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Presentation to the 74th OECD Steel Committee Meeting

July 1~2, Paris

worldsteel Short Range Outlook 2013-2014

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worldsteel Short Range Outlook 2013-2014

Macroeconomic Background to the Forecast

Key global economic risks stabilizing

Global economy stuck in a soft patch in early 2013, but recovery expected

in 2013 H2

The Eurozone crisis, albeit stabilizing, still remains critical risk factor

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Source: IMF

IMF GDP Forecast Revisions Risk Premiums (Spread over 10 year German bunds)

Source: Haver Analytics

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Short Range Outlook – Global overview Apparent Steel Use, finished steel (SRO April 2013)

1 412.6 million tonnes, 1.2% growth

1 453.9 million tonnes, 2.9% growth

1 500.3 million tonnes, 3.2% growth

2012

2013 (forecasts)

2014 (forecasts)

SRO submissions cover 96% of the ASU world total (based on 2014 data)

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1 2181 219

1 140

1 3001 395 1 413

1 454 1 500

7.0

0.0

-6.5

14.0

7.3

1.2

2.9 3.2

0

200

400

600

800

1 000

1 200

1 400

1 600

-10

-5

0

5

10

15

2007 2008 2009 2010 2011 2012 2013 2014

Mt%

Mt y-o-y % growth

123.1*

Evolution of World Steel Demand (2007-2014) Apparent Steel Use, finished steel (SRO April 2013)

*) 2014 as % of 2007

6

4

6.8

5.0

2.1

3.6

1.2

6.0

5.4

1.7

3.2

0.7

2.5

4.0

1.9

5.0

6.0

Apr 11 Oct 11 Apr 12 Oct 12 Apr 13

2012 2013

World World w/o China China

Evolution of SRO Growth rate (%), Forecast for 2012 and 2013, World and China

2.93.2

4.5 4.34.5

4.8

2.4

3.33.5

3.1

4.04.0

Apr 12 Jul 12 Oct 12 Apr 13

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Regional Breakgown Apparent Steel Use, finished steel (SRO April 2013)

2012 2013 2014 12/11 13/12 14/132014 as

% of 2007

World 1 412.6 1 453.9 1 500.3 1.2 2.9 3.2 123.1

European Union (27) 140.1 139.5 144.1 -9.3 -0.5 3.3 72.4

Germany 37.7 38.2 39.6 -7.6 1.4 3.7 92.8

Spain 10.7 10.3 10.9 -18.5 -3.5 5.3 44.3

NAFTA 131.2 135.0 139.0 7.8 2.9 3.0 98.1

United States 96.7 99.3 102.2 8.4 2.7 2.9 94.4

Central & South America 46.9 49.8 52.0 2.6 6.2 4.3 126.8

Brazil 25.2 26.2 27.2 0.5 4.3 3.8 123.5

CIS 56.5 57.6 59.8 3.3 2.0 3.8 106.1

MENA 63.2 65.2 69.9 2.2 3.2 7.1 128.8

Turkey 28.5 30.6 31.9 5.7 7.5 4.2 134.2

Mt %

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SRO – Regional Overview II Apparent Steel Use, finished steel (SRO April 2013)

2012 2013 2014 12/11 13/12 14/132014 as

% of 2007

World 1 412.6 1 453.9 1 500.3 1.2 2.9 3.2 123.1

Asia 920.4 950.0 976.6 1.8 3.2 2.8 144.5

Developed Asia 142.7 141.8 143.3 -1.8 -0.6 1.0 89.0

China 646.2 668.8 685.5 1.9 3.5 2.5 163.8

India 71.6 75.8 81.1 2.6 5.9 7.0 157.6

Other Emerging Asia 60.0 63.6 66.7 9.6 6.0 4.9 147.8

Developed Economies 389.0 390.5 399.6 -1.9 0.4 2.3 84.3

Emerging & Developing

Economies excl. China377.4 394.6 415.1 3.6 4.5 5.2 127.4

Mt %

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Post-Crisis Evolution of Steel Demand Apparent Steel Use, finished steel (SRO April 2013)

10

60

80

100

120

140

160

180

2007 2008 2009 2010 2011 2012 2013 2014

2007=100

World China Developed Economies Em. & Dev. Economies excl. China

Evolution of Steel Demand, 2007 = 100 Apparent Steel Use, finished steel

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Changing Industry Geography

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55.5%

57.7%

67.4%

64.8%

64.8%

65.2%

65.3%

65.1%

16.3%

15.1%

10.5%

11.1%

11.1%

9.9%

9.6%

9.6%

11.6%

10.7%

7.3%

8.6%

8.7%

9.3%

9.3%

9.3%

4.6%

4.1%

3.2%

3.7%

3.9%

4.0%

4.0%

4.0%

4.5%

4.8%

5.2%

4.7%

4.4%

4.5%

4.5%

4.7%

3.4%

3.6%

2.9%

3.4%

3.3%

3.3%

3.4%

3.5%

4.1%

4.0%

3.5%

3.7%

3.8%

3.8%

3.9%

3.9%

2007

2008

2009

2010

2011

2012

2013

2014

Asia EU (27) NAFTA CIS MENA Central & South America RoW

Regional Share in World Steel Demand Apparent Steel Use, finished steel

61.1%

63.4%

73.7%

71.3%

71.6%

72.5%

73.1%

73.4%

38.9%

36.6%

26.3%

28.7%

28.4%

27.5%

26.9%

26.6%

34.3%

36.7%

48.4%

45.2%

45.5%

45.7%

46.0%

45.7%

2007

2008

2009

2010

2011

2012

2013

2014

Emerging & Developing Economies Developed Economies China

Changing Industry Geography

Country ASU [Mt] Country ASU [Mt]

China 418.4 China 685.5

United States 108.3 United States 102.2

Japan 81.2 India 81.1

South Korea 55.2 Japan 62.2

India 51.5 South Korea 55.3

Germany 42.7 Russia 44.6

Russia 40.4 Germany 39.6

Italy 35.9 Turkey 31.9

Spain 24.5 Brazil 27.2

Turkey 23.8 Italy 21.7

TOP 10 (2007) TOP 10 (2014)

Top 10 accounts for 81.3% of world ASU in 2014

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Top 10 Steel Using Countries : 2007 vs 2014

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SRO - Summary

In 2012, world steel industry saw slowest growth in the post-crisis

period

Weak recovery expected in 2013, but further pick up in 2014

China entering a slower growth phase with rebalancing and emerging

economies’ growth momentum weakened compared to the pre-crisis

Europe’s prospects remain weak with diverging gap

US growth momentum weakens in H1 2013 due to the fiscal

consolidation, but longer term outlook positive

Bright spots : Central & South America, MENA, developing Asia

excluding China

Some positive notes: risks in the global economy have abated

considerably. In 2014, almost all countries will show positive growth

Uncertainty continues to prevail; the Euro zone Crisis remains key risk

factor along, China’s new pace of growth adds to uncertainty

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worldsteel.org

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ISSF Report to

OECD Steel Committee

Paris

02 July 2013

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Stainless Steel Categories

Category Typical chemical Characteristic

composition

CrMn steels Cr ~ 16% - 19% nickel-reduced stainless steel,

(200 series) Mn ~ 5.5% - 10% austenitic structure

Ni ~ 0.5% - 6%

CrNi steels Cr ~ 16% - 20% standard chrome-nickel

(300 series) Ni ~ 8% - 22% stainless steel,

(Mo, Si, etc) austenitic structure

Cr steels Cr ~ 10.5% - 19% standard chrome nickel-free

(400 series) (Mo, Si, Mn, etc) stainless steel,

ferritic structure

Alternatives to high Ni containing steels?

CrMn steels

Duplex steels

Cr steels

Please note: no chrome = no stainless steel!

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1 mill mt

35.4 mill mt

1. Oil Crisis 2. Oil Crisis

Gulf War

Asian

Crises

2012p

Recession 2001

1950

Compound annual growth:

Original time series: 5.91%

Trend growth: 5.58%

World Stainless Crude Steel

Production 1950 – 2012p in million tons

World

Financial

Crises

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Stainless Steel Production

Similar Performance as Plastics –

but more volatile

Stainless Steel

Plastics

Index 1990 = 100

1980 2011

6.9 million mt

33.6 million mt

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Volatility of Nickel Creates Volatility of Stainless Steel

Prices and Initiates very high Stock Fluctuations

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Global S C R Stock Changes all Products

Agreed Models

2007 2008 2009 tons 2010 2011 2012

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Stainless Crude Steel by Categories (2012 preliminary)

Note: due to major corrections of Chinese figures since 2011 not fully comparable with 2010, for CrMn steels in particular

Search for Alternatives to

Replace Nickel:

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Stainless Crude Steel Production 2010, 2011e and 2012pe by Categories

EuroAfrica Asia Americas World %

Provided by ISSF

Note: due to major corrections of Chinese figures since 2011 not fully comparable with 2010, for CrMn steels in particular

… however with regional differences:

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Asia and China Dominating:

Regional Market Shares of Apparent Demand

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Stainless Crude Steel Production:

Shift to Asia and China

19,187 20,690

22,840 24,570 24,546

+7.6% -0.1% +10.4% +7.8% -1.0%

28,706

+16.9

28,146

-2.0%

26,218

-6.8% -5.0%

24,904

+24.9

31,094

33,621

+5.2

36,363

n/a

* Major correction of Chinese figure for 2011, therefore not comparable with previous years

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Apparent Stainless Steel Use Growth

in 2012p, 2013e and 2014e

2012p 2013 e 2014 e

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Apparent Stainless Steel Use Growth

in 2012p, 2013e and 2014e

2012p 2013 e 2014 e

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