Economic and Ferrous Metal Market Trends

Ferrous Division Executive Committee ISRI 2013 Fall Committee and Board Meetings

San Francisco, CAOctober 22, 2013

Macro Indicators:Gross Domestic Product

Fastest Growing Sectors in Q2 2013:Gross Private Domestic Investment (+9.2%)Exports (+8%)

Sharpest Contraction:Nondefense Government Spending (-3.1%)

Macro Indicators: Unemployment

Macro Indicators: Inflation

Raw Material Prices

China Continues to Drive Global Steel Output Higher

U.S. CONSUMPTION OF PURCHASED AND HOME IRON AND STEEL SCRAP (thousand metric tons)

Item Jan-Jul 2012

Jan-July 2013

% CHG

Carbon Steel:Low-phosphorous plate and punchings 406 430 6%Cut plate and structural 2,810 2,410 -14%No. 1 HMS 3,410 3,100 -9%No. 2 HMS 3,520 3,440 -2%No.1 and electric furnace bundles 1,930 1,990 3%No. 2 and all other bundles 581 710 22%Railroad rails 180 194 8%Turnings and borings 1,490 1,460 -2%Slag scrap 917 679 -26%Shredded and frag 9,500 7,910 -17%No. 1 Busheling 2,690 2,800 4%Steel cans (post consumer) 66 73 11%All other carbon steel scrap 2,620 2,460 -6%

Stainless steel scrap 768 766 0%Alloy steel scrap 421 409 -3%Ingot mold and stool scrap 75 50 -33%Other iron scrap 715 491 -31%Other mixed scrap 798 877 10%Total 33,100 30,500 -8%

Year-to-Date 2013 U.S. Ferrous Scrap Exports by Major Destination(ex-stainless and alloy steel scrap, metric tons and % change)

Sources: U.S. Census Bureau/U.S. International Trade Commission

Country JUL ‘13 JUN ‘13 MAY ‘13 JAN-JUL '13

JAN-JUL '12

% CHG

Turkey 373,984 333,248 699,537 3,098,842 3,915,138 -21%

Taiwan 194,326 252,121 249,638 1,655,279 1,982,756 -17%

Korea 54,333 193,503 108,436 1,059,234 1,824,057 -42%

China 139,909 48,595 197,492 951,392 1,122,562 -15%

Egypt 0 80,992 115,762 567,441 332,335 71%

Canada 68,961 55,924 69,269 491,010 644,926 -24%

Malaysia 1,199 78,672 291,972 461,720 437,230 6%

Vietnam 8,809 87,987 35,033 371,790 263,734 41%

Indonesia 32,195 21,581 86,691 366,505 186,203 97%

India 27,897 53,990 63,188 365,044 675,423 -46%

Mexico 92,954 12,745 20,929 335,386 430,236 -22%

Others 122,667 81,071 110,835 695,857 651,809 7%

TOTAL 1,117,234 1,300,429 2,048,782 10,419,500 12,466,409 -16%

Outlook

• With the firming of domestic sheet prices and rising Chinese net steel exports, market participants will be keeping an eye on steel import competition in the fourth quarter.

• In the U.S., the construction and transportation sectors continue to exhibit signs of strength and U.S. real GDP growth accelerated to 2.5% in 2Q 2013.

• In the near term, cutbacks in U.S. government spending, on-going budget and debt ceiling showdowns, the implementation of new regulations, and the timing of potential shifts in U.S. monetary policy are likely to have important implications for investment, growth and the US Dollar while adding to uncertainty.

• Among the key overseas markets in the medium term, the International Monetary Fund expects GDP growth in Turkey will increase 3.4% in 2013 and rise 3.7% in 2014, while “developing Asia” is expected to grow 7.1% this year and 7.3% in 2014.

Outlook cont.

U.S. Exports of Ferrous Scrap(ex-stainless and alloy steel

scrap)metric tons

IMF Forecast of GDP Growth (%)

Country 2012 2013 2014 2015Turkey 6,397,832 3.8 3.5 4.3Taiwan 3,508,919 2.2 3.8 3.9Korea 2,822,174 2.8 3.7 4.0China 1,944,162 7.6 7.3 7.0Canada 1,152,384 1.6 2.2 2.4India 1,220,903 3.8 5.1 6.3Mexico 789,906 1.2 3.0 3.5Egypt 371,543 1.8 2.8 4.0Vietnam 528,252 5.3 5.4 5.4Indonesia 520,008 5.3 5.5 6.0

Sources: International Monetary Fund, U.S. Census Bureau, U.S. International Trade Commission