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Metals Consulting International Limited Page 1/13 World Steel Industry June 2009

World Steel Industry

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world steel industry review including estimate of 2008 global steel demand (by region, by end-use, by form, by product), 2009 demand forecast, outline of selected producer strategies, list of industry issues

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Page 1: World Steel Industry

Metals Consulting International Limited Page 1/13

World Steel Industry

June 2009

Page 2: World Steel Industry

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WORLD STEEL INDUSTRYAGENDA

• Global steel demand– By region– By end-use– By form– By product

• Demand forecast• Steel supply• Industry issues• Opportunities …

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GLOBAL STEEL DEMANDDemand by Region†

World Region Demand, mt

EU (27) 182

Other Europe 29

CIS 50

NAFTA 130

C & S America 43

Middle East / Africa 68

Asia & Oceania 693

World 1195

Figures are 2008 estimates in millions of metric tonnes of finished steel products. Assessments cover all steels and thus include ~25 mt world consumption of stainless steel [20mt flat + 5mt long].

Note – all figures in this report are to be treated as indicative estimates supplied by Metals Consulting International Limited [‘MCI’] rather than as precise or definitive assessments. For further clarification or support please contact us by email [email protected].

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GLOBAL STEEL DEMANDDemand by End-Use

Figures are MCI estimates of 2008 world steel consumption, in millions metric tonnes.

End Use Demand, mt

Construction 575

Machinery 285

Transport 135

Appliances 55

Fabrication 40

Oil and gas 40

Shipbuilding 20

Other 45

Total 1195

Transport includes approx. 90m cars @ 950 kg/car [flat steel products 640kg/car + long products 190kg/car + yield loss and parts supply] thus ~85mt just for light passenger vehicles (heavy and light trucks, buses, rail wagons etc represent additional steel demand). Appliances (white goods) amount to ~400m units at roughly 120-140kg steel (including yield loss) per appliance unit.

Figures above include demand across other steel segments including consumption of engineering steel or special bar quality steel of ~46mt (SBQ), and fasteners demand at around ~21mt.

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GLOBAL STEEL DEMANDDemand by Form

Demand estimates above exclude certain products not in flat / long / tubular form that are made from semi-finished steel. These include steel wheels produced from ingots or continuous cast rounds (mostly for rail transport), for which world demand currently amounts to ~5 million units [3.5m forged wheels; 1.5m cast wheels]. At ~350kg/wheel this segment accounts for ~2mt steel demand.

Form Demand, mt

Flat 555

Long 520

Tube 120

Total 1195

Figures are MCI estimates for 2008 in millions metric tonnes finished steel products.

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GLOBAL STEEL DEMANDDemand by Product – Flat Products

Product Demand, mt

Plate 110

Hot rolled coil & sheet 196

Cold rolled steel 117

Coated flat products 132

Total 555

Figures are 2008 estimates, and include electrical steel (silicon steel) demand of ~11 mt and tin mill product demand of ~13mt.

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GLOBAL STEEL DEMANDDemand by Product – Long Products

Product Demand, mt

Heavy sections 44

Light sections 46

Bar 280

Rod 150

Total 520

Figures are 2008 estimates. Heavy / light section cut-off is 80mm. Demand assessments include ~160mt rebar [excluding bar-in-coil] within bar, and include demand for other downstream products (e.g. wire, wire rope) obtained by further processing. Heavy sections figures include rail demand of ~10 mt/year.

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GLOBAL STEEL DEMANDDemand by Product – Tubes

Product Demand, mt

Welded 83

Seamless 37

Total 120

Figures are 2008 estimates of world demand. Welded tube estimate includes large diameter pipe (LDP) consumption of approximately 18mt.

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DEMAND FORECASTWorld steel demand in 2009 and 2010

• 2008 world finished steel demand ~1195 mt• Level of full year 2009 consumption:

– Will be lower due to the credit crisis– Will be critically dependent on construction sector –

thus infrastructure spending e.g. in China– Is assessed by MCI at ~1060mt– This is an average of recent IISI / OECD forecasts

• Recovery expected in 2010• MCI tentative 2010 demand forecast is ~ 1175

mt – if China stimulus progresses as planned†

†: China’s fiscal stimulus package is a $585 billion increase in spending on transportation construction [roads, rail], earthquake reconstruction, rural infrastructure modernisation projects, environmental protection, housing, indigenous innovation [technological capabilities] and healthcare / education. Geared largely to steel intensive building and construction, MCI appraise this package as one of the most important factors shaping the future recovery of Chinese / world steel demand in 2009 and 2010.

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STEEL SUPPLYTop 5 producers / development options

Producer Output mt Business development path

ArcelorMittal 116Rationalisation of high cost inland sites [Chicago area, USA; France, Germany]

Nippon Steel 36 Consolidation of Japanese industry

JFE 34 Merger with Nippon Steel

POSCO 31Acquisition of the Vietnamese Steel Corporation; regional jv's with Asian partner(s)

Baosteel 29 Organic [especially export oriented] volume growth

Outputs are 2008 crude steel production figures [source: IISI]. Development paths are MCI’s own estimates of possible development paths. Please note that these development options have been elaborated by MCI without consultation with the steelmakers.

For more analysis similar to that above (with MCI’s compliments) visit us at: www.steelonthenet.com/swot.html

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INDUSTRY ISSUESSome current topics for discussion

Globalisation Q: How does ArcelorMittal get to 250 mt?

A: Emphasis on demand side not supply side – construction markets especially

CO2Q: How to respond to increasing environmental and emissions costs?

A: Increasing geographic polarisation between melting and rolling of steel

TechnologyQ: What will the next technology leap comprise?

A: More ‘near net shape’ casting including technology licensing e.g. of Castrip®

ChinaQ: What are the main problems or allegations?

A: Direct and indirect subsidies; capacity expansion during time of stagnant world steel demand; increasing international adoption of trade barriers as a result, to the detriment of the industry worldwide

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OPPORTUNITIES …

• Can MCI help your firm develop a presence in the international steel sector?

• Can we help you raise funds for investment?• Or assist you perhaps with a strategic appraisal of your

business?• If so please contact us for a no obligation discussion …

Please contact: Andrzej Kotas, Managing Director, MCI

Website: http://www.steelonthenet.com

Email: [email protected]

Mobile: +44 (0) 775 149 0885

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OPPORTUNITIES …

For more steel information visit us:

http://www.steelonthenet.com