8.3 8.8 8.6 8.7 8.0

2012 78% 81% 80% 81% 79% 75%

2011 7.9 7.4 8.1 7.8 7.9 8.0

2011 73% 75% 75% 74% 73% 76%

Steel Mill Products: US Imports, June & Year-to-Date, 2012

Imports: Country of Origin
(000 net tons)

Canada..
Mexico
Other W. Hemisphere..
European Union
Other Europe*..
Asia.
Oceania.
Africa..
Total
Imports: Customs District
Atlantic Coast
Gulf Coast/Mexican Border
Pacific Coast.
Gr Lakes/Canadian Border
Off Shore

Month of June
2012
2011
% Chg
510
526
-3.0%
234
211
10.9%
433
268
61.6%
456
371
22.9%
230
368
-37.55
940
848
10.8%
14
86
-83.7%
3
27
-88.9%
2,820
2,705
4.3%
226
1,389
490
694
22

312
1,235
471
679
8

Source: AISI; *includes Russia

Update #277

-8-

-27.6%
12.5%
4.0%
2.2%
175.0%

2012
3,055
1,307
2,372
2,773
2,433
5,459
191
41
17,632
2,206
8,638
2,996
3,675
117

Year-to-Date
2011
3,108
1,615
1,519
2,201
1,499
4,075
533
96
14,645
1,874
6,238
2,831
3,597
105

% Chg
-1.7%
-19.1%
56.2%
26.0%
62.3%
34.0%
-64.2%
-57.3%
20.4%
17.7%
38.5%
5.8%
2.2%
11.4%

Locker Associates, Inc.

LOCKER ASSOCIATES is a business-consulting firm that specializes in enhancing the
competitiveness of businesses and industries on behalf of unions, corporate and government
clients. By combining expert business and financial analysis with a sensitivity to labor issues,
the firm is uniquely qualified to help clients manage change by:

leading joint labor/management business improvement initiatives;

facilitating ownership transitions to secure the long-term viability of a business;
conducting strategic industry studies to identify future challenges and opportunities;
representing unions in strategic planning, workplace reorganization and bankruptcy
formulating business plans for turnaround situations; and
performing due diligence for equity and debt investors.

Over the last 28 years, the firm has directed over 225 projects spanning manufacturing,
transportation, distribution and mining industries. Typical projects involve in-depth analysis of a
firms market, financial and operating performance on behalf of a cooperative labormanagement effort. Locker Associates also produces a widely read monthly newsletter, Steel
Industry Update that circulates throughout the U.S. and Canadian steel industry.

MAJOR CLIENTS
United Steelworkers
Bank of Boston
Congress Financial
Santander Investment Securities
AEIF-IAM/AK Steel Middletown
Prudential Securities
US Steel Joint Labor-Mgmt Comm
LTV Steel Joint Labor-Mgmt Committee
Intl Union of Electrical Workers
Bethlehem Joint Labor-Mgmt Comm
Inland Steel Joint Labor-Mgmt Comm
Northwestern Steel and Wire
Boilermakers
American Federation of Musicians
USS/KOBE
Sysco Food Services of San Francisco
International Brotherhood of Teamsters
Development Bank of South Africa
J&L Structural Steel

Air Line Pilots Association/Delta Air Lines MEC

Sharpsville Quality Products
IPSCO
International Association of Machinists
CSEA/AFSCME
United Auto Workers
Service Employees International Union
American Fed of Television & Radio Artists
Supervalu
United Mine Workers
Algoma Steel
North American Refractories
UNITE/HERE
AFL-CIO George Meany Center
Watermill Ventures
Wheeling-Pittsburgh Steel
Canadian Steel Trade & Employment Congress
Minn Gov's Task Force on Mining
Special Metals

RECENT PROJECTS
Metallic Lathers and Reinforcing Ironworkers (2010-Present): strategic industry research
and ongoing advisement on major industry trends and companies to help enhance the competitive
position of the unionized NYC construction industry
Building & Construction Trades Council of Greater NY (BCTC) (2011-present): analysis and
advisement regarding major trends in the New York City construction industry, including capital
market developments which affect BCTC members
Communication Workers of America (CWA) (2011-present): research and analysis to
prepare CWA for nationwide contract negotiations with AT&T
IBT-Supervalu (2010): assist union and management to identify major operational problems
impacting warehouse performance and provide recommendations for joint improvement
Metallurgical Coal Producer (2011): prepared a detailed study on the major trends in the
world metallurgical coal market for a large metallurgical coal producer
Email: lockerassociates@yahoo.com | Website: www.lockerassociates.com