STEEL MARKETS ASIA CONFERENCE 2012

NOVEMBER 19-20, 2012

ASIAN STEEL SCRAP MARKET AND OUTLOOK

Presentation by

Ved Prakash Gemini Corporation NV,

Belgium

Gemini Corporation NV

•

Steel, Recycling Plastics, Rubber and Engineered Wood Panels

Global Crude Steel Production Pattern

Around 60% of the Crude Steel is produced through Iron Ore Route

More than 65% of Steel is produced through Internationally Traded Iron Ore

Around 40% of the Crude Steel is produced using scrap Less than 7% of Steel is produced through Internationally Traded Scrap

What does International Trade of Steel Scrap mean to the world ?

Turkey V/s Asia

• Turkey Imports – 22 Million Tons Steel Scrap

(Main Suppliers – USA, Europe and Russia)

+

• Asia Imports – 35 Million Tons Steel Scrap

(Main Suppliers – USA, Europe, Japan, Middle East and Africa)

=

Around 80% of Global Steel Scrap trade

• What is the driving force of Asian steel industry from Raw material point of view ?

• Is it Scrap ?

• Is it Iron Ore ?

• Is it DRI/HBI ?

Country

Iron Ore DRI

Imported Scrap

Total Crude Production

China 650 <1 6.5 683

Korea 42 - 8.6 68

Japan 81 - - 107

India 39 25 4.5 72

Taiwan 13 - 5.3 22

RAW MATERIAL CONSUMPTION PATTERN OF ASIA - 2011

Imported Scrap = less than 4% of total crude steel production of Main Asian Steel Producers

in million MTs

2009

Countries Million Tons Million Tons 2010Growth

(YoY) Million Tons 2011Growth

(YoY)

Bangladesh 545 241 -56% 310 22%China 13,692 5,848 -57% 6,767 14%India 4,727 3,606 -24% 3,450 -5%Indonesia 1,484 1,644 11% 2,157 24%South Korea 7,800 8,089 4% 8,629 6%Malaysia 1,683 2,308 37% 2,050 -13%Pakistan 1,806 1,041 -42% 926 -12%Taiwan 3,912 5,331 36% 5,328 -0.06%Thailand 1,323 1,182 -11% 1,877 37%Viet Nam 1,830 1,936 6% 1,438 -35%

Asia - Total 40,015 18,933 -53% 34,128 45%

Trend of Steel Scrap Import in Asia2010 2011

Courtesy - WSA

Courtesy - WSA

Per Capita Steel Consumtion in Asia 2009 2010 2011

Kgs Growth (YoY) Kgs Growth (YoY) Kgs Growth (YoY)

China 429 23% 454 6% 479 5% India 56 13% 59 6% 62 5%

Indonesia 37 -17% 44 19% 54 21% Japan 442 -32% 532 20% 550 4%

South Korea 975 -23% 1122 15% 1205 7% Malaysia 301 -21% 370 23% 360 -3% Pakistan 15 13% 15 -3% 14 -5% Taiwan 589 -33% 927 57% 941 2%

Viet Nam 141 25% 150 6% 134 -11%

Asia 223 8% 242 8% 254 5%

Countries Jan - Sept 2012 Jan - Sept 2011 % Growth Million MT Million MT

China 534.6 527.6 1.3% India 56.9 53.9 5.5% Japan 81.3 81.0 0.4%

South Korea 52.2 50.7 3.0% Taiwan 15.9 17.0 -6.3%

Total Asia 740.8 730.1 1.5%

Global Crude Steel Production Growth For 2012 is Expected To Be +/- 2%

STEEL PRODUCTION GROWTH IN ASIA 2012

South Korea and India – are going to lead the Asian steel Industry in coming years

Courtesy - WSA

Slow down in China and it is impact on Asian Steel Industry

– Raw Material such as Iron Ore, Coal prices will be under pressure. – Chinese will be more active in export market. – Depressed Finished Steel will narrow down the long term outlook of

International Steel Scrap Industry.

Where are the opportunities for steel scrap exports to Asia? - The countries where per capita consumption is still relatively less such as India, Indonesia, Pakistan, Vietnam, Philippines

Korean Steel Industry : -

- Highest Per Capita Consumption in the world

- Domestic Demand is likely to remain Flat - Export Counts to 40% of total Steel Production - Global Expansion Plans – Main in India, Indonesia, Vietnam etc. - Heavy dependence on imported Raw Materials Iron Ore, Coal, Scrap - Strong forecast for Automotive Steel Sector

- Moderate Growth in Steel is Expected in Korea in 2013

- According to an Independent Study

Indian Steel Industry : - Projected to be second largest Steel producer in the world by 2015. - Highest Growth Rate in 2012 – 5.5% (First 9 months).

- For India, growth in apparent steel use is expected to grow by 6.9% in 2012 and by 9.4% in 2013

- Very low Per Capita consumption in Asia and in the developing world. Per Capita Consumption in Rural India is 10 kgs . - Enormous Capacity Expansions in coming years. - Increasing need for Raw Materials - Coal, Scrap etc.

Data according to Steel Ministry of India

- Challenges to Scrap Industry in India : ` - Weak Indian Rupee - Fluctuating Shipping costs – Specially for containerized cargos - Rising Cheap imports of Finished Steel – 18% increase YOY - Uncertainty over DRI production amid Coal /Iron Scam probes. (one of the main reason of increased scrap imports)

What areas of South East Asia look attractive ?

Source : World Trade Atlas, SEAISI

Scrap demand in ASEAN

Scrap supply (million tonnes) Major sources of import

Total import in 2011 was 8.64 million tons and expected to grow around 10 million in 2012

Indonesia

- Huge Investments in Steel Sector from S. Korea, China, India and Japan

- Growth in Imported Scrap – Almost 24% YOY

- Steel consumption grew by 22.4% y/y to 10.95mn metric tons in 2011.

- Steel consumption growth expected to be+/- 5% (GDP growth 6.5%)

- Still, a great potential as the country with the largest economy and highest

population in ASEAN,

- Share of steel consumption reached 20.9% making it the top second steel consuming country in the region after Thailand (15 million tons)

Thanks you very much ! Thanks to SBB team. You can contact me at – Ved@geminicorp.be