Steel Industry Update/253 August 2010

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

Month of June Year-to-Date
(000 net tons) 2010 2009 % Chg 2010 2009 % Chg
Raw Steel Production ............... 7,816 4,811 62.5% 45,083 26,751 68.5%
Capacity Utilization ................. 75.4 46.9 -- 72.1 43.2 --
Mill Shipments .......................... 7,292 4,797 52.0% 42,233 26,156 61.5%
Exports ..................................... 1,048 706 48.4% 6,222 3,937 58.0%
Total Imports............................. 2,035 862 136.1% 11,706 8,624 35.7%
Finished Steel Imports ............ 1,563 811 92.7% 9,189 8,057 14.0%
Apparent Steel Supply*............. 7,807 4,902 59.3% 45,200 30,277 49.3%
Imports as % of Supply*.......... 20.0 16.5 -- 20.3 26.6 --
Average Spot Price** ($/ton) ...... 717 534 34.3% 693 609 13.9%
Scrap Price# ($/gross ton) .......... 316 255 23.9% 340 204 67.0%
Source: AISI, Steel Snapshot *Excl semi-finished imports **Avg price of 8 carbon products #shredded bundles

Table 2: World Crude Steel Production by Region, June & Year-To-Date

(000 metric tons) Month of June Year-to-Date
Region 2010 2009 % Chg 2010 2009 % Chg
European Union.......... 15,311 11,283 35.7% 90,004 62,240 44.6%
Other Europe .............. 2,898 2,428 19.3% 15,552 13,325 16.7%
C.I.S............................ 8,601 8,057 6.8% 53,004 44,125 20.1%
North America............. 9,866 6,358 55.2% 56,635 35,370 60.1%
South America ............ 3,705 2,757 34.4% 21,297 15,988 33.2%
Africa .......................... 1,324 1,234 7.3% 8,093 7,119 13.7%
Middle East................. 1,575 1,500 5.0% 9,582 8,560 12.0%
Asia............................. 74,789 66,616 12.3% 447,683 362,820 23.4%
Oceania ...................... 688 427 61.1% 3,974 2,304 72.5%
Total ........................... 118,756 100,661 18.0% 705,823 551,851 27.9%
Countries
China………………… 53,766 49,309 9.0% 323,172 266,887 21.1%
Japan………………... 9,352 6,883 35.9% 54,573 36,690 48.7%
United States……….. 7,199 4,364 65.0% 41,007 24,268 69.0%
Russia………..……… 5,430 5,122 6.0% 32,685 26,784 22.0%
India.………………… (e)5,350 5,251 1.9% 32,529 30,366 7.1%
South Korea..………. 4,801 3,939 21.9% 28,339 21,943 10.6%
Germany.…………… 3,856 2,514 53.4% 22,744 13,834 64.4%
Ukraine …………….. 2,470 2,304 7.2% 16,358 13,615 20.1%
All Others…………... 26,532 20,975 26.5% 154,416 117,464 31.5%
Source: World Steel Association, 8/10; e=estimate

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Table 3: Global Steel Output Forecast, 2010e-2011f

Region (e) 2010 (f) 2011
EU 27 139.1 170.0
Other Europe 29.1 31.0
CIS 97.5 104.9
NAFTA 82.4 107.2
South America 38.1 42.9
Africa 15.2 16.1
Middle East 17.7 20.9
China 567.8 627.0
Japan 87.5 107.0
Other Asia 143.7 160.4
Oceania 6.0 7.7
World Total 1,224.3 1,395.0
Source: MEPS, 7/27/10; in million tonnes; e=estimate, f=forecast

Table 4: Top 20 Global Steel Producers, 2009

Rank Company Output
1. ArcelorMittal 77.5
2. Baosteel 31.3
3. POSCO 31.1
4. Nippon Steel (1) 26.5
5. JFE 25.8
6. Jiangsu Shagang (2) 20.5
7. TATA Steel (3) 20.5
8. Ansteel 20.1
9. Severstal 16.7
10. Evraz 15.3
11. US Steel 15.2
12. Shougang (4) 15.1
13. Gerdau 14.2
14. Nucor 14.0
15. Wuhan 13.7
16. SAIL 13.5
17. Handan 12.0
18. Riva 11.3
19. Sumitomo 11.0
20. ThyssenKrupp (5) 11.0
Source: Worldsteel, 7/19/10; in million tonnes
(1) Doesn’t incl. share of Usiminas production (1.6 mil tonnes)
(2) Doesn’t include Yonglian (4.4 mil tonnes) and Xixing (1.4
mil tonnes)
(3) Includes Corus and NatSteel
(4) Does not include Changzhi (2.1 million tonnes)
(5) Includes share of HKM

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Table 5: Top 20 Global Steel Long Product Producers, 2010

Rank Company Base Capacity ‘10 Capacity ‘09
1. ArcelorMittal UK 51.2 47.3
2. Gerdau Brazil 22.6 19.5
3. Evraz Holding Russia 18.7 14.7
4. TATA Corus India 11.1 10.7
5. Nippon Steel Japan 10.8 10.5
6. JFE Steel Japan 10.0 9.5
7. Nucor USA 9.4 8.9
8. Hebei Steel China 8.9 NA
9. Riva Italy 8.8 8.6
10. Shanghai Baosteel China 8.6 5.5
11. Celsa Spain 8.5 8.2
12. Metinvest Holding Ukraine 7.8 NA
13. WISCO China 7.5 NA
14. Hyundai Korea Republic 6.9 6.7
15. Severstal Russia 6.8 6.6
16. Shougang Beijing China 6.7 6.5
17. NLMK Russia 6.7 NA
18. Sumitomo Japan 6.0 5.8
19. Imidro Iran 5.3 5.6
20. Jiangsu Shagang China 5.3 NA
Source: Steelonthenet.com, 7/28/10; in million tones

Table 6: China Steel Product Exports by Country, June 2010

Country Jun '10 1st Half '10 % Share
South Korea 921,278 4,911,284 20.9
India 487,338 2,364,622 10.1
Viet Nam 307,219 1,384,692 5.9
Brazil 331,647 903,487 3.8
Italy 164,663 681,449 2.9
Philippines 156,904 669,147 2.8
Singapore 180,983 648,329 2.8
Thailand 140,768 616,990 2.6
UAE 136,751 551,433 2.3
Indonesia 150,377 529,023 2.3
Malaysia 99,792 494,995 2.1
Taiwan Region 121,937 493,640 2.1
Hong Kong 126,987 492,731 2.1
US 124,408 479,419 2.0
Japan 142,066 465,306 2.0
Chile 190,468 450,851 1.9
Saudi Arabia 77,987 447,343 1.9
Russia 130,886 425,463 1.8
Australia 72,331 375,736 1.6
Iran 94,193 349,565 1.5
Others 1,453,448 5,791,242 24.7
Total 5,612,461 23,526,776 100.0%
Source: Worldsteel.org, 7/25/10; in ‘000 tonnes; e-estimate

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Source: Alix Partners, LLP; US Manufacturing Outsourcing Cost Index Report, July 2010

Source: Alix Partners, LLP; US Manufacturing Outsourcing Cost Index Report, July 2010

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Source: ISRI’s The Friday Report, 8/13/10

Source: ISRI’s The Friday Report, 8/13/10

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Source: AISI’s Indirect Steel Trade Report, August 2010

Source: AISI’s Indirect Steel Trade Report, August 2010

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Table 7: US Apparent Consumption of Stainless Steel, 2010F

2009 2010 % Chg
Product Form Production Exports Imports Market Market Est 2010f/2009
Semis 58 115 47 90 75 -17%
Bars 130 33 84 181 200 10%
Wire/Wire rod 41 18 46 69 85 23%
Tube and Pipe 285 35 89 339 400 18%
PMP 88 15 14 87 95 10%
Hot-rolled coil &CMP 120 99 50 71 90 27%
Cold-rolled coil 703 221 208 690 815 18%
Total stainless 1,426 436 538 1,527 1,760 15%
Total 2010 estimate 1,680 570 630 1,760 -- --
% Chg 2010E vs 2009 18% 31% 21% 15% -- --
Source: Metal Center News, July 2010; in ‘000 net tons

Table 8: US Steel Product Imports, Annualized for 2010

Product (in tons) Annualized ‘10 FY ‘09 % Chg
Ingots and Billets and Slabs 4,935,727 2,014,511 145.0%
Sheets Hot Rolled 2,335,404 1,739,209 34.3%
Oil Country Goods 1,976,965 1,602,111 23.4%
Line Pipe 1,631,583 1,603,357 1.8%
Sheets & Strip Galv HD 1,517,306 1,033,045 46.9%
Wire Rods 1,434,480 763,391 87.9%
Sheets Cold Rolled 1,143,882 1,137,583 0.6%
Plates ill Coils 1,017,534 710,897 43.1%
Bars Hot Rolled 1,009,945 674,388 49.8%
Plates Cut Lengths 745,592 530,221 40.6%
Standard Pipe 715,885 593,409 20.6%
Wire Drawn 618,471 486,302 27.2%
Bars - Reinforcing 517,415 419,426 23.4%
Structural Shapes Heavy 504,287 371,418 35.8%
Sheets & Strip All Other Ctd 461,989 298,070 55.0%
Tin Plate 441,297 322,955 36.6%
Mechanical Tubing 351,658 332,661 5.7%
All Other 1,946,430 1,581,951 23.0%
TOTAL 23,305,850 16,214,905 43.7%
SUBTOTAL Finished Imports 18,336,059 14,178,577 29.3%
Source: AISI, 7/31/10

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Table 9: Nucor Steel Sales to Outside Customers, 1st Half 2010

Product (in ‘000 tons) H1 '10 H1 '09 % Chg
Steel mills 7,988 5,002 60%
Joist 131 125 5%
Deck 149 148 1%
Cold finished 228 156 46%
Fab concrete reinforcing steel 460 463 -1%
Other 2,096 1,930 9%
Steel mills production 9,360 5,843 60%
Steel mills total shipments 9,303 5,807 60%
Source: Steel Guru, 7/24/10

Table 10: ArcelorMittal Financial Results, 1st Half 2010

Item H1 ‘10 H1 ‘09 % Chg
Sales 40,303 30,298 33.0%
EBITDA 4,890 2,104 132.4%
Operating income 2,409 -2,667 -190.3%
Net income 2,383 -1,855 -228.5%
Iron ore production (mt) 32.2 24 34.2%
Crude steel production (mt) 47.9 31.1 54.0%
Steel shipments (mt) 44.3 32.9 34.7%
EBITDA/tonne (US$/t) 110 64 71.9%
Operating income/tonne (US$/t) 54 -81 -166.7%
Basic EPS (USD) 1.58 -1.34 -217.9%
Source: Steel Guru, 7/29/10; in US$ millions unless otherwise shown

Table 11: South American Crude Steel Output, June 2010

Country Jun '10 Jun '09 % Chg
Argentina 421 311 35.1%
Brazil 2,850 1,942 46.8%
Chile 40(e) 83 -50.1%
Colombia 90(e) 69 31.4%
Ecuador 20(e) 24 -15.6%
Paraguay 7(e) 4 84.2%
Peru 75(e) 41 85.2%
Uruguay 7(e) 6 9.4%
Venezuela 195(e) 281 -30.7%
South America 3,705 2,757 34.4%
Source: Worldsteel.org, 7/25/10; in ‘000 tonnes; e-estimate

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Table 12: Japanese Steel Product Output, June 2010 – Part 1

Item Jun '10 % Chg YTD '10 % Chg
Pig Iron Production 6,899.1 135.3% 20,748.4 144.5%
For steelmaking 6,877.2 135.1% 20,674.0 144.4%
For casting 21.8 226.5% 74.4 179.4%
Crude Steel Production 9,352.1 135.9% 28,062.6 147.0%
LD converter 7,216.4 138.7% 21,727.0 152.2%
Electric arc furnace 2,135.8 127.0% 6,335.6 131.6%
Ordinary steel ingot 7,201.4 126.9% 21,762.0 137.8%
Specialty steel ingot 2,119.0 179.8% 6,206.7 193.2%
For casting 31.8 109.9% 93.9 106.5%
Total (ordinary steel) 7,217.1 126.8% 21,807.5 137.7%
Total (specialty steel) 2,135.0 179.0% 6,255.1 192.0%
Total Hot-rolled Steel Products 8,489.8 135.6% 24,851.3 149.6%
Source: JISF, 7/25/10; in ‘000 tonnes

Table 13: Japanese Steel Product Output, June 2010 – Part 2

Item Jun '10 % Chg YTD '10 % Chg
Total hot-rolled products (of ordinary steel) 6,708.4 128.0% 19,740.4 141.2%
Total hot-rolled products (of specialty steel) 1,781.4 174.9% 5,110.9 194.1%
Cold-rolled wide strip (of ordinary steel) 1,949.8 139.2% 5,818.6 166.5%
Cold-rolled sheet (of ordinary steel) 1.7 181.2% 5 197.8%
Electrical sheet & strip 174.4 139.2% 515.3 156.1%
Tin plate 82.8 123.1% 270 132.8%
Galvanized sheets 1,164.6 150.4% 3,389.6 178.7%
Cast iron pipes & tubes 31.6 82.3% 77.5 77.3%
Source: JISF, 7/25/10; in ‘000 tonnes

Table 14: Japanese Electrical Steel Exports, June & Y-T-D 2010

Country Jun '10 MoM% YoY% YTD 2010 YoY%

Korea 1,666 112.9% 84.2% 9,941 57.9%
China 31,748 85.9% 115.9% 186,182 169.5%
Taiwan 3,486 86.6% 205% 21,654 175.8%
Thailand 6,506 105.8% 494.3% 37,898 217.9%
USA 2,154 102.6% 194.7% 9,670 118.5%
Total 78,722 89.2% 113.1% 471,464 148.2%
Source: JISF, 8/10/10; in tonnes

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Table 15: Indian Crude Steel Capacity

Investor Existing Brownfield Greenfield Total by ‘12
SAIL 12.8 8.6 -- 21.4
RINL 2.9 3.4 -- 6.3
TATA Steel 6.8 3.2 3.0* 13.0*
Essar Steel 4.6 3.9 6.0* 14.5*
JSW Steel 6.6 4.4 -- 11.0
JSPL 2.4 4.8 3.3 10.5
Ispat Industries 3.6 0.6 -- 4.2
Bhushan Power & Steel 1.2 1.6 -- 2.8
Bhushan Steel 0.8 2.2 -- 3.0
Others & Secondary 31.0 3.2 -- 34.2
Total 72.8 35.9 12.3 120.9
Source: Steel Guru, 7/30/10; in million tonnes; *TATA Steel (Kalinga Nagar-Orissa) and Essar Steel
(Paradeep-Orissa) Greenfield projects are likely to be delayed beyond 2010

Table 16: Indian Steel Demand, 2007-2010(e)

Finished Consumption Quantity % Chg
2007-08 52.1 11.4
2008-09 52.4 0.4
2009-10(e) 56.5 7.9

Finished Production
2007-08 56.1 6.8
2008-09 57.2 1.9
2009-10(e) 59.7 4.4
Source: Joint Plant Committee, 8/8/10; in million tonnes; e=estimate

Table 17: Ukrainian Steel Consumption, 1st Half 2010

Product H1'10 H1'09 % Chg
Rebar 255,589 229,224 11.5%
Beam 20,197 16,608 21.6%
Wire rod 242,565 204,598 18.6%
HR sheet/coil 1,007,408 890,225 13.2%
CR sheet/coil 159,052 132,656 19.9%
Angle 103,139 69,015 49.4%
Channel 61,099 61,552 -0.7%
Other 1,082,700 548,195 97.5%
Overall consumption 2,931,749 2,152,073 36.2%
Source: Steelorbis.com, 7/18/10; in tonnes

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Table 18: Iron Ore Trade Forecast, by Country 2009-2013F

Country 2009 2010F 2011F 2012F 2013F

Australia 381 420 462 470 470
Brazil 266 340 390 425 420
India 107 100 110 120 100
South Africa 45 46 49 52 50
CIS 30 30 30 50 50
Other 110 110 120 130 130
Total 939 1,046 1,161 1,247 1,220
Source: Steel Times International, July/August 2010; Seaborne supply in million tonnes

Table 19: World’s Largest Iron Ore Producers, 2010

Company Base Capacity
Vale Brazil 417.1
Rio Tinto UK 273.7
BHP Billiton Australia 188.5
ArcelorMittal UK 78.9
Fortescue Metals Australia 55.0
Evraz Russia 50.4
Metalloinvest Russia 44.7
AnBen China 44.7
Metinvest Holding Ukraine 42.8
Anglo American South Africa 41.1
LKAB Sweden 38.5
CVG Venezuela 37.9
Cliffs Natural Resources USA 34.6
NMDC India 32.6
Imidro Iran 29.8
CSN Brazil 28.0
Shougang Beijing China 26.5
US Steel USA 23.5
ENRC Kazakhstan 19.7
Wuhan Iron & Steel China 18.6
Total capacity 2,177.3
Source: www.steelonthenet.com, 8/1/10; in million tonnes/year

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Locker Associates Steel Track: Spot Prices

U.S. Flat-Rolled Prices U.S. Other Product Prices
1100 1350
($ per ton) ($ per ton)
1250
1000

1150
900
1050
Plate CF Bar (SBQ)
800
950
CR Sheet
700 850

600 750
Beam
650
500
Wire Rod
HR Sheet 550
400
450

300
350

200 250
89 93 97 04 05 07 08 09 O N D J F M A M J J 89 93 97 04 05 07 08 09 O N D J F M A M J J

Locker Associates Steel Track: Performance

U.S. Raw Steel Production 100%
U.S. Capacity Utilization
10.0
(mil net tons)
2010 2010 2009
9.0 2009 90%

8.0 80%

7.0 70%

6.0 60%

5.0 50%

4.0 40%

3.0 30%
J F M A M J J A S O N D J F M A M J J A S O N D
2010 6.9 6.9 7.8 7.7 8.0 7.8 2010 64% 71% 73% 74% 75% 75%
2009 4.5 4.4 4.4 4.2 4.5 4.8 5.6 6.1 6.4 6.6 6.3 6.5 2009 43% 46% 43% 41% 43% 47% 52% 58% 62% 62% 61% 61%

U.S. Spot Prices for Selected Steel Products, July & Year-to-Date
Month of July Year-To-Date
($ per net ton) 2010 2009 % Chg 2010 2009 % Chg
Hot Rolled Sheet………….. 595 430 38.4% 626 444 41.1%
Cold Rolled Sheet......…….. 705 517 36.4% 735 532 38.3%
HD Galvanized Sheet..…… 790 555 42.3% 782 603 29.6%
Coiled Plate................……. 661 506 30.6% 638 631 1.1%
Cold-Finished Bar (SBQ)….. 883 817 8.1% 824 798 3.3%
Wide-Flange Beams....…… 723 661 9.4% 719 751 -4.3%
Wire Rod/Low Carbon.…… 678 520 30.4% 656 558 17.6%
Rebar.........................…….. 568 495 14.7% 571 499 14.5%
Average Spot Price+…….. 700 563 24.5% 694 602 15.3%
OCTG Seamless Tube…… 1,823 1,460 24.9% 1,716 1,847 -7.1%
Scrap ($/gross ton)*....………. 316 255 23.9% 340 204 67.0%
Sources: Steel Snapshot, Spears Research +Comp price of 8 carbon products *shredded bundles

Update #253