Steel Industry Update #256

8/8/2019 Steel Industry Update #256

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Steel Industry Update/256 November 2010 Locker Associates, 225 Broadway, Suite 2625 New York NY 10007 Tel: 212-962-2980

Table 1: Selected U.S. Steel Industry Data, September & Year-To-DateMonth of September Year-to-Date

(000 net tons) 2010 2009 % Chg 2010 2009 % ChgRaw Steel Production ............... 7,280 6,367 14.3% 67,115 44,789 49.8%

Capacity Utilization ................. 70.2 62.1 -- 71.2 48.0 --Mill Shipments .......................... 7,140 5,793 23.3% 63,154 42,791 47.6%Exports ..................................... 988 990 -0.2% 9,064 6,434 40.9%Total Imports ............................. 2,076 1,211 71.4% 18,383 11,802 55.8%

Finished Steel Imports ............ 1,585 1,026 54.5% 14,266 10,794 32.2%Apparent Steel Supply*............. 7,737 5,829 32.7% 68,356 47,150 45.0%

Imports as % of Supply* ......... 20.5 17.6 -- 20.9 22.9 --Average Spot Price** ($/ton) ...... 694 605 14.6% 693 600 15.4%Scrap Price# ($/gross ton) .......... 365 290 25.9% 343 221 55.5%

Source: AISI, Global Insight *Excl semi-finished imports **Avg price of 8 carbon products #shredded bundles

Table 2: U.S. Spot Prices for Selected Steel Products, October & Year-to-Date

Month of October Year-To-Date ($ per net ton) 2010 2009 % Chg 2010 2009 % ChgHot Rolled Sheet………….. 556 535 3.9% 609 465 30.9%Cold Rolled Sheet......…….. 666 630 5.7% 718 554 29.6%HD Galvanized Sheet..…… 726 645 12.6% 767 608 26.3%Coiled Plate........... .....…….. 575 587 -2.0% 634 611 3.8%Cold-Finished Bar (SBQ)….. 884 777 13.8% 845 799 5.8%Wide-Flange Beams....…… 705 653 8.0% 720 719 0.1%Wire Rod/Low Carbon.…… 625 584 7.0% 654 555 17.8%Rebar............ .............…….. 565 517 9.3% 571 505 13.2%Average Spot Price+…….. 663 616 7.6% 690 602 14.6%OCTG Seamless Tube…… 1,781 1,478 20.5% 1,746 1,738 0.4%Scrap ($/gross ton)*....………. 341 264 29.2% 343 225 52.4%

Sources: Global Insight, Spears Research +Comp price of 8 carbon products *shredded bundles



Steel Industry Update/256

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Source: World Steel Association, 11/10

Table 3: World Crude Steel Production by Region, September & Year-To-Date(000 metric tons) Month of September Year-to-Date Region 2010 2009 % Chg 2010 2009 % ChgEuropean Union……. 14,288 13,783 3.7% 129,988 97,869 32.8%Other Europe………. 2,925 2,517 16.2% 23,986 21,019 14.1%C.I.S…………………. 8,710 8,845 -1.5% 79,124 70,837 11.7%

North America……… 9,338 7,895 18.3% 84,340 57,668 46.3%South America……... 3,682 3,779 -2.6% 32,616 26,861 21.4%Africa………………... 1,398 1,253 11.9% 12,458 10,939 13.9%Middle East…………. 1,621 1,490 8.8% 14,061 12,918 8.8%Asia………………….. 69,114 70,535 -2.0% 663,238 574,184 15.5%Oceania………...…... 670 675 -0.7% 6,124 3,994 53.3%Total………………… 111,748 110,773 0.9% 1,045,935 876,290 19.4%CountriesChina………………… 47,945 50,961 -5.9% 474,532 420,890 12.7%Japan………………... 9,233 8,269 11.7% 81,932 60,925 34.5%United States……….. 6,645 5,776 15.0% 60,926 40,632 49.9%India (e)…….………… 5,640 5,293 6.6% 50,092 46,454 7.8%Russia (e) ...…..……… 5,600 5,420 3.3% 49,480 43,431 13.9%

South Korea..………. 4,655 4,510 3.2% 42,110 34,978 20.4%Germany.…………… 3,311 3,179 4.1% 32,974 22,655 45.5%Brazil…..…………….. 2,685 2,717 -1.2% 24,803 18,455 34.4%All Others…………... 26,034 24,648 5.6% 229,086 187,870 21.9% Source: World Steel Association, 11/10

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright © 2010 by Locker Associates Inc. Allrights reserved. Reproduction in any form forbidden w/o permission. Locker Associates, Inc., 225 Broadway Suite 2625 New York NY 10007.

World Crude Steel Production






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Table 5: U.S. Steel Co Financial Results, 3rd Quarter 2010

Item (in US$) 3q'10 2q'10 3q'09Net sales 4,497 4,681 2,817Total segment income -80 241 -379Retiree benefit expenses -43 -43 -33Income from operations -138 198 -412Net interest/other financial costs -78 150 25Income tax provision -9 72 -130Source: Steel Guru, 10/27/10; in US$ millions

Table 6: TATA Steel Financial Results, 1st Half 2010

(in US$) 1stH’11 1stH’10 % ChgSteel Deliveries (million tonnes) 11.7 11.3 3.9%

Turnover 12,427 10,835 14.7%EBITDA 2,008 135 1,387.4%EBITDA Margin (%) 16.2% 1.2% 1,250.0%Depreciation 472 499 --Net Finance Charges 281 356 --PBT 1,225 -981 --PBT Margin (%) 9.9% -9.1% --Profit after T, MI and SoA 847 -1,094 --PAT Margin (%) 6.8% -10.1% --

Source: Steel Guru, 11/13/10; in US$ millions unless noted; PBT=Profit Before Tax; PAT=Profit After Tax; MI=Minority Interest; SoA=Share of Profits of Associates

Table 7: ArcelorMittal Financial Results, 3rd Quarter 2010

(in US$) 3q'10 2q'10 3q'09 YTD'10 YTD'09Sales 21,039 21,651 16,170 61,342 46,468EBITDA 2,265 3,002 1,610 7,155 3,714Operating Income 1,057 1,723 326 3,466 -2,341Net Income 1,350 1,704 910 3,733 -945Iron ore production (Mt) 17.4 16.4 13.1 49.6 37.1Crude steel production (Mt) 22.7 24.8 19.6 70.6 50.7Steel shipments (Mt) 21.0 22.8 18.2 65.2 51.1EBITDA/tonne (USD/t) 108 132 89 110 73Op income/tonne (USD/t) 50 76 18 53 -46Basic EPS (USD) 0.89 1.13 0.6 2.47 -0.66

Source: Steel Guru, 10/27/10; in US$ millions unless noted




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Table 8: Chinese Investments and Contracts in US Companies, 2007-2009

Year Chinese Investor Investment Partner Sector Sub-sector2007 Sinopec $100 Syntoleum Energy Coal2007 CIC $3,100 Blackstone Finance Investment

2007 Minsheng $200 UCBH Finance Banking2007 CIC $5,000 Morgan Stanley Finance Investment

2008 Wuxi PharmaTech $150 AppTec Lab Technology Biomedical

2008 CIC $100 Visa Finance --

2008 China Life $260 Visa Finance --

2008 CIC $3,200 JC Flowers Finance Investment

2008 China National Cereals $140 Smithfield Foods Agriculture --

2008 SAFE $2,500 TPG Finance Investment

2008 CIC $200 Blackstone Finance Investment

2009 CIC $800 Morgan Stanley Real Estate Property

2009 CIC $500 Blackstone Finance Investment

2009 CIC $530 Blackrock Finance Investment

2009 CIC $1,210 Morgan Stanley Finance Banking2009 CIC $600 Oaktree Capital Finance Investment

2009 CIC $600 Goldman Sachs Finance Investment

2009 Beijing West Industries $100 Delphi Transport Autos

2009 State Construction Eng $100 -- Transport Rail

2009 CIC $1,580 AES Power --

2009 Jinjiang Int’l Hotels $150 Thayer Lodging Real Estate Tourism

2009 BAIC $200 Saab Transport Autos

Sources: Wiley Rein LLP, October 2010; investment in million US$

Table 9: Ownership of the Top Ten Chinese Steelmakers, 2010

Producer2009

Production Owner/Majority Shareholder% Gov’t

OwnershipHebei Iron & Steel Group 40.2 Hebei Province SASAC* 100%

Baosteel Group 38.9 Central SASAC 100%

Wuhan Iron & Steel Group 30.4 Central SASAC 100%

Anben Iron & Steel Group 29.2 Central SASAC and LiaoningProvince SASAC 100%

Shagang Group 26.4Runyan Trading Co. (17.4%), 39

individuals (64%) and JiangsuShagang Group Labor Union (18.6%)

19%

Shandong Iron & Steel Group 21.3 Shandong Province SASAC 100%

Shougang Group 17.3 Central SASAC 100%

Xinwu’an Group 16.7

Wenfeng I&S Co, Puyang I&S Co,Xinghua I&S Co, and nine other millswhich have 83.7% ownership; Wu’an

City SASAC has 16.3% ownership

16.3%

Magang Group 14.8 Anhui Province SASAC 100%

Valin Iron & Steel Group 11.8 Hunan Province SASAC 100%

Source: Wiley Rein LLP, October 2010; 200; production is in million metric tons




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Table 10: NA Light Vehicle Production Outlook

Year Million of Units2007 15.02008 12.62009 8.52010f 11.7

2011f 12.72012f 14.12013f 15.02014f 15.72015f 15.92016f 16.22017f 16.3

Source: J.D. Power Automotive, October 2010

Table 11: North American Light Vehicle Production, 2010Sales Group YTD’10 YTD’09 ’09-’10 Chg % ChgBMW Group 158,435 121,666 36,769 30%Chrysler (w /Fiat) 1,509,791 931,197 578,594 62%Daimler 125,121 96,129 28,992 30%Ford 2,330,680 1,832,174 498,506 27%Fuji Heavy 148,839 82,953 65,886 79%General Motors 2,734,484 1,884,762 849,722 45%Honda 1,295,267 1,030,589 264,678 26%Hyundai 411,430 199,215 212,215 107%Mazda 56,778 41,373 15,405 37%Mitsubishi 27,542 18,502 9,040 49%

Renault-Nissan 987,628 727,148 260,480 36%Suzuki 2,123 1,931 192 10%Tesla 1,456 1,409 47 3%Toyota 1,450,483 1,232,816 217,667 18%Volkswagen 423,083 323,866 99,217 31%Total Production 11,663,140 8,525,730 3,137,410 37%Source: J.D. Power Automotive, October 2010

Table 12: US Heavy Equipment Performance and Outlook, 3rd Quarter 2010

Company

3q’10

Earnings

3q’10

Revenues

Investment

Plans OutlookAgco Corp……… 461.3% 19.3 Yes ImprovingBucyrus Int’l*…… -15.7% 261.3 Yes BullishCNH Global NV... back in black 19.6 Yes SolidCummins, Inc….. 197.9% 34.4 Heavily Major growthPaccar, Inc....….. 822.3% 31.0 Doubling Ramping upSource: American Metal Market 11/1//10; *2010 results include acquisition of Terex Mining






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SAIL’s Existing Plants, Posco’s Plans and Target Customer Base in India, October 2010

Source: Goldman Sachs, 10/4/10




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Table 16: North American Service Center Industry Ranking, 2010p & 2009

2009Rank Name

Sales2010p ($mil)

Sales2009 ($mil)

2009Empl’s

StockingLocations

SquareFeet (000)

PrimaryProducts

1. Reliance Steel & Aluminum n/a 5,320 9,000+ 220+ 23,300 C/A & SS2. McJunkin Red Man n/a 3,660 3,650 245 n/a C/A & AL3. Ryerson Inc. 3,800 3,070 4,060 100 9,100 C/A & SS4. ThyssenKrupp Materials NA 2,400 2,100 3,000 77 5,100 C/A & SS5. Samuel, Son & Co. LTD. 2,540 1,960 3,992 86 8,120 C/A & SS6. O’Neal Steel n/a 1,730 2,540 70 4,141 C/A & SS7. MACSteel Service Centers 1,900 1,600 3,300 80+ 40,000 C/A & SS8. Namasco Corp. n/a 1,200 1,131 30 n/a C/A & SS9. Steel Technologies Inc. 1,400 1,200 1,400 30 3,350 C/A

10. Namasco Corp 1,500 1,195 1,300 23 2,700 C/A11. Carpenter Technology Corp. n/a 1,190 n/a n/a n/a C/A & SS12. Metals USA Holdings Corp. 1,300 1,100 1,723 38 4,600 C/A & SS13. Worthington Steel Co. n/a 989 1,200 10 3,130 C/A & SS14. Marmon/Keystone Corp. 920 850 1,410 48 4,900 C/A & SS15. Alro Steel Corp. n/a 820 n/a 43 3,100 C/A & SS16. Edgen Murray n/a 773 450 20 n/a C/A & SS

17. A.M. Castle & Co. n/a 726 1,576 33 3,400 C/A & SS18. Kenwal Steel Corp. 880 720 450 6 1,200 C/A19. Steel Warehouse Co. LLC 950 594 877 10 1,775 C/A20. Coilplus Inc. 790 570 470 10 1,300 C/A21. Olympic Steel Inc. n/a 523 1,057 16 2,009 C/A & SS22. Central Steel & Wire Co. n/a 521 1,000 5 2,100 C/A & SS23. Heidtman Steel Products Inc. 650 425 700 11 2,500 C/A24. Triple-S Steel Holdings Inc. 480 390 500 8 2,000 C/A & AL25. Majestic Steel USA Inc. n/a 354 200 1 450 C/A26. Cargill Incorporated 400 300 210 8 1,000 C/A26. Norfolk Iron & Metal 400 300 574 4 1,000 C/A28. Trident Steel Corp. n/a 295 n/a 8 n/a C/A29. Eaton Steel Bar Co. 350 250 275 5 700 C/A

30. Empire Resources Inc. n/a 246 80 10 1,000 C/A & AL31. Kelly Pipe Co. LLC 260 225 250 49 n/a C/A & SS32. Brown-Strauss Steel 250 220 200 7 275 C/A33. McNeilus Steel Inc. 250 209 310 3 810 C/A & AL34. Superior Supply & Steel 250 205 187 9 300 C/A & SS35. Chicago Tube & Iron Co. 218 201 410 10 950 C/A & SS36. Lapham-Hickey Steel Corp. 250 200 550 7 900 C/A & SS37. New Star Metals Inc. 250 187 212 3 630 C/A38. Mill Steel Co. 340 175 105 3 425 C/A39. Misa Metals Inc. 207 171 200 5 626 C/A & SS40. Esmark Steel Group 250 167 250 4 660 C/A &SS41. Saginaw Pipe & Steel Co. 160 160 125 2 100 C/A42. Liberty Steel Products 175 150 175 4 400 C/A & AL43. Triad Metals International 182 149 103 3 480 C/A44. Pacesetter Steel Service Inc. n/a 146 150 3 295 C/A45. Eastern Metal Supply Inc. 163 145 320 7 691 AL46. Contractors Steel Co. 190 142 300 5 1,100 C/A47. Ranger Steel Services LP 200 140 23 4 750 C/A48. McNichols Co. 138 136 316 17 573 C/A & SS49. Tubular Steel Inc. 176 131 350 7 700 C/A & SS50. Monarch Steel Co. Inc. 156 126 100 3 300 C/A

Total…..……………………… n/a 38,356 41,761+ 1,110+ 142,940+ --Source: Metal Center News, September 2010




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200

300

400

500

600

700

800

900

1000

1100

89 93 97 04 05 07 08 09 O N D J F M A M J J A S O

U.S. Flat-Rolled Prices

250

350

450

550

650

750

850

950

1050

1150

1250

1350

89 93 97 04 05 07 08 09 O N D J F M A M J J A S O

U.S. Other Product Prices

CF Bar (SBQ)

Beam

CR Sheet

Wire Rod

HR Sheet

Plate

($ per ton) ($ per ton)

Locker Associates Steel Track: Spot Prices

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.020102009

2010 6.9 6.9 7.8 7.7 8.0 7.8 7.5 7.3 7.3

2009 4.5 4.4 4.4 4.2 4.5 4.8 5.6 6.1 6.4 6. 6 6.3 6.5

J F M A M J J A S O N D

U.S. Raw Steel Production (mil net tons)

U.S. Capacity Utilization

Locker Associates Steel Track: Performance

30%

40%

50%

60%

70%

80%

90%

100%2010 2009

2010 64% 71% 73% 74%75% 75% 72% 68%70%

2009 43% 46% 43% 41%43% 47% 52% 58%62% 62% 61% 61%

J F M A M J J A S O N D

Steel Mill Products Foreign Trade, August & Year-to-DateImports: Country of Origin Month of September Year-to-Date (000 net tons) 2010 2009 % Chg 2010 2009 % ChgCanada……………………….. 570 462 23.4% 5,300 2,817 88.1%Mexico………………………… 182 111 64.0% 2,180 1,286 69.5%Other W. Hemisphere……….. 104 91 14.3% 828 614 34.9%European Union……………… 398 208 91.3% 3,235 1,825 77.3%Other Europe*……………….. 237 13 1,723.1% 1,792 823 117.7%Asia……………………………. 516 291 77.3% 4,456 4,184 6.5%Oceania………………………. 59 35 68.6% 509 228 123.2%Africa………………………….. 11 1 1,000.0% 83 24 245.8%

Total 2,076 1,211 71.4% 18,383 11,802 55.8%Imports: Custom District Atlantic Coast………………… 167 145 15.2% 2,299 1,510 52.3%Gulf Coast/Mexican Border… 790 352 124.4% 6,197 5,134 20.7%Pacific Coast…………………. 408 202 102.0% 3,556 1,791 98.5%Gr Lakes/Canadian Border…. 699 503 39.0% 6,175 3,236 90.8%Off Shore……………………… 12 10 20.0% 157 130 20.8%

Source: AISI; * includes Russia

Update #256




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Steel Industry Update #256