Volume 15, Issue 3 March 2019

The Americas

U.S. job growth almost stalled in February, with the economy creating only 20,000 jobs amid a contraction of payrolls in construction and several other sectors, which could raise concerns about a sharp slowdown in economic activity. The February unemployment rate at 3.8% was down from 4.0% in January. Employment at construction sites fell by 31,000 jobs, the biggest drop since December 2013, after increasing by 53,000 in January.

The U.S. trade deficit in goods and services widened 19% in December to $59.8 billion. In 2018, the trade gap swelled 12% from 2017 to $621.04 billion. Excluding services that the U.S. sells to foreigners, such as tourism, intellectual property and banking, the deficit grew 10% to a record $891.25 billion. Economists say the shortfall was fueled by tax cuts and spending increases that juiced demand from U.S. consumers and businesses at a time when growth in the rest of the world was slowing.

U.S. retail sales unexpectedly dropped 1.2% in December to $505.8 billion, the severest decline since 2009 and a worrying sign for economic growth. Every major retail category aside from motor vehicles and building materials posted sales declines. November sales were revised downward to a 0.1% increase, suggesting easing consumer spending, which will feed into the broader pace of 4thQtr economic growth.

U.S. consumer prices were unchanged for a third straight month in January. In the twelve months through January, the CPI rose 1.6%, the smallest gain since June 2017. The core CPI gained 0.2%, rising by the same margin for a fifth straight month, and in the 12 months through January, the core CPI rose 2.2%. In January, gasoline prices fell 5.5%.

The Leading Economic Index fell 0.1% in January to 111.3, following no change in December. The Conference Board said the LEI has now been flat essentially since October 2018 and it forecasts that U.S. GDP growth will likely decelerate to about 2% by the end of 2019.

U.S. import prices fell 0.5% in January; both

fuel and nonfuel prices contributed to the decline. Imported fuel prices decreased 3.2% in January and 22.5% over the past three months. The drop was primarily driven by a 44.2% drop in natural gas prices, following a 138.8% increase over the 4thQtr of 2018. Prices for U.S. exports decreased 0.6% for the second consecutive month in January.

U.S. industrial production fell a sharp 0.6% in January partly due to a large drop in vehicle production. The stark production drop was driven by a precipitous 8.8% decline in vehicle

production. Machinery, chemicals, electronics and aerospace equipment output also fell. Overall capacity utilization fell to 78.2% and has remained below long-run averages. However, from the prior year, overall industrial production is still up a solid 3.8 percent.

U.S. GDP rose at a 2.6% annual rate in the 4thQtr as growth slowed and the boost from the tax cuts faded. The 2.6% fell short of the 3.4% growth rate in the 3rdQtr and 4.2% in the 2ndQtr.

Durable goods orders rose 1.2% in December, largely driven by ramped up commercial aircraft and parts orders, and orders for vehicles and vehicle parts. Without transportation, orders grew at a 0.1% pace. The underlying business-investment gauge, new orders for nondefense capital goods excluding aircraft, declined 0.7% in December, the fourth decline since August 2018, signaling firms are feeling less confident due to domestic and global economic uncertainty. Growth in the longer term appears to be pulling back; the measure grew 2.5% on the year, down from 13% in September 2017.

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U.S. producer prices declined 0.1% in January but core business prices increased 0.2%. From a year earlier, overall prices increased 2% in January, while prices excluding food, energy and trade services rose 2.5%. January’s overall decline was driven by a 0.8% reduction in goods prices. Lower energy prices helped push down overall goods prices.

U.S. factory orders ticked up 0.1% in Decem-ber. Factory orders excluding transportation items fell 0.6%; orders excluding defense rose 0.4%. Orders for vehicles bodies, trailers and parts grew at the fastest pace since July 2015. Orders for durable goods increased 1.2%.

U.S. consumer confidence in February rebounded robustly, as consumers’ future expectations improved after Congress reopened the government. The Conference Board index of consumer confidence rose to 131.4 in February from 121.7 in January.

U.S. construction spending edged down 0.6% in December. Residential construction fell by 1.4%, revealing ongoing struggles in the housing sector. Nonresidential activity rose 0.4%, while spending on government projects fell 0.6%, with both federal and state and local activity falling a sharp 2.2% and 0.5% respectively. For the year 2018, construction spending rose 4.1% to $1.3 trillion. It was an all-time high, but the 4.1% gain in 2018 was the weakest performance since spending fell 2.6% in 2011.

U.S. personal income fell 0.1% in January, the first dip in more than three years as dividends and interest payments dropped. Wages increased 0.3% after rising 0.5% in December. The DoC didn’t publish January consumer spending due to delays in data gathering caused by the partial government shutdown. Consumer spending dropped 0.5% in December.

Existing-home sales fell 1.2% in January to an annual rate of 4.94 million. It was the third consecutive month of declining sales, and the January sales were the lowest since November 2015. Compared with a year earlier, sales declined 8.5%. Inventories of existing homes for sale rose 3.9% to 1.59 million, a 3.9 months’ supply. The national median sale price for a previously owned home was $247,500, up 2.8% from a year earlier, and the slowest year-over-year increase since February 2012.

U.S. housing starts tumbled in December, capping a weak year for construction of new single-family homes due to factors such as rising construction material and labor costs. Housing starts dropped 11.2% in December to an annual rate of 1.078 million, the lowest level in more than two years. Residential building permits, which can signal how much construction is in the pipeline, edged up 0.3% from November to an annual pace of 1.326 million in December.

Home prices grew in 2018 at the slowest pace in four years. The S&P CoreLogic Case-Shiller index rose 4.7% for the year ended in December, a significant slowdown from 2017, when home prices grew more than 6.0 percent.

Mortgage delinquencies have fallen since the financial crisis. In the 4thQtr only 1.06% of mortgage balances were overdue by 90 days or more, down from 8.89% in the 1stQtr of 2010. Auto-loan delinquencies also remain below their recession-era peak but have been slowly creeping up since 2014. About 4.47% of auto-loan balances were delinquent in the 4thQtr.

U.S. new home sales rose 3.7% in December, to an annual rate of 621,000. For 2018 as a whole, the estimated 622,000 rate of new homes built was 1.5% above the 613,000 in 2017.

The ISM manufacturing index fell to 54.2 in February from 56.6 in January. Activity slowed at manufacturing firms as cold weather and uncertainty over trade led factories to pull back. The new order index for new orders dipped to 55.5 from 58.2 in January, a sign that demand continues to grow but at a slower pace.

The U.S. service sector rebounded in February. The ISM non-manufacturing activity index increased 3.0 points to a reading of 59.7 in February. The ISM's new orders sub-index for the services sector surged 7.5 points to 65.2, the highest level since August 2005.

Some U.S. steel slab importers’ requests for exclusions from Section 232 tariffs have been denied. W.C. flat-rolled mill CSI was denied exclusions on about 100,000 tons of slabs from Japan, while Evraz’s denials may amount to 400,000 tons of slab from Russia. One analyst estimated that up to 4 million tons of imported slab were denied exclusions from the 25% tariffs, representing roughly 10-15% of the total requested exclusions for semi-finished slabs.

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U.S. steel exports have plunged since the Section 232 tariffs were implemented against steel imports from Canada, Mexico and the EU. The U.S. exported 558,661 tonnes of steel in November 2018 – off 2.4% from 572,513 tonnes in October 2018 and down 30.2% from 800,740 tonnes in November 2017. Total U.S steel exports averaged 781,375 tonnes/month over February-June 2018, before falling to an average 568,695 tonnes for July-November 2018. If that downtrend were to extend over 12 months, the volume difference would amount to 2.532 million tonnes of lost demand for U.S. mills year-on-year.

Iron-ore futures reached new 4½-year highs in early February with ongoing tumult for Vale extending the ferrous metal’s sharp recent gains. Benchmark iron ore with 62% iron content climbed 2.8% to $94.85/tonne. Iron ore’s price surge continued as Vale said it was complying with orders from the Brazilian mining regulator and evacuating 500 residents from a rural town near a dam containing mining waste in Minas Gerais state. Vale declared force majeure on a number of iron ore and pellet contracts. Separately, Arcelor-Mittal evacuated residents near a dormant tailings dam as a precaution after the Vale incident. By the end of February, iron ore prices had retreated by 10%.

Nucor and U.S. Steel raised offer prices by another $40/ton for hot-rolled, cold-rolled and hot-dip galvanized coil. The moves come less than a month after a $40/ton price increase, which stabilized domestic sheet prices that had been falling since July 2018. ArcelorMittal raised prices for hot-rolled coil to $730/ton ($36.50 per cwt) and cold-rolled coil and coated products to $860/ton.

Outokumpu attributed its weaker year-on-year financial results for 2018 to softer performance at its Americas division, lower base prices in Europe, higher electrode costs and U.S. trucking expense increases. The Finnish stainless steel producer’s Ebitda slipped to €485 million ($550 million) for 2018, down from €631 million in the corresponding period of 2017. Its Americas division’s adjusted Ebitda swung to a loss of €5 million ($5.7 million) for that period, compared with an Ebitda of €21 million in 2017.

U.S. raw steel production for the year-to-date through March 2nd was 16.439 million tons at a capability utilization rate of 81.1%. That output was up 6.9% from the 15.384 million tons made during the same period in 2018, when the capability utilization rate was 75.7 percent.

U.S. steel mills shipped 7.804 million tons of steel in December, a 0.2% drop from November but a 6.5% increase from December 2017. Shipments for the full year 2018 were 95.279 million tons, a 4.8% increase vs. 2017 full year shipments of 90.886 million tons.

Olympic Steel sales rose 29% in 2018, reaching $1.7 billion. Increased shipping volume, combined with higher average prices in all three of the company's operating segments, drove the sales increase. Operating income more than doubled to $57.1 million, up from $24.0 million in 2017. Full-year 2018 net income improved 78% to $33.8 million, compared with net income of $19.0 million in the prior year.

U.S. Steel plans to resume construction of a new electric arc furnace at its tubular operations in Birmingham, adding 1.6M tons of annual steelmaking capacity. It is USS’s second major expansion since U.S. tariffs on imported steel last March raised steel prices. USS restarted a pair of blast furnaces last year at its mill near St. Louis that have a combined capacity to make 2.8M tons/year of steel. The company expects to spend $215 million to complete the electric arc furnace and add ~150 full-time employees.

BlueScope, Australia’s largest steel producer, plans to add 800,000-900,000 tonnes per year of sheet capacity at its U.S subsidiary. It also plans to add a third electric-arc furnace and a second caster that will boost melt capacity by 1.4 million tonnes at its Ohio mill, paving the way for a “debottlenecking” that could raise the sheet figure higher. BlueScope U.S. revenue was US$916.3 million in the first half of FY2019 ended December 31, up by 36.7% from a year earlier with Ebitda that more than doubled to US$320 million over the same period.

Key points gleaned from the 2019 Mexican Steel Forum included that the U.S. accounts for 60% of Mexico's steel exports, but Mexico accounts for only 9% of U.S. steel exports. Mexico will manufacture one of eight light vehicles that will be sold in the U.S. in 2019.

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Section 232 tariffs on aluminum and steel raised $3.6 billion in their first nine months of 2018, and revenues for the last two months are likely to be another $1billion. The majority of the money raised by tariffs so far has come from steel. Duties collected on steel since the tariffs took effect in March total $2.76 billion in the nine months to November. The DoC had expected around 4,500 exclusion requests with a response within 90 days. Instead, it’s had over 50,000 requests with 86% taking more than 90 days to process and over half are still pending.

U.S. steel imports in December were 1.898M tons, including 1.679M tons of finished steel, down 20.4% and 12.6% from November, respectively. For the full year of 2018, total and finished steel imports are 33.731M and 25.694M tons, down 11.5% and 13.1%, respectively, compared to the full year 2017. Finished steel import market share was 19% in December and 23% for all of 2018. Tinplate imports in 2018 were 769,213 tons, down 18.3% from 2017.

ArcelorMittal said the Section 232 steel tariffs are costing its Canadian operations $100 million per quarter. ArcelorMittal ships steel from its Dofasco mill in Toronto into the U.S., selling at market prices and “then we pay the tariffs,” MT said, and this comes after a weak 4thQtr for steel prices in the U.S. Average steel sales prices for ArcelorMittal’s N. American division (Canada, Mexico & the U.S.) fell 1.6% sequentially in the 4thQtr. MT shipped 1.83 million tonnes of flat-rolled steel in North America during the 4thQtr, down from 1.95 million tonnes a year earlier.

The Peugeot brand is coming back to North America after a near 30-year hiatus as part of PSA's plan to reduce its reliance on its European heartland following a year of record results. Net profit rose 40% to €3.3B in 2018; sales climbed 6.8% to 3.9 million vehicles. The strategy, which will also see Citroen launch in India and Opel in Russia, is part of PSA's plans to increase sales outside of Europe by 50% by 2021.

BMW was the biggest U.S. automotive exporter by value for the fifth consecutive year, with exports totaling over $8.4 billion in 2018. The company said it exported 234,689 units of its X model SUVs and coupes from its Spartanburg, South Carolina, plant during 2018, positively contributing to the U.S. balance of trade.

Fiat Chrysler will spend $4.5 billion to expand factory production in Detroit, including building a new assembly plant to produce Jeep SUVs. FCA plans to spend $1.6 billion to build the new Detroit plant, converting a site used for engine-manufacturing operations into a vehicle assembly complex that will build the next-generation Jeep Grand Cherokee and a new large Jeep SUV that has yet to hit the market.

Auto industry officials expect that the Section 232 recommendation on auto imports from DoC will include at least some tariffs on fully assembled vehicles or on technologies and components. MEMA, which represents auto parts suppliers, warned that tariffs will shrink investment in the U.S. at a time when the auto industry is reeling from declining sales, tariffs on steel and aluminum and tariffs on auto parts from China. A new report from the Center for Automotive Research showed its worst-case scenario of a tariff of 25% would cost 366,900 U.S. jobs in the auto and related industries. Major automaker groups said last year that the cumulative effect would be an $83 billion annual price increase and argued there was no evidence auto imports posed a national security risk. President Trump said the U.S. would impose auto tariffs on the EU if a trade deal can’t be reached between the two sides, suggesting that the talks will decide, not DoC’s assessment.

U.S. light-vehicle sales fell 2.9% in February as severe winter weather, lingering effects of the temporary U.S. government shutdown and anxiety over federal tax refunds curtailed showroom traffic. And in the latest sign the market downturn may be gaining speed, the annualized sales rate – 16.61 million – dropped below 17 million for the 2nd-straight month. It's the lowest monthly SAAR since August 2017, when the pace of sales came in at 16.58 million.

Volkswagen will invest $1.7 billion in a self-driving car venture with Ford. The carmakers agreed to make Ford’s autonomous-driving unit Argo the nucleus of an equally held joint venture that could receive additional assets from VW over time. VW would provide nearly $600 million as an equity investment in Argo and provide $1.1 billion in working capital for the venture’s research and development. The two companies will both own half of the entity.

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Europe, Africa and the Middle East Eurozone manufacturing PMI fell to 49.3 in

February 2019, below the previous month’s final 50.5. The latest reading pointed to the steepest contraction in the manufacturing sector since June 2013, as new orders dropped to the fastest rate since April 2013, and export orders declining to the greatest extend for over six years. Manufacturing output fell 4.0 percent.

Eurozone economic sentiment fell to 106.1 in February from 106.3 in January, the 10th straight decline. Investment has in turn fallen. Bank lending to companies was 3.3% higher in January than a year earlier but down from 3.9% in December. The UK is suffering from Brexit uncertainty, sending its ESI to 99.2 from 103.7 in January, its lowest level since June 2013.

The German economy narrowly escaped recession in the final quarter of 2018, recording output growth of just 0.02%, following a 0.2% contraction in the 3rdQtr. Fallout from global trade disputes and Brexit are threatening to derail a decade-long expansion in Europe's economic powerhouse. Morale is depressed by weaker demand for German products in China, the eurozone and emerging markets.

German manufacturing activity dropped to its lowest level since 2012 in February, with IHS Markit's PMI slipping to a record low of 47.6%, leaving the country's resilient services sector to keep the economy afloat. The uncertainty relating to U.S.-China trade tensions and weakness in the autos industry were highlighted, along with reports of growing competitive pressures within Europe.

The EU decided to allow the continued use of chrome passivation in the making of tinplate and electro-coated steel. There have been concerns about the potential health issues related to the use of chromium trioxide for the passivation of steel, and tin mills worldwide are working to adopt a chrome-free process. But it has taken much longer than expected.

Volkswagen's 2019 profit’s biggest threat is potential American tariffs. "It's becoming tense once again," VW Chief Executive Herbert Diess said. "You know it's a pity because we can’t solve it from the car industry [alone]. Analysts said tariffs could cost VW €2.5 billion a year, about 13% of expected earnings.

ArcelorMittal posted its highest annual profit in almost a decade, helped by the U.S. steel tariffs that boosted revenue in its North American business, where operating income was up almost 60% in 2018. Full-year Ebitda earnings were $10.3 billion, an increase of 22%. Net income was $5.1 billion, up 12.7%. Full-year steel shipments were 83.9 million tonnes (-1.6% YoY). Steel shipments in the 4thQtr were 20.2 million tonnes (-3.6% YoY). Crude steel production was 92.5 million tonnes in 2018 (-0.6% YoY). For 2019, ArcelorMittal predicts global apparent steel consumption will be up 0.5 to 1%, versus 2.8% last year.

Russian steelmaker Severstal plans to start construction of a new blast furnace this year which will have nominal capacity to produce 2.9 million tonnes/year of pig iron, with start-up expected in 2021. In 2018, the company produced 9.15 million tonnes of pig iron and 12 million tonnes of crude steel. It now plans to increase its liquid steel production to 12.7 million tonnes by 2023, mainly by increasing melts at the existing basic oxygen furnaces.

German carmakers Daimler and BMW are deepening their cooperation by combining their ride-hailing, parking and electric car charging businesses. The luxury car manufacturers have earmarked more than €1 billion to expand the JV, which includes Car2Go, DriveNow and ChargeNow, as the carmakers move beyond auto production towards a pay-per-minute system based on vehicle usage.

Porsche announced plans to release an electric version of the Macan SUV, its most popular model, in the next few years. The automaker also intends to invest about €6B in developing EVs, and wants half of all its new vehicles to be either hybrids or fully electric by 2025.

Honda will close its only British car plant in 2022 due to declining diesel vehicle demand and Brexit uncertainty. Honda built 160,000 vehicles in Swindon in 2018, about 10% of total UK output of 1.52 million cars. Nissan abandoned plans to produce its next-generation crossover SUV in the UK. Jaguar Land Rover is trimming 4,500 jobs from its 43,000-strong global workforce. BMW may move production of the Mini to the Netherlands. The number of cars produced in the UK fell by 9% in 2018.

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Asia/Pacific, Japan, Australia and India President Trump postponed plans to increase

the current import duties on $200 billion worth of Chinese goods, de-escalating the trade tensions between the two countries. The tariffs, which took effect in September at a rate of 10%, were set to increase to 25% on March 1st unless the two countries reached a deal. Trump didn’t set a new deadline for the tariff increase but proposed a summit with Chinese president Xi Jinping to conclude a deal, “assuming both sides make additional progress.”

Manufacturing activity in China shrank for a third-straight month in February. The Caixin/Markit PMI was 49.9 vs. January's reading of 48.3. Manufacturing activity in February remained near contraction levels not seen since early 2016. Domestic manufacturing demand improved significantly, and foreign demand was not deteriorating as quickly as last year. Still, new export orders slipped back into contractionary territory.

Japan logged its biggest trade deficit in nearly five years in January. The value of Japan’s January exports fell 8.4% from a year ago to ¥5.574 trillion, a two-year-low. The country logged its fourth-straight monthly trade deficit, which grew by almost 50% to ¥1.415 trillion—the biggest since March 2014. The data underscores the widening impact of the U.S.-China trade dispute on the global economy.

India’s GDP growth in the 3rdQtr FY2019 fell to 6.6%. The economy had grown 7.1% in the 2ndQtr and 8.2% in the 1stQtr, logging 7.6% for the first FY half. The manufacturing sector has underperformed, despite emerging as the world’s sixth biggest auto manufacturer and expanding production of smart phones. Manufacturing’s share of GDP has risen just 1.5% in last three years to stand at nearly 18%.

World crude steel production for January was 146.7 million tonnes (Mt), up 1.0% vs. a year ago. China produced 75 Mt of crude steel, an increase of 4.3% compared to January 2018. India’s crude steel output was 9.2 Mt (-1.95%), while Japan’s was 8.1 Mt (-9.8%). The U.S. produced 7.6 Mt of crude steel in January, an 11.0% increase on January 2018. In the EU, France produced 1.2 Mt of crude steel in January 2019, a decrease of 9.7% from 2018.

ArcelorMittal said India's bankruptcy court approved its takeover bid for Essar Steel, potentially ending months of court battles and opening the country’s steel industry to outsiders. The approval of the takeover of the Essar steel plant by MT and Japan’s Nippon Steel & Sumitomo Metal, paves the way for the first major foreign participation in India’s steel sector. ArcelorMittal has said it would pay a total $5.73B toward Essar Steel’s debt and invest in operations and improving profitability.

Chinese finished steel exports increased in January, with foreign buyers able to secure favorable deals due to lower prices in the country’s domestic market. China exported 6.19 million tonnes of finished steel in January, up 33.3% from 4.64 million tonnes in January of 2018. January 2019 shipments were also 11.3% higher than the 5.56 million tonnes of finished steel exported in December of last year.

Baosteel began producing steel strip from its new mill at Shanghai as a part of its Tinplate Product Structure Optimization project. The DCR mill has the capacity to process 205,000 tonnes of strip a year and has the option of running in both reduction/temper and temper modes to make tinplate. The mill was supplied by Primetals Technologies – a joint venture between Siemens of Germany and Mitsubishi Heavy Industries of Japan – and can operate at a maximum line speed of 1,500 meters/min.

Subaru plans a recall of as many as 2.3 million vehicles after discovering chemicals released by certain cosmetics, fabric softeners and car polish could cause malfunctions by creating an insulating layer on switches, preventing the proper flow of electricity. Subaru has been reeling from a series of problems ranging from faulty components to inspection re-dos, which, coupled with weakening sales in the U.S., has forced the company to slash its full-year profit outlook to its weakest in six years.

BHP expects iron ore demand in 2019 to remain at levels similar to last year despite uncertainties over short-term supply. Vale has warned that the suspension of its mines in the wake of the tailings dam disaster in Brazil could affect up to 70 million tonnes per year of its production. The miner’s output in 2019 was initially expected to reach 400 million tonnes.

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Industry Observations The economic harm from potential U.S.

tariffs on imported autos and components would dwarf that of any other trade policy implemented by the Trump administration so far, according to a new study by the Center for Automotive Research. The report estimates as many as 366,900 U.S. jobs will be lost including as many as 77,000 franchised-dealership jobs. U.S. light-duty vehicle prices will increase by $2,750 on average. U.S. new light-duty vehicle sales will drop by up to 1.3 million units per year. Dealerships will lose $43.6 billion, or $2.6 million each, under the worst-case scenario. Many consumers will be forced into the used-car market. The cost of maintaining and repairing vehicles will go up.

American consumers have been saddled with $69 billion in added costs because of the tariffs the U.S. imposed last year, including on $250 billion on Chinese imports, as well as levies on steel and aluminum, according to a study released by a quartet of economists working on a National Science Foundation grant.

Lobbying spending by steel producers, including some foreign firms, jumped last year to $12.2 million, up 20% from 2017 and the highest in at least two decades. Major steel companies pushed the administration to impose tariffs under Section 232 of U.S. trade law, leading to higher prices in the U.S., higher profits and plans to expand capacity. The effectiveness of the steel lobby led to counter efforts by manufacturers who rely on steel, who say tariffs are raising their costs and forcing them to pass them on to consumers.

The EU forecasts GDP in the eurozone will grow by 1.3% in 2019, instead of the 1.9% forecast in November, and by 1.6% next year, down from 1.7%. The eurozone’s waning fortunes (the end of the “euroboom”) reflect a drastic turn from just two years ago, when the currency area grew by 2.4% in 2017. Italy’s economy, which slipped into recession at the end of 2018, will grow at the slowest pace in the currency union at just 0.2% this year. Germany is struggling to repeat the export-driven growth of 2014-2017, with its 2019 growth forecast to drop to 1.1% from 1.8%.

U.S. Car and Light Truck Sales & Inventories February 2019

Company Sales Inventory GM (est.) 209,203 108 Ford Motor Co. 184,811 101 Fiat/Chrysler 162,961 119 Toyota 172,748 71 Honda 115,139 90 Nissan Group 114,342 79 Hyundai/Kia 90,546 74 VW Group 44,358 98 Total Cars 379,425 76 Total Trucks Total All Units

889,146 1,268,571

93 88

* Not all companies shown. Inventories are shown in days-will-last as of the first day of the month. Currencies in March

USD to ¥en 111.3 USD to Korean Won 1,123 Can$ to USD .7592 Chinese Yuan to USD .1494 €uro to USD 1.138 Australian$ to USD .7107 UK£ to USD 1.329 Mexican Peso to USD .0519

Global Briefing is prepared by Chuck Finnegan of the metals consulting firm Rubiconix for the use of Berlin Metals, North America’s highest quality service center provider of Tin Mill Products and Stainless Steel Strip. Contact sales@berlinmetals.com with any questions, comments or inquiries. This issue and previous briefings are archived on Berlin Metals’ web site, http://www.berlinmetals.com/.

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ArcelorMittal Reports on 2018 Results, Global Steel demand and Its Stronger Balance Sheet Berlin March 2019 Brief Appendix

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ArcelorMittal 2018 Financial Results Reflect Better Markets- Steel Division Improvement Berlin March 2019 Brief Appendix

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ArcelorMittal Looks at Chinese Overcapacity and Regional Steel Inventories Berlin March 2019 Brief Appendix

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Steelmakers in the U.S. Find Strength to Expand Under Tariff Protection- It’s Risky Steelmakers in the U.S. are expanding steel production capacity, betting that recent falling prices won’t last and tariffs will shield them from foreign competition. Steel demand has been weakening lately, increasing the risk that putting more steel into the market could cause a glut and drive prices lower. Steel mill expansions are risky. Prices can rise or fall dramatically in the two or three years it takes to build a mill. Imports last year fell 10% from 2017 to an estimated 34 million tons as the tariffs took effect and made imported steel more expensive. But imports still account for about a quarter of the U.S. steel supply. Companies bringing more domestic production capacity into the market aim to drive down import volumes further. Many of the new and expanded mills are located

in parts of the U.S. where construction companies and manufacturers rely on imports because they are far away from large steel mills in the Midwest and the South. It can be cheaper to buy steel from overseas than ship U.S.-made steel overland from those mills. Berlin March 2019 Brief Appendix

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Charts Related to Labor Productivity, Farmers’ Distress and Manufacturing & Income Disparity

Berlin March 2019 Brief Appendix

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Charts Related to U.S. Industrial Profits & GDP; China’s Manufacturing; Recession Probability Berlin March 2019 Brief Appendix

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Outokumpu Financial Report Presentation Slides Stainless Steel, February 2019 Berlin March 2019 Brief Appendix

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Outokumpu Financial Report Presentation Slides Stainless Steel, February 2019 Berlin March 2019 Brief Appendix

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Charts Related to Global Automotive Production, Sales and Borrowing Berlin March 2019 Brief Appendix

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The Global Economic Risks, U.S. Sectors Growth, Energy Consumption & Export/Import Prices Berlin March 2019 Brief Appendix

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Commodity Prices – Nickel, Tin, Aluminum, Steel Scrap and Iron Ore

Berlin March 2019 Brief Appendix

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Graphs Relating to the U.S. Economy: Autos, Trucks, Credit and Confidence Berlin March 2019 Brief Appendix

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Charts on Auto Markets, Price Changes Over 20 Years Berlin March 2019 Brief Appendix

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World Trade Slowed in 2018; Japan’s Manufacturing Sector Contracting; Steel Production ________________________________________________________________________________________ Disclaimer: This publication is for informational purposes only and should not be considered or construed as representations or advice by Olympic Steel, Inc. To the best of our knowledge, the information contained herein is accurate and reliable as of the date of publication; however, it should not be used or relied upon in regard to any specific facts or circumstances. The views set forth herein are the personal views of the authors and do not necessarily reflect those of Olympic Steel, Inc. Olympic Steel, Inc. does not assume any liability whatsoever for the accuracy and completeness of the information. OLYMPIC STEEL, INC. MAKES NO REPRESENTATIONS ABOUT THE SUITABILITY OF THE INFORMATION CONTAINED HEREIN FOR ANY PURPOSE. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of Olympic Steel, Inc., which may be given or withheld at its discretion. Berlin March 2019 Brief Appendix