Recent Developments in the North American Steel Industry

OECD Steel Committee MeetingParis, France

March 19-20, 2020

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Macroeconomic economic conditions in North America are softening, causing growth in manufacturing to slow North American apparent steel demand and steel

production both declined in 2019 The North American region continues to face

significant direct and indirect steel trade deficits While new investment in North American steel

mills continues, there have also been recent announcements of additional layoffs, mill idling, consolidations, and permanent closures

Overview of North American Market Conditions

NAFTA Macroeconomic Data

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Gross Domestic Product (GDP)Percent Change (Y-O-Y)

2013 2014 2015 2016 2017 2018 2019 2020fU.S. 1.7 2.5 2.9 1.6 2.2 2.9 2.3 2.1

Canada 2.0 2.5 1.1 1.5 3.0 1.9 1.3 1.6

Mexico 1.4 2.2 2.5 2.9 2.1 2.1 -0.1 0.5

Industrial Production (IP)Percent Change (Y-O-Y)

2013 2014 2015 2016 2017 2018 2019 2020fU.S. 2.0 3.1 -1.0 -1.9 1.6 3.9 0.8 0.0

Canada 1.8 4.0 -1.1 -0.3 4.9 3.0 1.0 0.5

Mexico -0.5 2.7 1.0 0.4 -0.2 0.5 -1.6 -0.1

Source: U.S. Bureau of Economic Analysis (BEA), IHS Markit (U.S. – March 2020), Bank of Canada, Mexico Economic Outlook, Banco de Mexico, Oxford Economics2020f = Forecasts

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North American Apparent Steel Demand Remains Below Recent Highs, Declining 2.3 Percent in 2019

0

20

40

60

80

100

120

140

160

2013 2014 2015 2016 2017 2018 2019

Mill

ion

Met

ric

Tons

(M

MT)

North American Apparent Steel Use (ASU)Source: U.S. Census Bureau (Commerce), Global Trade Atlas, AISI, CSPA, Canacero

North American Steel Production in 2019 Declined by 0.9 Percent Amid Market Uncertainty

5

0

20

40

60

80

100

120

140

2013 2014 2015 2016 2017 2018 2019

Mill

ion

Met

ric

Tons

(M

MT)

North American Crude Steel ProductionSource: AISI, CSPA, Canacero

NAFTA Utilization Remains Below World Utilization Rates for Past Seven Quarters

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60%

65%

70%

75%

80%

85%

90%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2013 2014 2015 2016 2017 2018 2019

Capacity Utilization – North America vs. WorldSource: AISI, CSPA, Canacero, World Steel Association

NorthAmerica

Offshore Imports Accounted for 16 Percent of the North American Market in 2019

7

0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016 2017 2018 2019

Fini

shed

Impo

rt M

arke

t Sh

are

(%)

Mill

ion

Met

ric

Tons

(M

MT)

Non-North American Steel ImportsSource: U.S. Census Bureau (Commerce), Global Trade Atlas, AISI, CSPA, Canacero

Non-North American Semi-Finished Steel Imports Non-North American Finished Steel ImportsFinished Import Market Share

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North American Finished Steel Exports Remain Low, Down 32 Percent from 2013 Levels

0

0.5

1

1.5

2

2.5

3

3.5

2013 2014 2015 2016 2017 2018 2019

Mill

ion

Met

ric

Tons

(M

MT)

North American Finished Steel Exports to WorldSource: U.S. Census Bureau (Commerce), Global Trade Atlas

North American Direct Steel Deficit Exceeded 25 Million Metric Tons for Sixth Year in a Row

9

-40

-35

-30

-25

-20

-15

-10

-5

02013 2014 2015 2016 2017 2018 2019

Mill

ion

Met

ric

Tons

(M

MT)

North American Direct Steel Trade Balance with WorldSource: U.S. Census Bureau (Commerce), Global Trade Atlas

Semi-Finished Steel Trade BalanceFinished Steel Trade Balance

Growing North American Indirect SteelTrade Deficit

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019TOTAL DEFICIT (16,842,803) (17,664,694) (15,739,727) (13,831,674) (10,917,159) (13,970,547) (15,742,255) (17,884,571) (18,757,601) (21,129,381) (23,331,151) (24,923,093) (26,779,200) (30,078,500) (29,502,600)ROW - ex. China (11,810,103) (11,809,094) (9,467,986) (7,297,702) (5,359,609) (7,152,305) (8,151,830) (9,299,092) (9,953,281) (11,710,565) (13,377,626) (14,804,236) (15,818,000) (17,197,000) (18,345,200)China (5,032,700) (5,855,600) (6,271,741) (6,533,971) (5,557,550) (6,818,243) (7,590,425) (8,585,480) (8,804,320) (9,418,816) (9,953,525) (10,118,857) (10,961,200) (12,881,500) (11,157,400)

(5.0) (5.9) (6.3) (6.5) (5.6) (6.8) (7.6) (8.6) (8.8) (9.4) (10.0) (10.1) (11.0) (12.9) (11.2)

(11.8) (11.8) (9.5) (7.3)(5.4)

(7.2)(8.2)

(9.3) (10.0)(11.7)

(13.4) (14.8)(15.8)

(17.2)(18.3)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

-

Steel Content Million MT NORTH AMERICAN INDIRECT STEEL TRADE DEFICIT WITH CHINA and ROW

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While North American Steelmaking Capacity Has Remained Steady, Global Capacity Increasing

0

500

1,000

1,500

2,000

2,500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

e

Steelmaking Capacity – World vs. North America2019e = estimate | Source: OECD

Global NAFTA

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Steel Production Growth Weak or Negative for Most Global Producers, While China Soars

0

200

400

600

800

1,000

1,200

China EU NorthAmerica

India Japan South Korea Russia Turkey Brazil

Mill

ion

Met

ric

Tons

(M

MT)

Raw Steel Production – Top Global Steel ProducersSource: World Steel Association

2018 2019

-4.9%

+8.3%

-0.8% +1.8% -4.8% -1.4% -0.7% -9.6% -9.0%

Efforts to Strengthen the North American Steel Market through Increased Cooperation

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The steel industry in all three countries is working to strengthen the North American steel market by——Urging prompt implementation of the U.S.-Mexico-

Canada Agreement, which will enhance the integration of our economies and modernize the NAFTA

—Strongly supporting government efforts to address global excess capacity and improve WTO rules on subsidies and other forms of market-distorting support

—Supporting North American governments’ cooperative efforts to strengthen trade remedy enforcement against dumped and subsidized imports and to adopt measures to combat transshipment, circumvention and evasion

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As steel demand softens in many markets worldwide, North American steel producers continue to face unfairly-traded steel imports and circumvention of trade remedies from many countries Meanwhile, global steel excess capacity continues to

plague steelmakers and markets worldwide North American steel producers favor effective solutions

to get governments out of the business of supporting uneconomic steelmaking capacity Urgent actions by governments are needed to address

this critical situation by implementing effective trade remedies enforcement and continued efforts to strengthen international rules on subsidies and other forms of trade-distorting measures

State Supported Steel Production Continues to Impact North America