WORLD Inside Track #106

STEEL Iron Dominos

Chinese spot iron ore import price on the

DYNAMICS verge of plummeting.

HRB export price may peak soon.
Early Warning System

Iron Dominos: Tumbling Down The Great Wall

(The toppling Chinese iron ore price domino upsets the hot-rolled band,
steel scrap and other steel-price-related dominos.)

The most critical price in the global steel industry is China’s spot transaction price for imported
iron ore. First, the price is used to set the price paid for iron ore by many of the major international
steel companies. Second, changes in the price are likely to impact: a) the Chinese hot-rolled band
ex-works spot price; b) the steel scrap price on the world market; c) the hot-rolled band world export
price; d) the pig iron and hot-briquetted iron (HBI) export prices; and, perhaps, e) the price of hot-
rolled band in Brazil, Europe, India and the United States.

A far lower Chinese spot iron ore import price would significantly drive down the hot-rolled band
operating cost for those steel mills that purchase iron ore on a quarterly benchmark basis. The
quarterly benchmark iron ore price is presently tied to the Chinese import price for iron ore fines two
to four months before the quarter. (Note: Integrated steelmakers – those with blast furnaces and
BOF steelmaking units – require about 1.6 tonnes of iron ore to ship a tonne of finished product.)

If the iron ore spot price starts to fall sharply, Chinese steel traders (of which there are about 150,000
in the country) are likely to refrain for a while from purchasing domestic hot-rolled band, and related
products; at least until the price has fallen sufficiently to reflect the lower iron ore price. Once
China’s steel traders decide to hold back on their orders, the Chinese steel mills may be forced to cut
back steel production. Normally, the steel traders receive and redistribute about 50-55% of the steel
sheet products shipped by the steel mills; and, perhaps about 50% of the steel that’s exported. (Note:
Our contacts in China currently expect that the steel mills will ramp up their production in the
months ahead because of the rise the past month in the spot price of hot-rolled band and other
products.)

Reduced Chinese steel production, should this occur, would exert additional downside pressure on the
iron ore spot price because Chinese iron ore production, which is up sharply in 2010 to new record
levels, is likely to be cut back less substantially than steel production. Foreign suppliers of iron ore to
China will lose market share until the spot iron ore price drops so low that the Chinese iron ore
producers are forced to cut back their output.

August 20, 2010 Peter F. Marcus (201) 503-0902

Philipp Englin (201) 503-0908
Michele D’Augustine (201) 503-0911
WORLDSTEELDYNAMICS
Forecasts and viewpoints

The steel industry situation is highly fluid at the present time. New pricing developments,
and new ideas about what’s going to happen, seem to occur every day. The complexity of
the situation, and the difficulty of interpreting even the most simple data series, makes the
forecasting of events subject to substantial error. This condition is why everyone is
scrambling with such intensity to try to figure what’s going to happen; it’s like high speed
musical chairs. And, it’s why steel buyers are so determined to buy ahead with the shortest
lead time possible in order to minimize the price risk.

WSD offers herein eight forecasts and viewpoints about what’s going to happen near- and
longer-term, followed by commentaries on the Chinese iron ore situation, the USA steel
shipment outlook, the global steel mills’ cost trend and other items.

1. The Chinese spot price for imported iron ore fines, currently at $154-157 per tonne
delivered to China on a CFR basis (based on the Metal Bulletin daily assessment) falls to
about $100 per tonne at some point in the fourth quarter this year. (Note: This is, in
essence, the same forecast we made in our report dated July 6, 2010.) The price on July
2, 2010 was $140 per tonne; it bottomed out about 10 days later at $124 per tonne. WSD
thinks the price is highly vulnerable for a number of reasons:

 Traditional supply/demand analysis. A substantial oversupply of iron ore in

China may occur in the fourth quarter given: a) Chinese steel production that
remains below the peak level in the second quarter of 2010; b) Chinese iron ore
production that rises to new record levels in 2010 reflecting massive investments
in the sector – about $13 billion this year; c) offshore iron ore deliveries to China
that remain high; d) sizable iron ore inventories at the ports; and e) rising global
capacity to produce iron ore.

 The power of the invisible hand – i.e., price allocates resource. The ultra-high
Chinese iron ore price may attract greater-than-expected iron ore deliveries to
China in the fourth quarter – in addition to the high domestic supply. Shipments
from Indian ore companies will resume after the monsoon season, which ends
next month. More deliveries from Brazil are available now that steel companies
elsewhere in the world have replenished their iron ore inventories and operational
and logistical problems holding down deliveries in the first quarter have been
overcome. Deliveries of offshore iron ore to China in the fourth quarter of 2010
may amount to 600 million tonnes annualized; however, granted Chinese steel
production of 622 million tonnes annualized and domestic iron ore concentrate
deliveries of 494 million tonnes annualized, and no iron ore inventory liquidation,
only about 435 million tonnes of the offshore iron ore would be needed. (Hence,
even if WSD’s Chinese steel production estimate is low for the fourth quarter, the
oversupply of offshore iron ore would still be more than 100 million tonnes
annualized.)

 Technical factors – i.e., non-iron-ore supply/demand items. Participants in the

physical trading of iron ore in China include the steel mills, iron ore importers
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 WORLDSTEELDYNAMICS
(large and small) and iron ore traders. Participants in the over-the-counter swap
market, for which volume may amount to almost 3 million tonnes per month,
include financial players. It’s not clear that physical trading activity, which is the
basis for the determination of the daily imported iron ore prices by Metal Bulletin,
Platt’s and Steel Business Briefing, is extraordinarily high. There’s no liquid
financial futures market in China in iron ore, as there is for rebar and hot-rolled
band. When iron ore traders are contemplating what actions to take in their
physical transactions, we hear that they consider: a) supply/demand developments
in the iron ore industry; b) the price trends in steel products; c) Chinese stock
market trends (there’s a fair correlation between spot steel and spot iron ore price
movements and stock market trends); d) the country’s economic outlook
including views on the timing of governmental easing or tightening of credit
availability; and e) the price of the iron ore (the higher the price, the greater the
perception of risk).

Iron Ore Fines cfr China port

(daily average price)
200

180
$ per dry tonne

160

140

120

100

80
10/19/09

11/16/09
11/30/09
12/14/09
12/28/09

2/8/10

3/8/10

4/5/10

5/3/10

8/9/10
11/2/09

1/11/10
1/25/10

2/22/10

3/22/10

4/19/10

5/17/10
5/31/10
6/14/10
6/28/10
7/12/10
7/26/10

Source: Metal Bulletin

2. The hot-rolled band export price, currently about $660 per tonne for Tier I mills
FOB the port of export, peaks out in the $660 to $710 per tonne range in the next
month or two. The price then falls back to the $550-$650 per tonne trading range – i.e.,
$600 per tonne plus or minus $50 per tonne – for a period that could persist until the
summer of 2011. (Note: This pricing scenario matches up with what we call a “fair”
profit year for many steel mills in 2011 – for sure, profitability would be much higher
than that at the industry low point during the fourth quarter of 2008 and first half of
2009.)

 For the Tier I-II mills, the HRB export price bottomed out in early July 2010 at about
$600 per tonne, FOB the port of export. Several months before that, the mills’ asking
price peaked at about $770 per tonne; although, there were not many buyers at this
price. The low price in November 2009 was about $490 per tonne; and, in the spring
of 2009 about $380 per tonne.

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WORLDSTEELDYNAMICS
 For the Tier IV-III mills, the HRB export price bottomed out at $510-540 per tonne in
June 2010 and then rallied to the present figure of $560-600 per tonne, FOB the port
of export. The price could rise further in the next few weeks given that new order
activity has been good on the world market. The mills’ peak asking price in April
2010 was $590-650 per tonne, FOB the port of export. For this group, the estimated
HRB export price trading range later in 2010 and the first half of 2011 could be $500-
600 per tonne, FOB the port of export.
SteelBenchmarkerTM HRB Price
USA, China, Western Europe and World Export
(WSD's PriceTrack data, Jan. 2000 - March 2006; SteelBenchmarker data begins April 2006)
August 9, 2010
1200

1100

1000 USA
FOB mill
900 Western Europe
Dollars per metric tonne

ex-works
800

700 690
634
600 595
527
500

400

300
China
200 World Export
FOB port of export
100
Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09
Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Jul-00

Jul-01

Jul-02

Jul-03

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10
May-00

May-01

May-02

May-03

May-04

May-05

May-06

May-07

May-08

May-09

May-10
Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10
Sep-00

Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

3. It’s really quite a shock that leading international steelmakers are now being forced
to buy their iron ore quarterly based on a system that ties the price to the monthly
spot price for iron ore fines delivered to China. This situation makes the mills’
evolution of costs during the year far more unpredictable because of swings in the iron
ore spot market. Adding to the uncertainty is that, at times, the Chinese spot iron ore
import price seems to have a “life of its own” – i.e., it does not necessarily reflect the
near-term supply/demand shifts in the iron ore industry. As noted earlier, the major iron
ore companies are using the average monthly Chinese iron ore CFR import price, two to
four months before the start of each quarter, as the marker that sets the price for the
quarter in question.

 Steel companies that purchase their iron ore on a quarterly basis need to set their
own product prices each quarter. However, this is an untenable situation for some
of their largest customers, such as the automotive companies, that want to set the
price for their final products on an annual basis. (Note: Once there’s a liquid futures
curve for hot-rolled band and steel scrap outside of China, the ability to hedge the
steel price risk will somewhat overcome this problem.)

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 WORLDSTEELDYNAMICS
 The volume of physical trading of Chinese imported iron ore may not be that
substantial – although, there’s no doubt in WSD’s opinion that this is a real market
with significant trading activity. (Note: We are sure that the major iron ore
companies would not rely on this market if the tonnage was inconsequential.) There
are no reports on what volumes are being transacted, say our contacts. Much of the
trading involves the purchase and sale of the iron ore inventories at the ports, say our
contacts. Inventories owned by traders at the ports might amount to 20-25 million
tonnes. Iron ore in inventory is not expensive to carry in China given the low interest
rates – i.e., about 0.45% per month. And, there’s no storage charge. Not many
Chinese iron ore traders appear to be participating in the iron ore swaps market
(which may amount to about 3 million tonnes of transactions per month and includes
financial groups), says a contact. (Note: Currently, there is backwardation – i.e., the
future price is lower than the current price – in the iron ore swaps market. The
forward figure for December 2010 is $133 per tonne versus the figure for August
2010 of $142 per tonne. The forward price for June 2011 is $127 per tonne.)

 Steel and iron ore trader decisions at times may be the result of mob thinking.
Like the wheat farmer, a steel trader’s competitor who sits next door has no impact on
the price; hence, Chinese steel traders often disclose fully to one another just what
they are doing. At times, when a steel trader has an opportunity to purchase or sell a
large quantity of steel, he or she often lays off some of the tonnage with his or her
friends in the trading community.

 Steel traders play a huge role in the Chinese steel industry. Data available from
the Chinese Iron & Steel Association indicates that 50-60% of China’s steel product
deliveries made to steel traders (an outgrowth of the country’s “command system” in
place through much of the 1990s when the steel mills produced what they could and
the receipt and sale of their products was handled by traders). Daily market prices
from 28 cities, for about 15-20 steel products, are published in various newspapers
and in internet-based information services (including SteelHome that provides daily
data to WSD).

China Iron Ore Inventory and Indian Ore CIF Prices at Ports
225 80

200 70

175
60
Ore Inventory at
Seaports
150
Imported Indian Ore CIF China
Million Tonnes

Ports Prices, $ Per Tonne 50

$ Per Tonne (CIF)

125
40
100
30
75

20
50

25 10

0 0
12/11/2005

10/30/2006

10/23/2007

10/28/2008

12/14/2009
4/3/2006
5/8/2006

1/8/2007

7/3/2007

6/2/2008

4/3/2009
5/7/2009

5/4/2010
6/4/2010
7/9/2010
5/16/2005
6/20/2005
7/25/2005
8/29/2005
10/3/2005
11/7/2005

1/23/2006
2/27/2006

6/12/2006
7/17/2006
8/21/2006
9/25/2006

12/4/2006

2/12/2007
3/19/2007
4/23/2007
5/28/2007

8/13/2007
9/17/2007

12/3/2007
1/14/2008
2/18/2008
3/25/2008
4/28/2008

7/14/2008
8/18/2008
9/22/2008

12/8/2008
1/12/2009
2/23/2009

6/12/2009
7/20/2009
8/25/2009
9/28/2009
11/9/2009

1/18/2010
2/22/2010
3/30/2010

8/13/2010

Source: WSD estimates

5
WORLDSTEELDYNAMICS
4. WSD places the odds at 65:35 that Chinese steel production and apparent steel
demand will not boom during the remainder of this year. Steel production, which
recovered to a 627 million tonne annual rate in the first 10 days of August from 599
million tonnes annualized in the last 11 days of July, is forecast by WSD to rise to a 622
million tonne annual rate in the fourth quarter; hence, output would be below the
annualized rate of 663 million tonnes in the second quarter of 2010. The Chinese steel
industry pricing and supply/demand situation in the fourth quarter is “hard to call”
because of the possibility of many new developments in the next few months. Here are
some questions about the near-term outlook and our answers:

 If steel production rebounds, will the Chinese major mills gain or lose market share
versus the smaller steel mills?
Answer: WSD expects more of a rebound in flat products, which was also the
case in the first half of the year. Apparent demand for long products in the
first half of the year was up 17%, versus a gain of 27% for flat products.
Hence, since the major steel mills are the largest producers of wide flat
products, we expect them to at least sustain their market share.

 To what extent will the Chinese government’s drive to reduce energy consumption in
the country impact Chinese steel production?
Answer: It appears that the government is increasingly interested in reducing
total energy consumption, and might be placing less emphasis on energy
consumption per tonne of steel product produced. Hence, it may be asking
even the most efficient steel plants to cut back output for a while.

 How high is Chinese real steel demand at the present time?

Answer: In July, apparent steel consumption was 570 million tonnes on a
crude steel equivalent basis. The reduction of inventory might have been 20-
30 million tonnes annualized.

 What will be the impact of the recent decline in new housing starts? Might there be
fewer new major infrastructure developments? Will there be pressure for local and
provincial governmental groups to limit their loans because they have surged so
sharply?
Answer: Overall, there’s no sign of any sizable slowdown. However, there
are also few signs of any sizable rise in steel consumption in the second half
of the year versus the first half. In July, new housing starts were down 38%
versus June, but the figure from January to July was 68% higher than the prior
year. If the current level of housing starts is sustained, long steel product
demand in the second half might be slightly below that in the first half.
Infrastructure projects are expected to continue to grow based on the
government’s new 5 trillion RMB investment plan that emphases energy
sources other than coal and oil. Local and provincial loan issuance has been
so huge that it’s believed the Central government will have tighter control of
these loans in the future.

6
 WORLDSTEELDYNAMICS
 How much Chinese steel is held in inventory?
Answer: The reported quantity of steel held in inventory in China continues
to be remarkably low on a tonnage basis relative to the level of steel
consumption in the country. Based on CISA data, main market inventory in
23 cities was 15 million tonnes, which was 65% higher than in January.
(Note: Consumption of steel in these 23 cities and nearby regions may have
been about 300 million tonnes.)
HRB Inventory Change in 23 Major Chinese Cities
6.0

5.5

5.0

4.5
million tonnes

4.0

3.5

3.0

2.5

2.0

1.5

1.0
1/4/08

2/4/08
3/4/08

4/4/08
5/4/08

6/4/08
7/4/08

8/4/08

9/4/08

1/4/09

2/4/09
3/4/09

4/4/09
5/4/09

6/4/09
7/4/09

8/4/09

9/4/09

1/4/10

2/4/10
3/4/10

4/4/10
5/4/10

6/4/10
7/4/10
10/4/08

11/4/08
12/4/08

10/4/09

11/4/09
12/4/09

Source: WSD Estimates

 Will Chinese steel exports rise further?

Answer: Chinese steel product exports for the past four months for which
data is available amounted to 60 million tonnes annualized. However, the
government has eliminated export rebates on 45% of the export product
categories. Hence, exports may drop to an annual rate of 40 million tonnes.

 What will be the impact on the supply/demand balance for steel in China once the
hundreds of smaller steel production units are shut down based on the government
wishes?
Answer: The impact is expected to be nil because perhaps 50% of these
facilities have already been shut and the tonnage involved is so small. Please
see the accompanying table. For example, 222 blast furnaces demanded to be
closed have an average output of 500 tonnes per day; the 66 steelmaking units
produce only 133,000 tonnes per year on average.

7
WORLDSTEELDYNAMICS
Elimination List of Chinese Steel Production Capacities, August, 2010
(thousand tonnes)

Eliminated Average Already Products

Capacity Units Capacity per year closed Service

Iron making 39,278 222 177 50% Long products

Steel making 8,764 66 133 60% Long products

Coking 25,865 352 73 50% Long & Flat

Ferro-alloy 1,719 245 7 50% Long & Flat

Ore inventory at main sea-ports

Total 75 million tonnes Target
Of which:
L&M steel mills 40 million general transportation demand (about one month consu
traders 20 million waiting for higher prices or small mills to buy
The big 3 ore producers 15 million rising freight rates and ore prices.

Source: MIIT and WSD estimates

Notes:
1. Traders ore inventory including the ore imported from India and other countries.
2. The big three ore producers incur a lower storage fee at China ports
3. China total concentrated ore demand is about 1010 million tonnes in 2010. Of which, domestic ore mines can
supply 435 million tonnes, and need to import about 575 million tonnes

China HRB Capacity

(million tonnes, # of mills)

2006 2007 2008 2009 2010E 2011E 2012E

Year End HRB Capacity 94 132 152 175 194 210 225
Y-to-Y change 38 20 23 19 16 15
# of companies producing HRB 36 39 39 41 42 44

Total # of HRB mills (year-end) 29 41 51 57 64 69 74

# of HRB mills added 5 12 10 6 7 5 5

HRB production 90 119 135 155 178 195 205

Y-to-Y change 29 16 20 23 17 10

Source: WSD estimates

 Where is Chinese steel production headed in the months ahead?

Answer. There are countervailing forces at work. A positive for output is that
steel demand appears to remain near peak levels and production is down. One
negative is that, if traders turn negative on the price outlook, they will pare
back their orders. And, it appears that the government is pressuring the larger
companies to cut production in order to reduce energy consumption. There
are mixed stories about where the economy is headed; in good part the
consequence of the government’s actions to tighten credit and restrict the rise
in loans. Overall, it may be a good contrarian bet that Chinese steel
production will stagnate in the months ahead.
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 WORLDSTEELDYNAMICS
China Steel Production Monthly and Each 10 Days for 2009-2010
(million tonnes)
Year, Month and Every 10 Days CISA 77 mills Total China E* Monthly Production Year Rate
1st 11.16 14.17 517
Feb 2nd 11.25 14.28 40.42 521
3rd 9.52 12.08 551
1st 10.95 13.78 503
Mar 2nd 11.07 13.93 45.10 509
3rd 12.08 15.19 504
1st 11.24 14.14 516
Apr 2nd 10.93 14.09 43.41 514
3rd 10.94 14.11 515
1st 11.44 14.74 538
May 2nd 11.47 14.78 46.46 540
3rd 12.72 16.38 544
1st 11.77 14.98 547
Jun 2nd 11.96 15.22 49.42 556
3rd 11.94 15.19 554
1st 11.98 15.24 556
2009 Jul 2nd 12.23 16.30 50.68 595
3rd 13.90 18.39 610
1st 12.85 16.74 611
Aug 2nd 12.46 16.36 52.33 597
3rd 14.22 18.62 618
1st 12.78 16.66 608
Sep 2nd 12.64 16.55 50.71 604
3rd 12.51 16.46 601
1st 12.94 16.92 618
Oct 2nd 12.70 16.46 51.75 601
3rd 14.01 18.15 602
1st 12.49 16.22 592
Nov 2nd 12.47 16.00 47.26 584
3rd 12.85 16.71 610
1st 13.09 16.45 600
Dec. 2nd 12.96 16.49 47.66 602
3rd 14.25 18.10 601
1st 13.21 16.72 610
Jan 2nd 13.11 15.56 52.54 568
3rd 14.77 17.52 582
1st 13.47 15.98 583
Feb 2nd 13.85 16.43 50.36 600
3rd 11.39 13.52 617
1st 13.68 16.85 615
Mar 2nd 13.80 16.97 54.97 619
3rd 15.73 19.34 642
1st 14.56 17.99 55.40 657
Apr 2nd 14.60 18.31 668
2010
3rd 15.22 19.10 697
1st 14.92 18.31 56.14 668
May 2nd 14.68 18.01 657
3rd 15.99 19.63 651
1st 14.60 17.84 53.77 651
June 2nd 14.49 17.67 645
3rd 14.03 17.11 625
1st 13.84 16.92 51.74 618
July 2nd 13.46 16.46 601
3rd 14.78 18.1 599
August 1st 14.13 17.2 627

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WORLDSTEELDYNAMICS
China 10-day Annualized Steel Production Rate
(million tonnes)
750

700

650

600

550

500

450

400
1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st
2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd
3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec. Jan Feb Mar Apr May June JulyAugust

Source: CISA 2009 2010

China Long and Flat Steel Products Apparent Consumption

(thousand tonnes)

Production 2010H1 1H 2009 Volume Chg Y to Y % 2010H2e 2010 2009 Y to Y %

Long Products 17756.10 14970.30 2785.80 18.6 17000.00 34756.10 32367.60 7.4
Flat Products 18329.20 13485.60 4843.60 35.9 18000.00 36329.20 29877.77 21.6
Import 2010H1 1H 2009 Volume Chg Y to Y % 2010H2e 2010 2009 Y to Y %

Long Products 81.74 52.38 29.36 56.1 80.00 161.74 124.38 30.0
Flat Products 713.6 704.4 9.20 1.3 700.0 1413.61 1527.38 -7.4
Export 2010H1 1H 2009 Volume Chg Y to Y % 2010H2e 2010 2009 Y to Y %
Long Products 410.84 125.22 285.62 228.1 400.00 810.84 365.18 122.0
Flat Products 1433.09 361.67 1071.41 296.2 1100.00 2533.09 1184.26 113.9
Apparent Steel Consumption 2010H1 1H 2009 Volume Chg Y to Y % 2010H2e 2010 2009 Y to Y %

Long Products 17426.99 14897.45 2529.54 17.0 16680.00 34106.99 32126.84 6.2
Flat Products 17609.72 13828.34 3781.39 27.3 17600.00 35209.72 30220.89 16.5

Source: WSD Estimates

5. The price of obsolete steel scrap, globally and in the USA, has 65:35 odds of
declining sharply in the fourth quarter of 2010. We hold this view even though steel
scrap prices are rising at the present time. Offshore demand for USA-based steel scrap
has increased in recent weeks.

Factors that may drive down the steel scrap price include:

 The “Tumbling Down the Great Wall” domino theory. If iron ore prices in China
fall sharply, this is expected to trigger a decline in steel scrap prices. There’s

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 WORLDSTEELDYNAMICS
been a close relationship between steel scrap prices and spot Chinese iron ore
prices during the past 8 months.

 Non-Chinese steel production annualized in the fourth quarter of 2010 is forecast

at 794 million tonnes, or 12% lower than in the second quarter of 2008.

 The ratio of pig iron plus DRI (directly reduced iron) production to steel
production outside of China has been about flat since the first half of 2008.
Hence, since steel production is down by about 110 million tonnes annualized,
this means that obsolete steel scrap usage (excluding home and new scrap) might
be down about 20 million tonnes annualized. (Note: The global reservoir of
obsolete steel scrap that’s 10-40 years old is, on average, about 340 million
tonnes per year.)

 The current price of #1 heavy melting scrap in the USA, at about $325 per gross
ton, is relatively high versus where it’s sold in the past. Shredded scrap is priced
at about $350 per ton, with prime industrial scrap, which lately has moved up less
in price, at about $415 per ton. WSD thinks that scrap prices may be high enough
to extract sizable quantities of it from the obsolete steel scrap reservoir – even
though there’s less demolition scrap available in the Advanced Countries due to
reduced construction activity.

 The major growth of global steel demand in recent years has been in China, where
the steel scrap usage per tonne of steel production is the far lower than in most
other countries because of: a) the high share of output via the BF/BOF route
(about 92% of the total); and b) the typically high proportion of liquid pig iron
that’s charged into the steelmaking furnace – about 90% on average.

 Chinese steel scrap imports typically rise when the scrap is priced cheaper than
pig iron in the country. Currently, the price of pig iron delivered to the steel mill
in Hebei Province, excluding the 17% VAT, is $422 per tonne. In comparison,
when including the cost of shipping offshore steel scrap to Chinese steel mills
located inland, foreign scrap is not currently priced attractively unless it is landed
at about $350 per tonne – which is about 10% below the current market price.
Chinese steel scrap imports in the first half of 2010 amounted to 3 million tonnes
versus 13.7 million tonnes in 2009 and 3.6 million tonnes in 2008.

6. Price competition for hot-rolled band on the world market may intensify in the
remainder of 2010 and in the first half of 2011. We place 75% odds on this
possibility if there’s no steel shortage (which is our working assumption). Since mid-
2008, WSD thinks the “competitiveness” of the hot-rolled band price structure has
increased in a number of countries (China and the USA) and on the export market. The
tendency toward more price competition – i.e., the battle for market share – was obscured
in mid-2009 and early-2010 by “short” steel shortages that were created when apparent
steel demand rose and steel production was still depressed outside of China. Steel buyers
in mid-2009 ended their inventory liquidations and then, in early 2010, decided to place
orders further ahead because they saw expected sizable increases in the steel mills’ prices
due to the surging price of iron ore.
11
WORLDSTEELDYNAMICS
HRB Futures Price on the Shanghai Exchange
(RMB per tonne)

5000

4800

4600
October contracts December Contracts

4400

4200
August Contracts

4000

3800

3600
3/12/2010

3/19/2010

3/26/2010

4/16/2010

4/23/2010

4/30/2010

5/14/2010

5/21/2010

5/28/2010

6/11/2010

6/18/2010

6/25/2010

7/16/2010

7/23/2010

7/30/2010
4/2/2010

4/9/2010

5/7/2010

6/4/2010

7/2/2010

7/9/2010

8/6/2010
Source: WSD Estimates

7. The steel industry’s profit outlook for 2011 is “fair.” Our most likely scenario
(Scenario C, below) calls for industry volume to be up about 6%, but for price
competition to be more intense. Here’s how we place the odds on the four different
scenarios for next year:

A. Global apparent steel demand surges 10-15% reflecting the booming global
economy and steel users’ steel inventory replenishments. Tight supplies recur in
steelmakers’ metallics (pig iron, steel scrap, steel scrap substitutes and spot-price
iron ore). A steel shortage returns. Steel mill profits surge. Odds = 5%

B. Global steel demand rises about 8%. “Pricing power” remains “good” for
many mills as they calibrate their production to their customers’ needs. Profits
are up substantially. Odds = 30%.

C. Global steel demand rises about 6%. However, the rise in demand is not
sufficient to prevent an intense battle for market share among the steel mills.
“Pricing power” is only “fair” for many mills on the world export market, and
also in the USA, the EU, Brazil, India and a number of other countries. The steel
mills’ annualized profits remain well above those in the fourth quarter of 2008
and first half of 2009, but are still only fair. Odds = 50%.

12
 WORLDSTEELDYNAMICS
D. Global steel demand stagnates reflecting the sputtering global economy. Steel
price competition intensifies. Shake-out pricing conditions return to the steel
industry. A pricing death spiral – i.e., the price falls to the marginal cost of many
steel mills – occurs for hot-rolled band on the world market. Many steel mills
report losses. Odds = 15%.

WSD Global Steel Scenario Odds: 2011 and 2012

Item 2011 2012 Comment

A. Global steel 5% 20% Assuming a booming global
demand boom economy, steel shortage possibilities
rise. In 2012, a shortfall of pig iron
production outside of China is not
far-fetched. The Chinese economy
remains very strong. Profits surge.
B. Good increase in 30% 40% Steel demand up about 8% in 2011.
global steel In 2012, a second year of good
demand global steel demand growth boosts
the operating rate sufficiently to
shift more “pricing power” to the
steel mills.
C. Fair increase in 50% 20% Oversupply conditions in 2011
global steel wreak havoc on the steel mills’
demand pricing power; although pricing
power is far better than it was at the
low points in the fourth quarter of
2008 and first half of 2009. Profits
are only fair.
D. Global economic 15% 20% Macro forces, including de-
Stagnation leveraging, prevent significant
global economic growth. Credit
availability lessens as fears rise
about another global financial crisis.
Governments have problems
refinancing their debt. The Chinese
economy grows only 6% in 2012.
Shake-out conditions return to the
steel industry. Many mills lose
money.

When’s the next steel shortage?

By 2012 or 2013, the odds of a steel shortage rise to 25% or more. By then, underinvestment
at the primary end by non-Chinese steel companies may be limiting blast furnace production
gains. Also, by 2012-2013, de-leveraging actions by governments, manufacturing companies
and consumers may have reduced their debt sufficiently to support a good recovery in capital

13
WORLDSTEELDYNAMICS
spending, construction activity and consumer spending. Surging steel demand in India
begins to become a more important driver of steel industry developments.

A development working against a steel shortage in 2012 or 2013 would be a substantial

slowdown in Chinese steel demand growth as its economy makes the transition to less fixed
asset investment as a share of GDP and more consumer spending as a share of GDP. Of
course, the greater the rise in consumer spending, the larger the reduction in the consumer
savings rate. The current components of the savings rate as a share of GDP in China may be
about as follows: Enterprises at 22%; households at 22% and government at 6%, with the
total at about 50%. These figures by 2013 could shift to 22%, 18% and 6%, respectively,
with the overall aggregated savings rate for the three groups falling to about 46% of GDP.

Nevertheless, it’s not far-fetched that rising steel demand in the non-Chinese Developing
World will be sufficient to trigger a shortage even granted relatively small gains in Chinese
steel production.

HRB operating cost outlook

Based on WSD’s World Cost Curve analysis, we estimate that the average operating cost to
produce hot-rolled band globally in the third quarter of 2010 will be about $626 per tonne,
excluding an $18 per tonne penalty due to the reduced operating rate for the integrated steel
mills. The mini-sheet mills dependent on steel scrap have an estimated production cost of
$580 per tonne assuming no penalty for operating rate. The mini-sheet mills would have a
cost advantage of $46 per tonne.

Looking ahead to 2011, the average hot-rolled band operating cost for the integrated steel
mills is estimated at $557 per tonne, excluding a $12 tonne penalty due to the reduced
operating rate. The mini-sheet mills have an average forecasted operating cost of $561 per
tonne. (Note: The major integrated mills often make a broader range of product for their
customers than the mini-sheet mills. Hence, the cost figures are not always directly
comparable.) Operating costs come down in 2011 reflecting: a) a $40 per tonne drop in the
price of purchased iron ore from $150 to $110 per tonne; b) a $60 per tonne decline in the
coking coal price from $235 to $170 per tonne FOB Australia (perhaps the estimated decline
is too severe versus the current figure of about $190 per tonne); and c) a $20 per tonne
decline in steel scrap costs from $350 to $330 per tonne (perhaps not a sharp enough price
reduction). On balance, declining input costs work substantially to the favor of the integrated
mills.

Based on updated data for June 2010 (when iron ore costs were lower than the third quarter
of 2010), the World Cost Curve indicates that steel mills with the lowest operating cost to
produce hot-rolled band, including plant and corporate overhead costs, are located in
Kazakhstan, Russia, India, Iran, Mexico, Egypt and Saudi Arabia. The average operating
cost of the 20 lowest-cost companies is about $405 per tonne.

In comparison, the operating cost for the 20 highest-cost companies – i.e., #153 to #172 –
was $675 per tonne. The operating cost for the median company – i.e., #86 – was $595 per

14
 WORLDSTEELDYNAMICS
tonne. These figures include integrated, non-integrated and slab-purchasing producers of
hot-rolled band. No doubt, when raw material prices are high, the cost curve is quite steep.

WSD 2010 Global Steel Mill Cost Change Forecast - 2011

(Production in metric tonnes, Prices in $ per tonne)
---------------------------------2010Q3------------------------------- ----------------------------------2011----------------------------------

Usage per Tonne Market Price of Production Cost Input Price Impact per Tonne
Shipped Input of Input Change Shipped New Cost
BF/BOF Sheet Mills - 95% of Total

Iron Ore (Fines & Pellets)

Purchased 1.0 Tonnes $150 $150 -$40/T -$40 $110
Self-Supplied 0.6 Tonnes $41 $25 $1/T $1 $26
Sub-Total 1.6 Tonnes $175 $136
Coking Coal
Purchased 0.55 Tonnes $235 $129 -$60/T -$33 $96
Self-Supplied 0.05 Tonnes $87 $4 $1/T $0.1 $4
Sub-Total 0.6 Tonnes $134 $101
Scrap 0.2 Tonnes $350 $70 -$20/T -$4 $66
Home Scrap Credit 0.1 Tonnes -$350 -$35 -$20/T $2 -$33
Electricity 200 kWh $0.07 $15 2% $0 $15
Other Energy 12 mmBTU $5.7 $69 0% $0 $69
Net Labor ~1-10 manhours $2-$60 $74 2% $1 $75
Freight (Inbound) 2.4 Tonnes $24 $58 $1/T $2 $60
All Other Costs $68 3% $2.0 $70
Sub-Total $626 -$68 $557

Fixed Cost Impact (F.C. @ $70/t)

70% Operating Rate (2009) $30 $30
80% Operating Rate (2010) $18 $18
85% Operating Rate (2011) $12 $12
90% Operating Rate (2007) $0 $0
TOTAL $643 -$85 $570

EAF-based Mini Sheet Mills - 5% of Total

Iron Ore (Fines & Pellets)

Purchased 0 Tonnes $70 $0 -$40/T $0 $0
Self-Supplied 0 Tonnes $40 $0 $1/T $0 $0
Sub-Total 0 Tonnes $0 $0
Coking Coal
Purchased 0 Tonnes $129 $0 -$60/T $0 $0
Self-Supplied 0 Tonnes $85 $0 $1/T $0 $0
Sub-Total 0 Tonnes $0 $0
Scrap, Pig Iron and DRI 1.1 Tonnes $390 $429 -$25/T -$28 $402
Home Scrap Credit 0.1 Tonnes -$360 -$36 -$25/T $3 -$34
Electricity 600 kWh $0.07 $44 2% $1 $45
Other Energy 5 mmBTU $5.72 $29 0% $0 $29
Net Labor ~1-10 manhours $2-$60 $37 2% $1 $37
Freight (Inbound) 1.3 Tonnes $24 $32 $1/T $2 $34
All Other Costs $47 3% $1 $48
Sub-Total $580 $0 -$20 $561

Fixed Cost Impact (F.C. @ $60/t)

70% Operating Rate (2009) $26 $26
80% Operating Rate (2010) $15 $15
90% Operating Rate (2007) $0 $0

TOTAL $580 -$35 $561

Source: WSD Cost Curve Analysis

Exchange rate shifts continue to impact steelmakers’ international cost positions. Countries
whose currencies that have been strong versus the U.S. dollar since the spring of 2009 from
the strongest to least strong include Australia, Brazil, Canada, Japan, South Korea, Russia,
India, Mexico and Taiwan.

Weakened currencies versus the U.S. dollar include the Euro and the British Pound.

15
WORLDSTEELDYNAMICS
HRB price commentary

Steel price volatility remains high. As indicated in an accompanying graphic, since 2003 the
hot-rolled price on the world export has changed direction about every six months on average
(17 times in 92 months). In comparison, in the period from 1974 to 2002, the price changed
direction about every year (29 times in 336 months).

Factors working to sustain and/or boost the world hot-rolled band price

Here are some developments working to support and/or drive up the world price for hot-
rolled band. (Note: Notwithstanding the items discussed below, it’s WSD’s viewpoint that
the price may be within about $50 per tonne of its peak.)

 The steel market is still “alive” say our contacts in the steel trading industry.

 Steel demand is strong in Brazil and India.

 Export prices firmed in early August, a time of the year that almost never favors the
steel mills for seasonal reasons.

 The steel mills still have “pricing power.” Buyers are not confident.

 There are few signs of rising interest rates and/or immediate global financial
problems. The strengthening Euro versus the U.S. dollar in recent weeks is a sign
that the risk of a EuroZone financial meltdown is diminished.

 The steel sheet mills in the USA have experienced some improvement in orders the
past few weeks.

 Magnitogorsk (MMK) of Russia, a major Tier III mill and sizable hot-rolled band
exporter, is apparently offering hot-rolled band for export at $590-600 per tonne,
FOB the Black Sea, say out contacts. Our contacts indicate this it is probably sold out
for September.

 The Chinese steel mills are trying to raise their export prices

 Steel scrap prices are up substantially are up about $50 per tonne, with the price
delivered to the Far East up fro $325 to perhaps $390 per tonne..

 The spot iron ore price is high – which means that the mills have high costs and need
high steel prices.

 Inventories are low for steel buyers outside of China.

 Brazilian pig iron producers, we hear, asking about $440 per tonne, FOB the port of
export, for their product. There may be few buyers at this price, says a contact.

16
 WORLDSTEELDYNAMICS
 Slab prices are up about $20 per tonne the past week. The export price for well-
positioned slab sellers may be about $520 per tonne, FOB the port of export.

 Steel mills in some regions, including Europe and Japan, have been cutting back
output because apparent demand is less for their product.

 Hot-rolled band prices are perhaps holding up fairly will in the EU.

 Fewer steel mills and their customers, it appears, seem to be complaining about credit
availability.

WSD expects the HRB export price to top out within $50 per tonne of the current figure

(Note: WSD’s experience is that it’s often harder to call the price at the top than at the
bottom. In April 2008, WSD claimed that “chill” conditions were becoming apparent – i.e.,
initial signs of a steel buyers’ strike. What happened? Scrap prices took off – probably
because of surging apparent demand for steel (and scrap) and the unusually wide spread
between scrap and the price of steel products – leading to a “price pull” situation for scrap.
Consequently, the hot-rolled band price rose another $250-300 per tonne before it peaked
out in July 2008 at $1,150 per tonne, FOB the port of export.)

Items that may restrain the world export price for hot-rolled band:

 Recent steel intensity trends in the Advanced Countries. As discussed later, steel
usage per unit of industrial production in the OECD has recovered to a level about in
line with that in the first half of 2010. Hence, it’s hard to see further rise in steel
intensity the next few years; yet, a decline could occur if the recent steel intensity
figures were in part the consequence of rising inventory in the hands of steel buyers.

 The Japanese need to find other outlets for their hot-rolled band now that their exports
to South Korea are lessened due to new capacity in South Korea (Hyundai Steel) and
more competition from Chinese steel mills.

 Overcapacity to produce hot-rolled band outside of China appears to be substantial.

 Our contacts indicate that offshore offers in Brazil have been so substantial that the
mills are considering reducing their home prices (currently among the highest in the
world).

 Some of WSD’s contacts think there are hints of a renewed steel buyers’ strike – a
“chill” – now that the hot-rolled band price is about 10%. They report that buyers
seem to be more resistant at the higher price.

 Excess capacity to product hot-rolled band in China is growing now that production
has declined. There are about 40 corporate entities with 64 wide hot strip mills.
Wide hot strip mill capacity in 2010 is about 194 million tonnes, with production
17
WORLDSTEELDYNAMICS
estimated at 178 million tonnes. Capacity rises in 2011 to 210 million tonnes, and in
2012 to 225 million tonnes.

 WSD thinks that the current Chinese ex-works price for hot-rolled band is close to a
peak at about $528 per tonne, ex-works excluding the VAT. It’s up from the recent
low of $429 per tonne in mid-July.

 Some of the Chinese macro indicators have turned negative. While construction
activity tied to housing construction is at record levels, reflecting the prior surge in
activity, new housing starts are down substantially. Some observers expected a
much-slowed growth rate for the Chinese economy later in 2010 (which, possibly,
could be the foundation for renewed sizable gains in 2011).

 In the USA, while orders are improved, there’s still a sizable oversupply situation.
Competition in hot-rolled band is rising, especially in the Southeast, now that
ThyssenKrupp is starting up its 5.0 million tons per year hot strip mill.

 The latest economic news from the Advanced Countries is mixed. It’s plausible that
the rise of economic activity the past year was to a fair extent the consequence of an
inventory reversal (same phenomenon as in steel), rather than major gains in
underlying consumption.

 Coking coal prices have been weak. The Australian FOB export price has been cut to
about $190 per tonne, FOB the port of export, from $225 per tonne earlier in the year.
With coking coal production rising in China and steel production down somewhat,
the outlook for coking coal sales to China may be poor at the present time. As one
contact noted: “China is the marginal coking coal buyer, and the USA is the marginal
coking coal seller.” Coking coal seaborne trade in 2010 may rise to about 263 million
tonnes from 218 million tonnes – an increase of 45 million tonnes.

 There’s a lessened need for steel buyers to price hedge when steelmakers’ raw
material costs are coming down and the odds of a steel shortage seems unlikely to
recur in the foreseeable future. Many buyers want almost instant delivery in order to
minimize the price risk – a development that makes it hard to export steel products
because the buyers don’t like the long lead times. (Note: In the USA, some of the
mini-sheet steel plants have been operating at more than 90% of capacity despite
only a two- to three-week order backlog. Orders arrive at the last minute to an extent
that’s never occurred before.)

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 WORLDSTEELDYNAMICS
China: A sharp rise in apparent steel demand in Q4 2010?

WSD’s Liu Jinghai, director of Chinese research, sees few signs for a sizable speed-up in
Chinese economic development in the second half of 2010.

Auto production is down since May.

Shipbuilding new orders are down steadily.
Appliance production is normally lower in the second half.
Housing sales volume is down, and the market price has fallen. The purchase
of land was off 42% in July versus June. In July, on a year-to-year basis, there was a
rise of 22%.
The Chinese government will probably keep a tighter reign in credit in the housing market.
Local governments are now burdened with debt that’s three times their revenues.
The growth rate is down for the manufacture of tractors and power generators.
Exports of steel may slow as the government reduced export rebates.

USA steel industry situation

The outlook for the USA steel mills is fluid given: a) the uncertainty about steel demand
trends, including shipments in the fourth quarter of 2010; b) it’s not yet clear when
construction activity will rise significantly from the lows; c) the current short lead times to
ship hot-rolled band (three to four weeks in some cases); d) steel buyers’ determination to not
build inventories (although the steel service center industry figures have been rising in recent
months) ; e) the ability of the steel sheet-producing mills to sustain their exports if and when
the world export price declines; f) the possibility of rising foreign offerings in steel sheet
products, including galvanized coils from India; g) the impact of steel scrap price changes
(which have promoted hot-rolled band price boosts in recent weeks as the mini-sheet mills
seek to offset higher costs); g) the low operating rates at the steel mills producing
construction products (perhaps only about 65% since industry deliveries of long products
from 2000 to 2010 may be down about 35% to 29.6 million tons); h) the rate at which the
new ThyssenKrupp 5.0 million tons per year hot strip mill in southern Alabama gains market
share from nearby competitors including Nucor (the Hickman, Berkley and Tuscaloosa
facilities), Severstal North America (the original SeverCorr facility in Mississippi) and U.S.
Steel’s Fairfield, Alabama plant.

ThyssenKrupp, whose operating and financial costs will be gargantuan, will be offering
prime quality carbon-grade hot-rolled band starting in September, 2010. In 2011, we
estimate that it may ship 2.5 million tons of carbon hot-rolled band versus 0.2 million tons in
the fourth quarter of 2010 (assuming the plant is producing prime product in September,
2010). The company’s investment at the new 5.0 million tonnes per year slab-producing
plant in Brazil may be 5.2 billion Euro ($6.5 billion), while the investment in the USA hot
strip mill, various carbon and stainless steel rolling mills, and a stainless steelmaking facility
USA may be $4.6 billion.

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WORLDSTEELDYNAMICS
USA steel sheet and plate

The USA mills’ deliveries of flat-rolled steel products in 2010, including coiled plate but
excluding discrete plate, and including product made from purchased domestic and foreign
slab, may amount to 47.2 million tons – up from 31.6 million tons in 2009, but down from
the peak of 62.6 million tonnes in 2004.

In 2011, sheet deliveries may rise to 52.3 million tons, for a gain of 5.1 million tons.
However, if ThyssenKrupp captures 2.3 million tons of the increase, this leaves only 2.9
million tons of increase for the rest of the suppliers.

By 2013, flat-rolled shipments are forecast to rise to 57.1 million tons, which compares to
deliveries in 2008 of 50.4 million tons and, in 2009, of 31.6 million tons.

USA long products

Deliveries of long products in 2010 may amount to only 29.6 million tons, up 22% up from
the low point of 24.3 million tons in 2009. Peak deliveries were 45.2 million tons in 2000.
In 2011, we forecast a recovery to 33.6 million tons; and, in 2012, a further gain to 35.6
million tons. By 2013, long product shipments may recover to 40 million tons assuming that
infrastructure, construction and capital spending projects are much higher than at present.

USA shipments of all products

USA steel demand and the mills’ deliveries remain far below prior peaks. At this juncture,
it’s not clear whether or not the uptrend in shipments will continue in the fourth quarter of
2010.

Domestic steel shipments in 2010 are forecast to rise to 82.9 million tons, up from 60.9
million tons in 2009 (and only 26.1 million tons in the first half of 2009). The recent annual
domestic shipment high was 111.4 million tons in 2004. Currently, a number of the steel
sheet mills appear to be operating at 80-90% of capacity versus perhaps only about 65% of
capacity for the long product mills.

In 2011, we estimate that domestic deliveries will recover to 92.7 million tons; if so,
overcapacity in the industry will still be substantial in both long and flat products.

One of the factors propping up the USA hot-rolled band price, given the importance of the
steel-scrap-dependent mini-sheet mills, is the relatively high price of steel scrap.

WSD’s weighted index of activity in 15 USAsteel-consuming industries in 2010 may come

in at about 79.5, which compares 100 in 2008 and the peak of 116 in 2000.

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 WORLDSTEELDYNAMICS
USA Steel Consumption / Shipment Outlook
(million short tons)

1995 2000 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e
First quarter 24.9 28.6 28.2 27.1 27.8 26.3 27.5 13.0 20.5 22.7 24.0 25.7
Second quarter 24.4 28.5 29.0 25.6 28.8 26.5 27.5 13.1 21.8 23.9 25.5 27.0
Third quarter 24.0 27.3 27.4 25.7 26.8 27.1 26.0 16.6 20.5 23.1 25.2 26.5
Fourth quarter 24.2 24.7 26.8 26.6 26.1 26.5 16.8 18.2 20.1 23.0 24.0 25.0
Shipments 97.5 109.1 111.4 105.0 109.5 106.4 97.8 60.9 82.9 92.7 98.7 104.2
Plus: Imports 24.4 38.0 35.8 32.1 45.3 33.2 31.9 16.1 22.1 27.0 28.5 30.0
Less: Imported semis converted to finished 5.0 8.6 7.4 6.9 9.3 6.6 5.9 2.0 4.7 5.6 6.5 7.0
products by AISI-reporting companies
Less: Exports 7.1 6.5 7.9 9.4 9.7 11.2 13.5 9.4 12.3 13.9 14.5 15.0
Subtotal: Apparent steel demand 109.8 131.9 131.9 120.8 135.8 121.9 110.3 65.6 88.0 100.2 106.2 112.2
Less: Est. user/buyer inventory build -2.0 -2.0 8.1 -6.4 6.6 -2.5 -4.0 -9.0 4.0 3.0 4.0 5.0
Equals: Actual steel consumption 111.8 133.9 123.8 127.2 129.2 124.4 114.3 74.6 84.0 97.2 102.2 107.2
% change 2.0% 3.1% 7.1% 2.8% 1.6% -3.7% -8.1% -34.7% 12.5% 15.7% 5.1% 4.9%

Index of activity (IDX) in 15 steel consuming

industries (2004 = 100) 99 116 100 102 108 108 100 75 80 86 90 94
% change 4.3% 5.8% 5.8% 1.9% 6.3% 0.1% -7.6% -24.8% 5.4% 8.2% 4.7% 4.4%
IDX Short-Lead-Time Capital Goods 41 50 42 44 49 47 43 31 37 40 42 43
IDX Long-Lead-Time Capital Goods 26 33 29 29 31 35 34 27 22 25 26 28
IDX Consumer Goods 21 23 23 23 22 21 17 12 16 17 17 18
IDX Miscellaneous Industries 10 10 6 6 6 6 7 5 5 5 6 6
Steel consumption per point of
activity index (million tons) 1.134 1.152 1.238 1.247 1.192 1.146 1.140 0.990 1.057 1.130 1.136 1.140

USA Steel Shipment Breakdown

(million short tons)

1995 2000 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e
Integrated mills (with blast furnace)
Big Six (1993 - 2001) 43.0 40.7
AK Steel 6.3 6.4 6.2 6.5 5.9 3.9 5.7 6.1 6.1 6.1
ArcelorMittal Steel 15.6 20.0 20.2 18.1 14.9 8.2 16.4 17.7 17.7 17.7
Esmark Wheeling-Pittsburgh 2.4 2.4 2.3 2.0 2.1 2.3 1.3
Severstal North America 2.8 2.6 2.7 2.7 2.6 2.1 3.7 2.6 3.2 3.8 3.8 3.8
Dearborn 2.8 2.6 2.7 2.7 2.6 2.1 2.0 1.3 1.7 2.3 2.3 2.3
Sparrows Point (merged May 2008) 1.2 1.1 1.0 0.8 0.8 0.8
Warren (merged July 2008) 0.3 0.2 0.5 0.7 0.7 0.7
Wheeling (merged Aug 2008) 0.3 0.0 0.0 0.0 0.0 0.0
US Steel 15.6 13.3 14.2 14.5 16.9 9.9 15.6 17.0 18.0 19.0
Subtotal integrated mills 43.0 40.7 42.5 44.4 45.3 43.5 43.9 25.7 41.9 45.4 46.4 47.4
2% -4% 1% -41% 63% 8% 2% 2%
Flat-rolled mini-mills
Gallatin 0.3 1.2 1.4 1.4 1.6 1.6 1.4 0.9 1.2 1.4 1.4 1.4
Delta 1.4 1.7 1.7 1.8 1.8 1.6 1.0 1.3 1.5 1.5 1.5
NLMK Indiana (Beta Steel) 0.7 0.7 0.7 0.7 0.7 0.5 0.4 0.7 0.8 0.8 0.8
Nucor - flat 3.0 5.7 9.8 11.4 12.2 12.3 11.5 7.7 10.0 11.5 11.5 11.5
Berkeley 1.5 2.5 2.5 3.0 3.0 2.6 1.7 2.2 2.6 2.6 2.6
Crawfordsville 1.4 1.4 2.7 2.7 2.7 2.7 2.4 1.7 2.1 2.5 2.5 2.5
Hickman 1.6 1.6 2.2 2.2 2.2 2.2 2.3 1.7 2.1 2.5 2.5 2.5
Hertford (plate) 0.0 1.4 1.4 1.6 1.7 1.8 1.1 1.3 1.5 1.5 1.5
Decatur 1.2 1.8 1.9 1.9 1.9 1.7 1.0 1.6 1.7 1.7 1.7
Tuscaloosa (plate) 0.3 0.7 0.8 0.8 0.7 0.5 0.7 0.7 0.7 0.7
SSAB (plate) 1.2 2.3 2.2 2.7 2.7 1.7 2.6 2.3 2.3 2.3 2.3
Steel Dynamics Inc 1.9 2.3 2.4 2.5 2.5 2.3 2.1 2.3 2.5 2.5 2.5
Severstal Columbus 0.2 1.3 1.5 1.7 1.9 2.5 3.0
Subtotal Flat-rolled mini-mills 3.3 12.1 18.3 19.9 21.5 21.8 20.3 16.1 19.4 21.9 22.5 23.0

-21% 21% 13% 3% 2%

Long product EAF based mills
Chaparral Steel 1.0 1.4 1.4 1.4 1.8 1.3
Commercial Metals 1.3 1.8 1.8 1.8 1.8 1.8 1.7 1.6 1.5 1.7 1.7 1.7
Gerdau Ameristeel 1.1 2.0 5.8 6.3 6.5 7.6 8.3 5.3 5.5 6.8 6.8 6.8
Nucor - long 3.9 5.5 8.2 9.0 9.9 10.7 13.7 9.9 10.0 11.0 11.0 11.0
SDI - long 1.1 1.2 2.2 2.6 2.5 1.3 1.2 2.2 2.2 2.2
All others 43.8 45.6 32.3 20.9 20.5 17.2 7.4 1.1 3.4 3.7 8.1 12.1
Subtotal long product and smaller mills 51.2 56.2 50.6 40.7 42.7 41.2 33.6 19.2 21.6 25.5 29.9 33.9

Total mill shipments 97.5 109.1 111.4 105.0 109.5 106.4 97.8 60.9 82.9 92.7 98.7 104.2
Flat Rolled Sheet Mills using Semis
AK Steel Mansfield
NLMK Indiana (Beta Steel) 0.7 0.1 0.1 0.1 0.1 0.4 0.6 0.7 0.4 0.4 0.4 0.4
California Steel 1.6 1.8 2.1 1.8 1.9 1.7 1.4 0.8 1.4 1.5 1.6 1.8
Duferco-Farrell (Sharon)** 0.9 1.4 1.4 0.7 0.7 1.2 0.7 1.0 1.0 1.0 1.1
ThyssenKrupp USA 0.2 2.5 3.5 4.8
Others 2.7 5.9 3.9 3.6 6.6 3.8 2.7 -0.2 1.9 2.8 3.6 3.8
Subtotal imported semis based mills 2.3 2.7 3.6 3.3 2.7 2.8 3.2 2.2 2.8 2.9 3.0 3.3

Total Shipments 97.6 109.6 111.0 103.2 108.6 106.1 98.0 60.3 82.9 92.7 98.7 104.2
Flat Shipments 47.5 58.7 62.6 56.5 58.5 55.5 50.4 31.6 47.2 52.3 56.2 57.1
Discrete Plate Shipments 5.4 5.7 5.8 6.2 7.2 7.4 7.6 4.5 6.1 6.8 6.9 7.1
Long Shipments 44.7 45.2 42.6 40.5 43.0 43.2 39.9 24.3 29.6 33.6 35.6 40.0

% Flat 48.7% 53.6% 56.4% 54.8% 53.8% 52.3% 51.5% 52.3% 56.9% 56.4% 56.9% 54.8%
% Plate 5.6% 5.2% 5.2% 6.0% 6.6% 7.0% 7.7% 7.5% 7.4% 7.3% 7.0% 6.8%
% Long 45.8% 41.2% 38.4% 39.2% 39.6% 40.7% 40.8% 40.2% 35.7% 36.2% 36.1% 38.4%

Source: AISI, Company Reports and WSD estimates

* Also a steel producer
** Including semis from Beta Steel since 2008

21
 Percent

1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800

800

35
45
55
65
75
85
95
105
Jan-01 12/29/1980
12/28/1981
12/27/1982

Source: AISI
12/26/1983

Source: AISI
Jan-02
12/24/1984
12/23/1985
Jan-03 12/13/1986
12/12/1987
12/10/1988
12/9/1989
Jan-04
12/8/1990
12/7/1991
12/5/1992
Jan-05 12/4/1993

22
12/3/1994
12/2/1995
Jan-06 11/30/1996
11/29/1997
11/28/1998
(thousand tons)

Jan-07 11/27/1999
WORLDSTEELDYNAMICS

11/25/2000
11/24/2001
Jan-08 11/23/2002
11/22/2003
11/20/2004
11/19/2005
USA Raw Steel Production Utilization Rate

Jan-09
11/20/2006
Estimated Weekly USA Raw Steel Production

11/17/2007
11/15/2008
Jan-10
11/14/2009
 WORLDSTEELDYNAMICS
North American Auto Market
Cars & Light Trucks
(thousand units)

Addition or
Domestic Total (Reduction)
Production Sales Imports Sales to Inventory

Jan-07 1,208 822 265 1,087 120

Feb-07 1,294 976 275 1,251 43
Mar-07 1,437 1,171 366 1,537 (100)
Apr-07 1,296 1,026 306 1,332 (36)
May-07 1,437 1,198 361 1,559 (122)
Jun-07 1,409 1,108 342 1,450 (42)
Jul-07 940 988 316 1,304 (364)
Aug-07 1,445 1,140 331 1,471 (27)
Sep-07 1,229 1,016 295 1,311 (81)
Oct-07 1,454 937 289 1,227 227
Nov-07 1,330 889 286 1,175 155
Dec-07 947 1,064 321 1,384 (437)
Jan-08 1,168 794 245 1,039 129
Feb-08 1,289 902 269 1,172 117
Mar-08 1,118 1,006 346 1,352 (234)
Apr-08 1,199 907 337 1,244 (44)
May-08 1,128 1,011 382 1,393 (265)
Jun-08 1,223 866 319 1,185 38
Jul-08 858 813 319 1,132 (274)
Aug-08 1,067 937 309 1,247 (180)
Sep-08 1,123 742 220 962 161
Oct-08 1,157 619 215 835 322
Nov-08 869 549 195 744 125
Dec-08 723 673 219 891 (169)
Jan-09 435 469 186 655 (220)
Feb-09 598 491 196 687 (89)
Mar-09 700 614 241 855 (156)
Apr-09 677 605 212 817 (140)
May-09 557 684 240 924 (367)
Jun-09 621 638 220 858 (236)
Jul-09 589 726 269 995 (406)
Aug-09 818 905 354 1,259 (441)
Sep-09 974 555 190 745 230
Oct-09 1,023 632 204 836 187
Nov-09 930 745 179 566 365
Dec-09 838 475 552 1,027 (189)
Jan-10 904 525 171 696 209
Feb-10 942 600 178 778 164
Mar-10 1,113 813 252 1,065 49
Apr-10 985 759 221 980 6
May-10 1,027 857 245 1,101 (74)
Jun-10 1,133 757 224 981 152
Jul-10 N/A 788 259 1,047 N/A

Note: NA is not available

Source: Ward's Automotive Statistics

23
 Thousand Units Thousand Units
Million Units

400
600
800
1,000
1,200
1,400
1,600

0
2
4
6
8
10
12
14
16
18
20
22
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1972 Jan-07 Jan-07
1973 Feb-07
1974 Mar-07 Mar-07
1975 Apr-07
1976 May-07 May-07
1977 Jun-07
Jul-07 Jul-07
1978 Aug-07
1979 Sep-07 Sep-07
1980 Oct-07
1981 Nov-07 Nov-07
1982 Dec-07
1983 Jan-08 Jan-08
Factory Sales

Source: Ward's Automotive Statistics

Feb-08

(1) 2010 annualized year-to-date date

1984
1985 Mar-08 Mar-08

Source: Ward's Automotive Statistics

1986 Apr-08
May-08 May-08

Factory Sales
Imports
1987 Jun-08

Factory Sales
1988 Jul-08 Jul-08
1989 Aug-08
Production

1990 Sep-08 Sep-08

1991 Oct-08

24
1992 Nov-08 Nov-08
1993 Dec-08

Production
1994 Jan-09 Jan-09
1995 Feb-09
Mar-09 Mar-09
1996
Apr-09
1997 May-09 May-09
1998 Jun-09
Production
1999 Jul-09 Jul-09
2000 Aug-09
WORLDSTEELDYNAMICS

2001 Sep-09 Sep-09

Imports
2002 Oct-09
2003 Nov-09 Nov-09
2004 Dec-09
2005 Jan-10 Jan-10
Feb-10
2006 Mar-10 Mar-10

North American Automotive Annual Production and Sales

2007
North American Automotive Monthly Production and Sales

Apr-10
North American Automotive Monthly Production and Sales

2008 May-10 May-10

2009 Jun-10
2010 Jul-10

0
200
400
600
800
1,000
1,200
1,400
1,600
1,800

Thousand Units
 WORLDSTEELDYNAMICS
“Steel intensity” per unit of industrial activity

WSD closely watches steel intensity – i.e., million tonnes of steel consumed per unit of
activity in steel-consuming industries. When it’s flat or rising, the steel companies often
benefit from good increases in demand (assuming that the economic activity is also
increasing). The faster an economy grows, the greater the likelihood that steel intensity per
unit of economic activity goes up because the country’s increments to economic growth,
once past the normal 2% or so rise in services, tend to be increasingly tied to higher capital
spending and construction activity.

OECD steel intensity

For the OECD, which accounts for about 70% of global GDP, we calculate million tonnes of
steel production per point of OECD industrial production index. For example, in April 2010,
OECD steel production amounted to 42 million tonnes, while the Industrial Production Index
was 99.0; hence, steel production per point of index was 0.42 million tonnes.

When assessing the steel intensity level per month back to 1980, we see that:

 From 1980 to the 1998, steel intensity per unit of industrial production index fell from
about 0.70 million tonnes to 0.43 million tonnes – a drop on average of 0.01 per year
(or almost 2% per year). One reason is that measures of industrial production at times
give credit for improvements in quality; hence, actual production units can be
unchanged although the index indicates that units are rising.

 From 1998 to mid-2008, the intensity factor, notwithstanding the intra-year normal
sizable volatility, held steady at about 0.43 million tonnes per tonne of industrial
production index. Why did this relationship hold steady? The 10-year period up to
2008 was one of sharply rising fixed asset investment in the OECD.

 From mid-2008 to April 2009, there was a rather amazing decline in the intensity
index to 0.30 million tonnes per unit of IP – a drop of 33% during this period. No
doubt, the severe and synchronized inventory liquidation in most products in most
countries except China was the major reason for the precipitous drop.

 From April 2009 to April 2010, the steel intensity index recovered sharply to a figure
of 0.43, or in line with first-half-2008 pre-crisis level. Moreover, the 0.43 figure was
achieved even though industrial production in the OECD in April 2010 was 8%
below the figure in July 2008. (Note: Industrial production in the OECD peaked in
January 2008 at 109.3, or 3.5 index points above the level in July 2008.)

Looking ahead to 2015, WSD thinks that the steel intensity indicator probably has the
potential to rise only moderately. We don’t expect major inventory accumulations of steel by
manufacturing and middleman companies. Gains in steel consumption will probably result
from gains in industrial production and construction activity.

In the USA, gross private domestic investment fell to 11.8% of GDP in the first quarter of
2010 versus 14.6% in the second quarter of 2008 excluding inventory swings.

25
WORLDSTEELDYNAMICS
Unit Steel Production per Unit Industrial Production
in OECD Countries
0.8

Forecast

0.7

0.6

0.5

0.4

0.3

0.2
Aug-80

Nov-82
Aug-83

Nov-85
Aug-86

Nov-88
Aug-89

Nov-91
Aug-92

Nov-94
Aug-95

Nov-97
Aug-98

Nov-00
Aug-01

Nov-03
Aug-04

Nov-06
Aug-07

Nov-09
Aug-10

Nov-12
May-81
Feb-82

May-84
Feb-85

May-87
Feb-88

May-90
Feb-91

May-93
Feb-94

May-96
Feb-97

May-99
Feb-00

May-02
Feb-03

May-05
Feb-06

May-08
Feb-09

May-11
Feb-12
Source: OECD and WSD Estimates

USA steel intensity

In the United States, steel intensity per unit if IDX (WSD’s weighted index of activity for 15
steel-consuming industries) was fairly stable in the period from 1995 to 2008 at about 0.104
million tons. Yet, in the spring, it of 2009 fell to only 0.062 – a drop of 38% (versus the
OECD steel intensity decline of 33% in the same period). By June 2010, the USA intensity
figure recovered to approximately the level in mid-2008. However, our weighted steel-
consuming activity index figure in June 2010, at 80.9, was still 24% below the April 2008
figure of 106.8.

26
 WORLDSTEELDYNAMICS
USA Apparent Steel Consumption per Unit IDX
0.13

Forecast
0.12

0.11

0.1

0.09

0.08

0.07

0.06
Jan-80

Jan-81

Jan-82

Jan-83

Jan-84

Jan-85

Jan-86

Jan-87

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13
Source: IDX and WSD Estimates

Chinese steel intensity

In China’s case, we have two measures of activity in steel-consuming industries. The macro
index considers items such as changes in the money supply, retail sales, fixed asset
investment as reported (includes land sales) and industry value added. In this case, there’s
been a fairly steady drop in steel intensity, perhaps because there have not been accurate
adjustments for inflation and/or double counting in some of the indices. Similar to China’s
overall GDP figures, which many claim are not that accurate (because they are submitted by
officials who know what the government wishes to receive), some of the macro indices –
such as money supply, fixed asset investment and retail sales – may not be precise especially
on a monthly basis.

In the case of the micro index, which comprises unit production figures for 11 items, steel
intensity has held fairly steady since 2001 – although there are major intra-year and year-to-
year swings. Please see the accompanying exhibits.

Looking forward five years, it seems unlikely that Chinese steel intensity as a share of GDP
will be sustained as the government promotes consumption and deemphasizes fixed asset
investment.

Also, the government is in the process of boosting transfer payments (benefits) to its
citizenry for pension and medical care coverage to its citizens. This development is sure to
reduce the share of government revenues allocated to fixed asset investment.

27
 0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Jan‐01
Jan-01
Apr‐01
Apr-01
Jul‐01 Jul-01
Oct‐01 Oct-01
Jan‐02 Jan-02
Apr‐02 Apr-02

Source: WSD Estimates

Jul‐02

Source: WSD Estimates

Jul-02
Oct‐02 Oct-02
Jan‐03 Jan-03
Apr‐03 Apr-03
Jul‐03 Jul-03
Oct‐03 Oct-03
Jan‐04 Jan-04
Apr‐04 Apr-04
Jul‐04 Jul-04
Oct‐04 Oct-04
Jan‐05 Jan-05
Apr‐05 Apr-05
Jul‐05 Jul-05

28
Oct‐05 Oct-05
Jan‐06 Jan-06

Apr‐06 Apr-06
(million tonnes / index)

(million tonnes / index)

Jul‐06 Jul-06

Oct‐06 Oct-06

Jan‐07 Jan-07
WORLDSTEELDYNAMICS

Apr‐07 Apr-07

Jul‐07 Jul-07
Oct-07
Oct‐07
Jan-08
Jan‐08
Apr-08
Apr‐08
Jul-08
Jul‐08
Oct-08
Oct‐08 Ratio of China Apparent Crude Steel Consumption to WSD Macro-Index
Jan-09
Jan‐09
Ratio of China Apparent Crude Steel Consumption to WSD Micro-Index

Apr-09
Apr‐09
Jul-09
Jul‐09
Oct-09
Oct‐09
Jan-10
Jan‐10
Apr-10
Apr‐10
Jul‐10
 WORLDSTEELDYNAMICS
WSD China Micro-Economic Steel Index vs Apparent Steel Consumption

210 70

Micro Index consists of electricity Micro Economical

195 production, cement (6-month moving Index, Monthly 65

average), industrial boilers (6-month moving (left axis)

180 average), internal combustion engine (6-month 60

moving average), metal cutting tools (6-month

165 moving average), large and mid-sized 55

tractors, locomotives, auto production, ships (3-

150 month moving average), power generators (3- 50

ASC, Million Metric Tonnes

month moving average), air conditioners (3-
135 month moving average), building square meters 45
Micro Index

under construction (12-month moving average)

120 The weights are 40

0.15,0.1, 0.05, 0.05, 0.05, 0.05, 0.05, 0.1, 0.05, 0

105 .05 and 0.25, respectively. 35

Steel
90 30
Consumption
(right axis)
75 25

60 20

45 15

30 10
Jan-01

Nov-01
Jan-02

Nov-02
Jan-03

Nov-03
Jan-04

Nov-04
Jan-05

Nov-05
Jan-06

Nov-06
Jan-07

Nov-07
Jan-08

Nov-08
Jan-09

Nov-09
Jan-10
Jul-01

Jul-02

Jul-03

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09
May-01

May-02

May-03

May-04

May-05

May-06

May-07

May-08

May-09

May-10
Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10
Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09
Source: WSD estimates

WSD China Macro-Economic Steel Index vs. Apparent Steel Consumption

1500 75

1400 Macro Index consists of f ixed asset investiment 70

(12-month moving average), retail sales, M2
1300 money supply (6-month moving average) and 65
value added of industry (6- month moving
1200 average). 60
The weights are 0.35, 0.25, 0.20 and
0.20, respectively.

ASC, million metric tonnes

Macro Index

1100 55

1000
Steel Consumption 50
(right axis)
900 45

800 40

700 35

600 30

500 25

400 Macro Index 20

(left axis)
300 15

200 10
Jan-01

Sep-01
Nov-01
Jan-02

Sep-02
Nov-02
Jan-03

Sep-03
Nov-03
Jan-04

Sep-04
Nov-04
Jan-05

Sep-05
Nov-05
Jan-06

Sep-06
Nov-06
Jan-07

Sep-07
Nov-07
Jan-08

Sep-08
Nov-08
Jan-09

Sep-09
Nov-09
Jan-10
Jul-01

Jul-02

Jul-03

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10
May-01

May-02

May-03

May-04

May-05

May-06

May-07

May-08

May-09

May-10
Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Source: WSD estimates

29
WORLDSTEELDYNAMICS
IRON ORE

The spot price of foreign ore delivered to China has become a “wild card” just as significant
as the steel scrap price wild card:

 Purchased steel scrap, excluding home scrap, amounts to only about 6% of the
operating cost to produce hot-rolled band for a typical integrated steelmaker.

 Purchased iron ore may account for about 30% of the operating cost to produce hot-
rolled band for integrated steelmakers.

Iron ore price ironies

The Brazilian one-year benchmark price for iron ore fines in 2009 was $62 per tonne, FOB
Brazil. In 1999, the export price was $17.24 per tonne; by 2002, just before the steel industry
entered a period of surging raw material costs, the figure was $18.32 (and, the steel mills
were complaining it was too high).

 In the first quarter of 2010, the Brazilian export price was still under negotiation.
There was no quarterly benchmark price. The Brazilians probably had sizable
carryover deliveries at $62 per tonne, FOB Brazil. Also, for some buyers, the annual
contracts were in effect for a fiscal year beginning April 1st.

 In the second quarter of 2010, WSD estimates that the Brazilian port of export price
of iron ore fines, including the adjustments for the higher-quality characteristics of
the ore and about a 65% Fe content, may have been about $114 per tonne, FOB the
port of export.

 In the third quarter, the export price may have risen to about $145 per tonne using the
new “formula” – whereby the price is determined by the average of the Chinese spot
import price two to four months before the start of the quarter, plus adjustments for
the ocean freight rate from Brazil to China and the higher Fe content and other quality
characteristics of the Brazilian ore.

 In the fourth quarter, the price may be about $125 per tonne since we already know
the Chinese spot import price for June, July and two-thirds of August.

 In the first quarter of 2011, even if the Chinese spot price two to four months earlier
hits a temporary low for one month of $100 per tonne, the Brazilian export price for
65% Fe ore could still be about $110 per tonne.

What price actions have been taken by other iron ore producers? So far, two producers that
sell iron ore pellets have decided to set an annual price rather than a quarterly price for 2010:

 Quebec Cartier (owned by ArcelorMittal). Price set at $2.35 per Fe unit. Granted a
Fe content of 64%, this comes to $150/tonne FOB the port of export. The price for

30
 WORLDSTEELDYNAMICS
the prior year was $1.183 per Fe unit, or $75.70 per tonne – or, almost one-half as
much.

 LKAB of Sweden. Its port of export price is probably moderately higher than QCM’s
because it is located closer to its customers; hence, European buyers incur less freight
cost, which means the LKAB FOB port of export price can be higher.

IRON ORE PRICES TO CHINA

Indian Iron Ore Export Price to China, C&F Indian Iron Ore Export Price to China,
205 FOB Port in Goa
160
180
$ per Tonne

140

$ per Tonne
155
120
130
100
105
80
80 60
55 40
Feb-06

Feb-07

Feb-08

Feb-09

Feb-10
Aug-05
Nov-05

Aug-06
Nov-06

Aug-07
Nov-07

Aug-08
Nov-08

Aug-09
Nov-09
May-05

May-06

May-07

May-08

May-09

May-10

Aug-05
Nov-05

Aug-06
Nov-06

Aug-07
Nov-07

Aug-08
Nov-08

Aug-09
Nov-09
Feb-06

Feb-07

Feb-08

Feb-09

Feb-10
May-05

May-06

May-07

May-08

May-09

May-10
Source: China Ministry of Trade Source: China Ministry of Trade

Indian Iron Ore Ocean Freight, Fees & Insurance

to China
66
56
$ per Tonne

46
36
26
16
6
-4
Aug-05
Nov-05

Aug-06
Nov-06

Aug-07
Nov-07

Aug-08
Nov-08

Aug-09
Nov-09
Feb-06

Feb-07

Feb-08

Feb-09

Feb-10
May-05

May-06

May-07

May-08

May-09

May-10

Source: China Ministry of Trade

Australian Iron Ore Export Price to Beilun Brazilian Iron Ore Export Price to Beilun
Port, China Port, China
250 250
$ per Tonne

$ per Tonne

210 210
170 170
130 130
90 90
50 50
Aug 05
Nov 05
Feb 06
May 06
Aug 06
Nov 06
Feb 07
May 07
Aug 07
Nov 07
Feb 08
May 08
Aug 08
Nov 08
Feb 09
May 09
Aug 09
Nov 09
Feb 10
May 10
Aug 10

Aug 05
Nov 05

Aug 06
Nov 06

Aug 07
Nov 07

Aug 08
Nov 08

Aug 09
Nov 09

Aug 10
Feb 06

Feb 07

Feb 08

Feb 09

Feb 10
May 06

May 07

May 08

May 09

May 10

Source: China Ministry of Trade Source: China Ministry of Trade

IRON ORE PRICES IN CHINA

China Home Market Iron Ore Price, Hebei Province

245
220
$ per Tonne

195
170
145
120
95
70
Aug 05
Nov 05

Aug 06
Nov 06

Aug 07
Nov 07

Aug 08
Nov 08

Aug 09
Nov 09

Aug 10
Feb 06
May 06

Feb 07
May 07

Feb 08
May 08

Feb 09
May 09

Feb 10
May 10

Source: China Ministry of Trade

31
WORLDSTEELDYNAMICS
Iron ore price outlook – longer-term basis. WSD thinks that the long-term “market
clearing price” for iron ore may be about $75 per tonne, FOB Brazil. Factors working to
drive down the price to this level by about 2015 may include the following:

 The sizable rise in the capacity to produce iron ore. Moreover, about 64% of the
capacity additions at iron ore mines outside of China are non-Big-Three additions.

 Steel mills are building their own iron ore mines and participating in iron ore joint
ventures to a far greater extent. From 2010 to 2015, WSD estimates that the self
supply of iron ore, including joint venture tonnage, may rise about 102 million tonnes
per annum for the Chinese steel mills and 154 million tonnes for mills elsewhere.

 Freight rates are likely to remain fairly low given the glut of Capesize vessels.

 The growth rate of Chinese steel demand, WSD believes, will slow sharply after
about 2012 as fixed asset investment peaks out as a share of GDP.

 The Chinese government has indicated recently it wishes that about 40% of the
country’s iron ore requirements come from domestic mines. If it is really serious
about this guideline, the Chinese government may find ways to sustaining mining
capacity and iron ore production in China even when the international price of iron
ore declines.

Why the Chinese spot iron ore price may not collapse

While WSD sees a huge price collapse by the end of 2010, here are some offsetting
arguments:

 Many people in China think that, because the rise in domestic steel prices the past few
months, steel production will be headed back up. Also, some observers think there’s
been a sizable inventory reduction by steel buyers in recent months that will end in
the third quarter.

 Chinese steel demand could be higher than expected. When looking at the data in
WSD Micro Steel-Consuming Index, which includes 11 data series, there was a huge
rise in the index to new levels in June 2010 (the last month of available data). In this
month, the index was up 16.7% on a year-to-year basis.

 If the price falls, iron ore traders in China may begin to make forward purchases
during the fourth quarter anticipating a rise in steel production (reflecting easing of
credit in the Chinese economy) and a recovery of iron ore prices during the first half
of 2011. Iron ore production in China declines during the winter months.

 The Indian state of Karnataka has put a ban on exports in order to close down illegal
mining operations. Exports from Karnataka in the past year have accounted for
perhaps 10% of Indian exports.

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 WORLDSTEELDYNAMICS
Iron ore requirements versus capacity through 2015

In 2010, global iron ore requirements will be about 1.72 billion tonnes. Of this amount,
China uses about 975 million tonnes and the rest of the world 744 million tonnes. Included
in these figures is estimated steel mills’ self-supply of iron ore of about 99 million tonnes in
China (10% of their ore requirement) and 256 million tonnes outside of China (34% of their
requirement).

By 2015, global iron ore requirements rise to 2.21 billion tonnes. Of this amount, China
accounts for 1.18 billion tonnes, with the rest of the world at 1.02 billion tonnes. Included in
these figures is self-supply of iron ore to Chinese steel mills of about 202 million tonnes
(17% of the total ore requirement) including non-Chinese sources; a rise of 102 million
tonnes from 2010. Outside of China, the self-supply figure rises to 409 million tonnes, or
40% of the iron ore requirement – this is an increase of 154 million tonnes versus the 2010
level.
WSD Global Iron Ore Requirement Over the Cycle
2010E Cycle to 2015 ∆ 2015-2010
China All but China Total China All but China Total China All but China Total
Iron Ore
Purchased 1.5 1.05 1.41 0.96 -0.09 -0.09
Self-Supplied 0.17 0.55 0.29 0.64 0.12 0.09
Total 1.67 1.60 1.70 1.60 0.03 0
% Self-Supplied 10.2% 34.4% 17.1% 40.0%

Requirement (million tonnes) 975 744 1,719 1,182 1,023 2,205 206 279 486
Purchased 876 488 1,364 980 614 1,594 104 126 230
Self-Supplied 99 256 355 202 409 611 102 154 256

Crude Steel Production 633 789 1,422 750 990 1,740 117 201 318
BOF Production 583 405 988 690 529 1,219 107 124 231
EAF Production 50 384 434 60 461 521 10 77 87
DRI-based EAF 1 60 61 5 111 116 4 51 55

2010 Q2 Cycle to 2015 ∆ 2015-2010

China All but China Total China All but China Total China All but China Total
Iron Ore
Purchased 1.5 1.05 1.41 0.96 -0.09 -0.09
Self-Supplied 0.17 0.55 0.29 0.64 0.12 0.09
Total 1.67 1.60 1.70 1.60 0.03 0
% Self-Supplied 10.2% 34.4% 17.1% 40.0%

Requirement (million tonnes) 1,025 767 1,792 1,182 1,023 2,205 156 256 413
Purchased 921 503 1,424 980 614 1,594 59 111 170
Self-Supplied 104 264 368 202 409 611 97 146 243

Crude Steel Production 663 817 1,480 750 990 1,740 87 173 260
BOF Production 613 419 1,032 690 529 1,219 77 109 186
EAF Production 50 398 448 60 461 521 10 64 74
DRI-based EAF 1 60 61 5 111 116 4 51 55

Source: WSD Estimates 0.513307985

What about capacity changes versus changes in requirements?

WSD estimates that the Chinese capacity to produce iron ore concentrate in 2015 will be
about 530 million tonnes, or 80 million tonnes above the 2010 level. In comparison, if our
steel production forecast of 750 million tonnes for 2015 proves to be correct, the need for
additional iron ore will be about 206 million tonnes. If so, about 56% of the incremental
usage of iron ore would need to come from offshore sources. Meanwhile, given that the self-
supply of iron ore to Chinese steelmakers rises by 99 million tonnes (including offshore joint
venture ore) to 202 million tonnes in 2015 versus 2010, this leaves about 104 million tonnes
of Chinese iron ore that will need to be provided by third party sources.

33
WORLDSTEELDYNAMICS
For the non-Chinese steel industry, we estimate that steel production in 2015 may be 990
million tonnes versus 789 million tonnes in 2010. If so, the additional iron ore requirement
by 2015 is about 279 million tonnes. Of this amount, 154 million tonnes of the increase is
self-supplied iron ore – or 55% of the increase in iron ore consumption.

Chinese iron ore costs versus capacity

WSD estimates that Chinese iron ore capacity in 2015 may be about 530 million tonnes on a
concentrate basis. Of this:

 The low cost capacity, defined as having a production cost of less than $70 per tonne,
may amount in 2010 to roughly 130 million tonnes. WSD estimates that mines in this
category may have an average Fe content, on a crude ore basis, of perhaps 27%.

 The mid-low cost capacity, defined as having a production cost of about $70 to $85
per tonne, may amount to about 80 million tonnes. These mines may have an average
Fe content, on a crude ore basis, of about 29%.

 The mid-high cost capacity, defined as having a production cost of about $85 to $99
per tonne, may amount to about 170 million tonnes. These mines may have an
average Fe content, on a crude ore basis, of about 33-35%.

 The high cost capacity, defined as having a production cost exceeding $100 per
tonne, may amount to about 150 million tonnes. These mines may have an average
Fe content, on a crude ore basis, of about 36-50%.

Although the average Fe content of the higher-cost mines is above that of the lower-cost
mines, this higher-grade ore is typically more difficult and costlier to mine.

For 2015, WSD assumes that the price of off-shore iron ore, delivered to the Chinese steel
mill, may range between $100 and $120 per tonne. WSD also assumes that the price of
domestic iron ore concentrate may be about $115 per tonne delivered to the steel plant.
Based on these price assumptions, WSD estimates the following production figures on an
iron ore concentrate basis:

 Low-cost mine production may be about 130 million tonnes in 2015, compared to the
estimated figures of 180 million tonnes in 2010 and 195 million tonnes in 2007.
Low-cost mine production is likely to decline due to increased difficulty in mining
the low-grade ore as mines become depleted and require going to greater and greater
depths.

 Mid-low cost mine production may be about 80 million tonnes in 2015, compared to
an estimated 110 million tonnes in 2010.

 Mid-high cost mine production may amount to 170 million tonnes in 2015, compared
to an estimated 100 million tonnes in 2010 and perhaps only about 35 million tonnes
in 2007.
34
 WORLDSTEELDYNAMICS
 High cost mine production may be about 150 million tonnes in 2015, compared to
only 20 million tonnes in 2007 and perhaps about 60 million tonnes in 2010.

Chinese Iron Ore Market Analysis

(million tonnes)

2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e
Imported iron ore prices ($ per tonne, with VAT)
Benchmark 63.5% Fe contract price, FOB Brazil 47 51 89 61 117(2) 105(3) 110(5) 80(6) 75(6) 75(6)
Delivered to Chinese port from Brazil 98 170 160 108 172 (4) 159 (4) 165 (4) 127 (4) 121 (4) 121 (4)
Delivered to Chinese port from Western Australia 115 99 128 90 155 (4) 142 (4) 159 (4) 111 (4) 105 (4) 105 (4)
Delivered to Chinese port from India 144 221 171 112 164 (4) 152 (4) 162 (4) 118 (4) 112 (4) 112 (4)

China domestic market price ($ per tonne, with VAT) 85 176 184(1) 116 160 148 156 120 115 115

Capital outlays on iron ore (US$ billion) 4.6 5.9 9.6 11.9 13.2 12.0 11.0 8.0 6.0 4.0
Y-to-Y % Change 28.3% 62.7% 24.0% 10.9% -9.1% -21.4% -33.3% -45.5% -50.0%
China iron ore production capacity
Cost: $100 plus per tonne 10 20 20 40 60 90 110 130 145 150
Cost: $85 to $99 per tonne 30 35 45 60 100 125 140 155 165 170
Cost: $70 to $85 per tonne 90 90 110 120 110 100 95 90 85 80
Cost: less than $70 per tonne 170 195 195 190 180 170 160 150 140 130
Total 300 340 370 410 450 485 505 525 535 530

Chinese iron ore production by cost (6)

High cost: $100 plus per tonne 10 20 15 0 55 80 100 50 40 40
Medium high cost: $85 to $99 per tonne 20 30 35 45 90 120 135 120 120 120
Medium low cost: $70 to $85 per tonne 90 90 110 115 110 100 95 90 85 80
Low cost: less than $70 per tonne 170 195 195 190 180 170 160 150 140 140
Total 290 335 355 350 435 470 490 410 385 380

Average production cost, $US per tonne 76.6 77.9 77.7 77.1 86.3 90.0 92.4 88.3 87.8 87.9

(1)
September, 2008
(2)
Benchmark price up 90% in 2010-2011
(3)
If average price of imported ore down 10% in 2011
(4)
Includes $11 (from WA to China) or $26 (from Brazil to China) per tonne in ocean freight and insurance expense, $6 per tonne in ship
unloading fees, and 17% VAT. Does not include the estimated $13 per tonne transportation fee from Chinese port to the steel mill.
(5)
If average price of imported ore down 27% in 2013, down 6% in 2014 and no change in 2015.
(5)
If average price of imported ore up 5% in 2013
Source: WSD estimates

China Trade Balance and Fixed Asset Investment versus GDP

(2)
Annualized Rate
2000 2005 2006 2007 2008 2009 2010e Jul-09 Jul-10

(1)(2)
GDP ($ billions) 1,080 2,247 2,650 3,291 4,341 4,909 5,649 4,442 4,770

(1)(3)
China fixed asset investment ($ billions) 398 1,083 1,381 1,810 2,493 3,291 4,007 3,639 4,110
Ratio FAI to GDP 37% 48% 52% 55% 57% 67% 71% 82% 86%
Adjusted FAI to GDP (3) 35% 43% 42% 42% 43% 48% 48% 48% 48%

GDP (billion RMB) 8,940 18,387 21,087 24,953 30,067 33,535 38,060
FAI (billion RMB) 3,293 8,860 10,986 13,723 17,266 22,485 27,000

China trade ($ billions)

Imports all products 225 660 792 956 1,132 1,006 1,208 1,137 1,408
Exports all products 249 762 969 1,218 1,429 1,202 1,264 1,265 1,746
Trade surplus (deficit) 24 102 178 262 297 196 56 128 338
% of GDP 2% 5% 7% 8% 7% 4% 1% 3% 7%

Year-to-year change
GDP ($ billions) 36% 18% 24% 32% 13% 15% 7%
GDP (RMB) 34% 15% 18% 20% 12% 13%
FAI ($ billions) 28% 28% 31% 38% 32% 22% 13%
FAI (RMB) 26% 24% 25% 26% 30% 20%
Imports all products 18% 20% 21% 18% -11% 20% 24%
Exports all products 28% 27% 26% 17% -16% 5% 38%

Exchange rate-RMB per $ 8.28 8.18 7.96 7.58 6.93 6.83 6.74 6.83 6.77

Notes:
(1) FAI and GDP are before any inflation adjustment
(2) GDP "monthly" is previous quarter run rate
(3) Chinese reported FAI figures include investment in land and other items that cause the figures to be overstated relative to the approach
used by the IMF.

Source: People's Bank of China, Bloomberg and WSD estimates

35
WORLDSTEELDYNAMICS

Source: India Meteorological Department

36
 WORLDSTEELDYNAMICS
WSD World
Seasonally Adjusted
Crude Steel Production Trends
(million tonnes)
------------ Capacity --------------- ---------------------------------------- Production ----------------------------------
------------ Effective --------------- ------------- Actual -------------- ------------------------------ Annualized ------------------------------------- Year-to-Year Change -----------
Adv. Total Adv. Total Adv. Adv. Total Total Adv. Total
World China ROW World World China ROW World World World China ROW World World World China ROW World
(Actual) (Sea Adj) (Sea Adj)
1997 478.7 103.1 261.3 843.2 449.1 108.8 241.4 799.3 449.2 449.4 108.8 241.5 799.5 799.6
1998 483.8 121.7 265.2 870.7 437.3 114.6 226.0 777.9 437.6 437.3 114.5 226.1 778.3 777.9 -2.7% 5.3% -6.4% -2.7%
1999 489.3 140.5 280.5 910.3 431.3 124.0 234.4 789.6 431.3 431.7 124.0 234.3 789.6 790.0 -1.3% 8.3% 3.6% 1.5%
2000 490.3 150.8 298.5 939.6 459.1 128.5 262.0 849.5 459.1 459.1 128.5 262.0 849.6 849.6 6.4% 3.6% 11.8% 7.6%
2001 486.8 170.9 305.4 963.0 438.6 151.6 261.6 851.8 438.8 438.6 151.6 261.7 852.1 851.9 -4.5% 18.0% -0.1% 0.3%
2002 486.3 198.4 312.4 997.1 448.9 182.4 273.3 904.7 449.1 449.2 182.3 273.3 904.7 904.9 2.4% 20.3% 4.4% 6.2%
Q1-03 122.7 57.4 79.6 259.7 114.8 48.7 69.8 233.3 465.6 454.5 197.8 283.0 946.3 935.2 6.0% 16.2% 8.8% 8.8%
Q2-03 124.1 58.0 80.5 262.6 116.3 55.0 73.1 244.5 466.6 451.2 220.6 293.4 980.6 965.2 1.9% 22.3% 7.5% 7.7%
Q3-03 125.4 58.7 81.4 265.5 110.4 57.3 73.6 241.3 438.0 457.3 227.4 292.2 957.7 976.9 -1.6% 23.3% 4.0% 5.2%
Q4-03 125.4 58.7 81.4 265.5 116.5 61.3 73.7 251.5 462.3 469.4 243.5 292.3 998.1 1,005.2 1.8% 25.3% 4.6% 7.6%
2003 497.7 232.7 323.0 1,053.4 458.0 222.3 290.2 970.6 458.1 458.1 222.3 290.2 970.7 970.6 2.0% 21.9% 6.2% 7.3%
Q1-04 124.2 74.6 83.5 282.3 117.5 64.0 77.2 258.7 472.8 461.5 257.7 310.4 1,040.8 1,029.6 1.6% 30.3% 9.7% 10.0%
Q2-04 124.2 74.6 83.5 282.3 120.5 65.9 77.4 263.8 484.6 468.6 265.1 311.4 1,061.1 1,045.1 3.9% 20.2% 6.1% 8.2%
Q3-04 125.6 75.4 84.4 285.4 117.1 72.6 79.2 268.9 466.2 486.6 289.0 315.2 1,070.3 1,090.7 6.4% 27.1% 7.9% 11.8%
Q4-04 125.6 75.4 84.4 285.4 121.2 80.4 78.8 280.4 482.4 489.9 319.8 313.5 1,115.7 1,123.1 4.4% 31.3% 7.3% 11.8%
2004 499.6 300.1 335.7 1,135.4 476.4 282.9 312.6 1,071.9 476.5 476.7 282.9 312.6 1,072.0 1,072.2 4.1% 27.2% 7.7% 10.4%
Q1-05 124.5 92.7 88.4 305.7 118.9 78.9 79.5 277.3 482.4 471.2 320.4 322.4 1,125.2 1,114.0 2.1% 24.3% 3.9% 8.1%
Q2-05 125.9 93.8 89.4 309.1 118.4 87.7 80.9 287.0 474.8 459.1 351.8 324.7 1,151.3 1,135.5 -2.0% 32.7% 4.2% 8.5%
Q3-05 127.3 94.8 90.4 312.5 111.5 90.9 80.2 282.6 442.5 461.7 360.9 318.2 1,121.6 1,140.8 -5.1% 24.9% 1.0% 4.8%
Q4-05 127.3 94.8 90.4 312.5 117.8 95.7 83.5 296.9 467.2 474.3 379.6 331.2 1,178.1 1,185.1 -3.2% 18.7% 5.7% 5.6%
2005 505.1 376.1 358.6 1,239.8 466.5 353.2 324.1 1,143.8 466.7 466.6 353.2 324.1 1,144.0 1,143.9 -2.1% 24.9% 3.7% 6.7%
Q1-06 125.2 111.0 92.2 328.4 118.8 92.7 82.4 293.9 482.3 470.7 376.3 334.0 1,192.6 1,181.0 -0.1% 17.5% 3.6% 6.0%
Q2-06 126.6 112.2 93.2 332.0 124.7 106.1 86.2 317.1 500.4 483.9 425.7 345.7 1,271.8 1,255.3 5.4% 21.0% 6.5% 10.5%
Q3-06 128.0 113.4 94.3 335.7 119.9 107.8 87.0 314.7 475.9 496.7 427.8 345.3 1,249.0 1,269.8 7.6% 18.5% 8.5% 11.4%
Q4-06 128.0 113.4 94.3 335.7 120.7 112.5 88.1 321.4 479.1 486.5 446.5 349.7 1,275.3 1,282.8 2.6% 17.6% 5.6% 8.3%
2006 507.8 450.1 373.9 1,331.8 484.2 419.1 343.7 1,247.1 484.4 484.4 419.1 343.7 1,247.2 1,247.2 3.8% 18.7% 6.0% 9.0%
Q1-07 127.3 130.0 99.0 356.4 122.6 114.9 89.4 326.9 497.3 485.4 466.2 362.7 1,326.2 1,314.4 3.1% 23.9% 8.6% 11.2%
Q2-07 128.7 131.5 100.1 360.3 125.6 124.2 89.9 339.7 503.7 487.1 498.4 360.5 1,362.6 1,346.0 0.7% 17.1% 4.3% 7.1%
Q3-07 130.2 132.9 101.2 364.3 120.7 126.0 91.0 337.7 479.0 500.1 500.3 361.1 1,340.3 1,361.4 0.7% 16.9% 4.6% 7.3%
Q4-07 130.2 132.9 101.2 364.3 125.0 124.1 92.3 341.4 496.0 503.8 492.3 366.2 1,354.5 1,362.3 3.6% 10.2% 4.7% 6.2%
2007 516.4 527.4 401.5 1,445.3 493.9 489.3 362.5 1,345.7 494.0 494.1 489.3 362.6 1,345.9 1,346.0 2.0% 16.8% 5.5% 7.9%
Q1-08 130.1 142.4 103.5 376.0 127.8 125.0 93.7 346.4 514.0 501.9 502.5 376.7 1,393.2 1,381.1 3.4% 7.8% 3.9% 5.1%
Q2-08 130.1 142.4 103.5 376.0 130.4 138.3 93.8 362.5 524.4 507.1 556.3 377.4 1,458.0 1,440.7 4.1% 11.6% 4.7% 7.0%
Q3-08 131.5 144.0 104.6 380.1 123.8 127.7 91.7 343.2 492.7 514.6 507.6 364.7 1,365.0 1,386.9 2.9% 1.5% 1.0% 1.8%
Q4-08 131.5 144.0 104.6 380.1 96.1 109.4 68.5 274.0 382.3 386.1 435.1 272.6 1,090.0 1,093.8 -23.4% -11.6% -25.6% -19.5%
2008 523.2 572.7 416.2 1,512.1 478.1 500.3 347.7 1,326.1 478.4 477.4 500.4 347.8 1,326.6 1,325.6 -3.4% 2.3% -4.1% -1.4%
Q1-09 391.5 74.0 127.1 69.3 270.3 300.4 293.3 515.8 281.5 1,097.6 1,090.6 -41.6% 2.6% -25.3% -21.2%
Q2-09 395.8 77.3 139.7 74.1 291.1 310.1 299.9 560.4 297.4 1,167.9 1,157.8 -40.9% 0.8% -21.2% -19.9%
Q3-09 400.2 91.6 154.1 82.4 328.2 363.9 379.3 611.6 327.1 1,302.7 1,318.0 -26.3% 20.5% -10.3% -4.6%
Q4-09 400.2 103.2 155.1 83.8 342.0 409.4 415.5 615.4 332.3 1,357.1 1,363.2 7.6% 41.4% 21.9% 24.5%
2009 1,587.7 346.0 576.0 309.6 1,231.6 345.9 347.0 575.8 309.6 1,231.3 1,232.4 -27.3% 15.1% -11.0% -7.2%
Q1-10 106.3 157.9 82.9 347.1 431.2 420.8 640.7 336.4 1,408.4 1,397.9 43.5% 24.2% 19.5% 28.3%
Q2-10 115.6 165.3 88.1 369.0 463.8 448.5 663.1 353.3 1,480.1 1,464.8 49.5% 18.3% 18.8% 26.7%
Q3-10E 106.3 151.3 92.5 350.1 421.9 440.6 600.4 367.0 1,389.3 1,408.0 16.2% -1.8% 12.2% 6.7%
Q4-10E 107.9 156.8 92.1 356.8 428.2 434.7 622.1 365.3 1,415.7 1,422.2 4.6% 1.1% 9.9% 4.3%
2010E 436.2 631.3 355.6 1,423.1 436.3 436.1 631.6 355.5 1,423.4 1,423.3 25.7% 9.7% 14.8% 15.6%
2011E 457.1 656.3 390.6 1,504.0 457.2 457.3 656.6 390.5 1,504.3 1,504.4 4.8% 4.0% 9.8% 5.7%
2012E 475.7 679.6 419.2 1,574.5 476.6 474.6 680.4 416.6 1,573.6 1,573.6 3.8% 3.6% 6.7% 4.6%

Source: WSD's Global Steel Alert system

37
WORLDSTEELDYNAMICS
Global Steel Production, Consumption and Related Items
(million metric tonnes, crude steel equivalent (CSE) basis)

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Year Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption

1997 799 6.5% 0 10 1.01 789 6.8% 8 781 5.2%

1998 777 -2.7% 0 -3 1.00 780 -1.1% -5 785 0.5%
1999 789 1.5% 0 -8 0.99 797 2.1% -2 799 1.7%
2000 849 7.7% 0 3 1.00 846 6.2% -3 849 6.3%
2001 851 0.2% 0 -5 0.99 856 1.2% -4 860 1.3%
2002 905 6.3% 0 3 1.00 902 5.3% 5 897 4.3%
2003 971 7.3% 0 -2 1.00 973 7.8% 0 973 8.4%
2004 1,072 10.5% 0 -8 0.99 1,080 11.1% 10 1,070 10.0%
2005 1,144 6.7% 0 9 1.01 1,135 5.1% 19 1,116 4.3%
2006 1,247 9.0% 0 9 1.01 1,238 9.1% 19 1,219 9.2%
2007 1,346 7.9% 0 9 1.01 1,338 8.0% 21 1,317 8.0%
2008 1,327 -1.4% 0 -13 0.99 1,339 0.1% -4 1,343 2.0%
2009 1,231 -7.2% 0 -14 0.99 1,245 -7.0% -5 1,250 -6.9%
2010e 1,423 15.6% 0 9 1.01 1,415 13.6% 20 1,395 11.6%
2011e 1,504 5.7% 0 14 1.01 1,491 5.4% 23 1,468 5.3%
2012e 1,574 4.6% 0 16 1.01 1,557 4.5% 25 1,532 4.4%

------------------------------------------
Annualized --------------------------------------------------
SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Quarter Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption
1Q 08 1,393 6.0% 0 -10 0.99 1,403 8.2% 30 1,373 7.8%
2Q 08 1,458 8.3% 0 -10 0.99 1,468 10.0% 40 1,428 8.4%
3Q 08 1,365 0.3% 0 -15 0.99 1,380 1.5% -27 1,407 5.2%
4Q 08 1,090 -20.0% 0 -15 0.99 1,105 -18.8% -60 1,165 -12.9%
1Q 09 1,098 -21.2% 0 -55 0.95 1,153 -17.9% -50 1,203 -12.4%
2Q 09 1,168 -19.9% 0 -25 0.98 1,193 -18.7% -60 1,253 -12.3%
3Q 09 1,303 -4.6% 0 5 1.00 1,298 -6.0% 30 1,268 -9.9%
4Q 09 1,357 24.5% 0 20 1.01 1,337 21.0% 60 1,277 9.6%
1Q 10 1,408 28.3% 0 0 1.00 1,408 22.2% 90 1,318 9.6%
2Q 10 1,480 26.7% 0 20 1.01 1,460 22.4% 85 1,375 9.8%
3Q 10e 1,389 6.7% 0 -5 1.00 1,394 7.4% -10 1,404 10.8%
4Q 10e 1,416 4.3% 0 20 1.01 1,396 4.4% -85 1,481 15.9%
1Q 11e 1,485 5.4% 0 10 1.01 1,475 4.7% -10 1,485 12.6%
2Q 11e 1,545 4.4% 0 25 1.02 1,520 4.1% 55 1,465 6.6%
3Q 11e 1,496 7.7% 0 10 1.01 1,486 6.6% 30 1,456 3.7%
4Q 11e 1,490 5.3% 0 10 1.01 1,480 6.1% 15 1,465 -1.0%
1Q 12e 1,537 3.5% 0 15 1.01 1,522 3.2% 10 1,512 1.8%
2Q 12e 1,613 4.4% 0 20 1.01 1,593 4.8% 55 1,538 4.9%
3Q 12e 1,589 6.2% 0 15 1.01 1,574 5.9% 25 1,549 6.4%
4Q 12e 1,555 4.3% 0 15 1.01 1,540 4.0% 10 1,530 4.4%
* SAAR = seasonally-adjusted annual rate.

Source: IISI for historical steel production and WSD's GSA for annual apparent steel consumption figures.

38
 WORLDSTEELDYNAMICS
Advanced Countries Steel Production, Consumption and Related Items
----------Mid Scenario--------
(million metric tonnes, crude steel equivalent (CSE) basis)

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Year Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption

1997 449 5 0 1.00 444 0 444

1998 438 -2.6% -3 0 1.00 440 -0.8% 0 440 -0.8%
1999 431 -1.4% -5 0 1.00 436 -0.9% -5 441 0.2%
2000 459 6.5% -5 1 1.00 464 6.2% 15 449 1.6%
2001 439 -4.4% 7 -1 1.00 433 -6.7% 0 433 -3.5%
2002 449 2.3% 10 1 1.00 438 1.3% 2 436 0.9%
2003 458 2.0% 15 1 1.00 442 0.8% 2 440 0.8%
2004 477 4.0% 1 2 1.00 473 7.0% 3 470 6.8%
2005 467 -2.0% 9 0 1.00 457 -3.4% 5 452 -3.8%
2006 484 3.8% -10 0 1.00 495 8.2% 5 490 8.3%
2007 494 2.0% 2 1 1.00 492 -0.6% 5 487 -0.7%
2008 478 -3.2% 16 -1 1.00 464 -5.7% 0 464 -4.7%
2009 346 -27.7% 8 -11 0.97 349 -24.7% -24 373 -19.6%
2010e 436 26.1% 18 -1 1.00 420 20.3% 5 415 11.3%
2011e 457 4.8% 11 5 1.01 441 5.0% 8 434 4.5%
2012e 475 3.8% 18 5 1.01 452 2.5% 9 443 2.3%

--------------------------------------- Annualized -----------------------------------------------------

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Quarter Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption
1Q 08 514 3.4% 16 0 1.00 498 0.7% 10 488 -0.3%
2Q 08 524 4.1% 16 5 1.01 503 0.5% 15 488 -1.5%
3Q 08 493 2.9% 16 -15 0.97 492 3.1% -10 502 6.3%
4Q 08 382 -22.9% 16 5 1.01 361 -26.9% -15 376 -23.0%
1Q 09 300 -41.6% 8 -20 0.94 312 -37.3% -50 362 -25.7%
2Q 09 310 -40.9% 8 -20 0.94 322 -36.0% -45 367 -24.8%
3Q 09 364 -26.1% 8 0 1.00 356 -27.6% -5 361 -28.1%
4Q 09 409 7.1% 9 -5 0.99 405 12.2% 5 400 6.4%
1Q 10 421 40.1% 15 -10 0.98 416 33.1% 20 396 9.2%
2Q 10 448 44.6% 10 -10 0.98 448 39.2% 20 428 16.7%
3Q 10e 441 21.1% 20 0 1.00 421 18.2% 0 421 16.5%
4Q 10e 435 6.2% 25 15 1.04 395 -2.6% -20 415 3.6%
1Q 11e 449 6.8% 10 5 1.01 434 4.5% 10 424 7.2%
2Q 11e 451 0.5% 10 5 1.01 436 -2.9% 10 426 -0.7%
3Q 11e 462 4.9% 10 5 1.01 447 6.3% 5 442 5.1%
4Q 11e 467 7.4% 15 5 1.01 447 13.2% 5 442 6.6%
1Q 12e 467 3.9% 20 5 1.01 442 1.7% 5 437 2.9%
2Q 12e 477 5.8% 10 5 1.01 462 6.0% 15 447 4.9%
3Q 12e 489 5.8% 20 5 1.01 464 3.7% 10 454 2.7%
4Q 12e 466 -0.2% 20 5 1.01 441 -1.3% 5 436 -1.3%
* SAAR = seasonally-adjusted annual rate.

Source: IISI for historical steel production and WSD's GSA for annual apparent steel consumption figures.

39
WORLDSTEELDYNAMICS
Developing World (ex China) Steel Production, Consumption and Related Items
----------Mid Scenario--------
(million metric tonnes, crude steel equivalent (CSE) basis)

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Year Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption

1997 241 0 5 1.02 236 0 236

1998 226 -6.4% 11 -5 0.98 220 -6.9% -1 221 -6.5%
1999 234 3.6% 18 1 1.00 215 -1.9% -1 216 -1.9%
2000 262 11.8% 17 3 1.01 242 12.4% 3 239 10.5%
2001 262 -0.1% 13 0 1.00 249 2.7% 1 248 3.6%
2002 273 4.4% 15 1 1.00 257 3.3% 1 256 3.3%
2003 290 6.2% 24 2 1.01 265 3.0% 1 264 3.0%
2004 313 7.7% 14 2 1.01 296 12.0% 5 291 10.5%
2005 324 3.7% -9 2 1.01 331 11.6% 3 328 12.4%
2006 344 6.0% -24 2 1.01 366 10.7% 3 363 10.8%
2007 363 5.5% -57 2 1.01 418 14.1% 2 416 14.5%
2008 348 -4.1% -63 -3 0.99 413 -1.2% -3 415 -0.1%
2009 310 -11.0% -11 -9 0.97 329 -20.3% -5 334 -19.6%
2010e 356 14.8% -39 4 1.01 391 18.7% 9 382 14.3%
2011e 390 9.8% -29 3 1.01 417 6.7% 9 408 6.9%
2012e 417 6.7% -43 5 1.01 454 9.0% 10 444 8.8%

--------------------------------------- Annualized -----------------------------------------------------

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Quarter Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption
1Q 08 377 3.9% -47 0 1.00 424 16.7% 5 419 15.9%
2Q 08 377 4.7% -63 0 1.00 440 25.6% 5 435 24.8%
3Q 08 365 1.0% -92 0 1.00 457 26.0% -5 462 28.1%
4Q 08 273 -25.6% -48 -10 0.96 331 -12.8% -15 346 -8.4%
1Q 09 282 -25.3% -10 -20 0.93 312 -26.5% -15 327 -22.0%
2Q 09 297 -21.2% 3 -10 0.97 304 -30.9% -10 314 -27.8%
3Q 09 327 -10.3% -7 0 1.00 334 -26.8% 0 334 -27.6%
4Q 09 332 21.9% -29 -5 0.99 366 10.8% 5 361 4.6%
1Q 10 336 19.5% -35 -5 0.99 376 20.8% 20 356 9.2%
2Q 10 353 18.8% -50 5 1.01 398 30.8% 25 373 18.7%
3Q 10e 367 12.2% -35 5 1.01 397 18.8% 5 392 17.3%
4Q 10e 365 9.9% -35 10 1.03 390 6.6% -15 405 12.2%
1Q 11e 374 11.3% -20 0 1.00 394 4.8% 15 379 6.5%
2Q 11e 386 9.4% -30 5 1.01 411 3.3% 15 396 6.2%
3Q 11e 405 10.4% -30 0 1.00 435 9.6% 5 430 9.7%
4Q 11e 396 8.4% -35 5 1.01 426 9.1% 0 426 5.1%
1Q 12e 400 6.7% -45 5 1.01 440 11.4% 15 425 11.9%
2Q 12e 417 8.0% -35 5 1.01 447 8.8% 20 427 7.8%
3Q 12e 422 4.3% -45 5 1.01 462 6.3% 5 457 6.3%
4Q 12e 427 7.8% -45 5 1.01 467 9.6% 0 467 9.6%
* SAAR = seasonally-adjusted annual rate.

Source: IISI for historical steel production and WSD's GSA for annual apparent steel consumption figures.

40
 WORLDSTEELDYNAMICS
China Steel Production, Consumption and Related Items
----------Mid Scenario--------
(million metric tonnes, crude steel equivalent (CSE) basis)

Annualized Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Year Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption

1997 109 -6 1 114 2 112

1998 115 5.3% -9 1 1.01 122 7.6% 2 120 7.7%
1999 124 8.3% -13 1 1.01 136 11.2% 2 134 11.3%
2000 129 3.6% -11 0 1.00 140 2.9% 1 139 3.7%
2001 152 18.0% -20 3 1.02 169 20.6% 5 164 17.8%
2002 182 20.3% -25 3 1.02 204 21.1% 5 199 21.8%
2003 222 21.9% -39 4 1.02 257 25.8% 6 251 26.0%
2004 283 27.2% -15 6 1.02 292 13.8% 8 284 13.3%
2005 353 24.9% -1 7 1.01 385 31.6% 11 374 31.4%
2006 419 18.7% 35 7 1.01 411 6.8% 11 400 7.0%
2007 489 16.8% 55 6 1.01 482 17.3% 14 468 17.1%
2008 500 2.3% 48 -9 1.00 463 -4.0% -2 464 -0.8%
2009 576 15.1% 0 6 1.02 567 22.6% 24 543 17.0%
2010e 632 9.7% 21 6 1.02 604 6.5% 6 598 10.0%
2011e 657 4.0% 18 6 1.02 633 4.8% 6 627 4.8%
2012e 680 3.6% 25 6 1.02 649 2.6% 6 643 2.6%

--------------------------------------- Annualized -----------------------------------------------------

Annualized Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Net Apparent Steel Inventory Consumption % Change in
Quarter Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption
1Q 08 502 7.8% 31 -10 0.98 481 6.8% 15 466 7.0%
2Q 08 556 11.6% 47 -15 0.97 524 5.0% 20 504 3.1%
3Q 08 508 1.5% 76 0 1.00 432 -13.5% -12 444 -8.3%
4Q 08 435 -11.6% 32 -10 0.98 413 -13.8% -30 443 -4.5%
1Q 09 516 2.6% 2 -15 0.97 529 9.8% 15 514 10.1%
2Q 09 560 0.8% -11 5 1.01 566 8.0% -5 571 13.3%
3Q 09 612 20.5% -1 5 1.01 608 40.8% 35 573 29.1%
4Q 09 615 41.4% 20 30 1.05 565 36.9% 50 515 16.3%
1Q 10 641 24.2% 20 15 1.02 606 14.6% 50 556 8.2%
2Q 10 663 18.3% 40 25 1.04 598 5.6% 40 558 -2.3%
3Q 10e 600 -1.8% 15 -10 0.98 595 -2.0% -15 610 6.6%
4Q 10e 622 1.1% 10 -5 0.99 617 9.2% -50 667 29.4%
1Q 11e 650 1.5% 10 5 1.01 635 4.9% -35 670 20.6%
2Q 11e 693 4.5% 20 15 1.02 658 10.0% 30 628 12.5%
3Q 11e 648 8.0% 20 5 1.01 623 4.7% 20 603 -1.1%
4Q 11e 635 2.0% 20 0 1.00 615 -0.4% 10 605 -9.4%
1Q 12e 663 2.0% 25 5 1.01 633 -0.3% -10 643 -4.1%
2Q 12e 719 3.7% 25 10 1.01 684 3.9% 20 664 5.7%
3Q 12e 678 4.6% 25 5 1.01 648 3.9% 10 638 5.7%
4Q 12e 662 4.3% 25 5 1.01 632 2.8% 5 627 3.7%

Source: IISI for historical steel production and WSD's GSA for annual apparent steel consumption figures.

41
WORLDSTEELDYNAMICS
World Excluding China Steel Production, Consumption and Related Items
----------Mid Scenario--------
(million metric tonnes, crude steel equivalent (CSE) basis)

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Apparent Steel Inventory Consumption % Change in
Year Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption

1997 690 6 9 1.01 676 6 670

1998 663 -4.0% 9 -4 0.99 658 -2.6% -7 665 -0.7%
1999 665 0.3% 13 -9 0.99 661 0.4% -4 665 0.0%
2000 721 8.4% 11 3 1.00 706 6.9% -4 710 6.9%
2001 700 -2.9% 20 -8 0.99 688 -2.7% -9 697 -1.9%
2002 723 3.3% 25 0 1.00 698 1.5% 0 698 0.2%
2003 748 3.6% 39 -6 0.99 716 2.6% -6 722 3.4%
2004 789 5.5% 15 -14 0.98 788 10.1% 2 786 8.9%
2005 791 0.2% 1 2 1.00 788 0.0% 8 780 -0.8%
2006 828 4.7% -35 2 1.00 861 9.3% 8 853 9.4%
2007 857 3.5% -55 3 1.00 909 5.6% 7 902 5.8%
2008 826 -3.6% -48 -4 1.00 878 -3.5% -3 880 -2.5%
2009e 656 -20.7% 0 -20 0.97 675 -23.0% -29 704 -20.0%
2010e 792 20.8% -21 3 1.00 811 20.0% 14 797 13.2%
2011e 848 7.1% -18 8 1.01 858 5.8% 16 841 5.6%
2012e 893 5.4% -25 10 1.01 908 5.9% 19 889 5.7%

----------------------------------------------------------- Annualized -----------------------------------------------------

SAAR* Less: Steel Ratio: Equals: Minus: User Equals: Steel Year on Year
Crude Steel Net Mill Inventory Crude Apparent Steel Inventory Consumption % Change in
Quarter Production Exports Addition to ASC Consumption (CSE) Addition (crude EQ) Consumption
1Q 08 891 5.0% -31 0 1.00 922 9.0% 15 907 8.1%
2Q 08 902 6.4% -47 5 1.01 944 13.1% 20 924 11.6%
3Q 08 857 -0.4% -76 -15 0.98 948 10.2% -15 963 12.9%
4Q 08 655 -24.7% -32 -5 0.99 692 -21.5% -30 722 -17.4%
1Q 09 582 -34.7% -2 -40 0.94 624 -32.3% -65 689 -24.0%
2Q 09 607 -32.6% 11 -30 0.95 626 -33.6% -55 681 -26.2%
3Q 09 691 -19.4% 1 0 1.00 690 -27.2% -5 695 -27.9%
4Q 09 742 13.3% -20 -10 0.99 772 11.5% 10 762 5.5%
1Q 10 768 31.9% -20 -15 0.98 803 28.7% 40 763 10.7%
2Q 10 817 34.5% -40 -5 0.99 862 37.6% 45 817 19.9%
3Q 10e 789 14.2% -15 5 1.01 799 15.8% 5 794 14.2%
4Q 10e 794 7.0% -10 25 1.03 779 0.9% -35 814 6.8%
1Q 11e 835 8.7% -10 5 1.01 840 4.6% 25 815 6.8%
2Q 11e 852 4.3% -20 10 1.01 862 0.0% 25 837 2.5%
3Q 11e 848 7.5% -20 5 1.01 863 8.0% 10 853 7.4%
4Q 11e 856 7.8% -20 10 1.01 866 11.2% 5 861 5.8%
1Q 12e 874 4.7% -25 10 1.01 889 5.9% 20 869 6.7%
2Q 12e 894 4.9% -25 10 1.01 909 5.4% 35 874 4.4%
3Q 12e 911 7.5% -25 10 1.01 926 7.4% 15 911 6.9%
4Q 12e 893 4.4% -25 10 1.01 908 4.9% 5 903 4.9%
* SAAR = seasonally-adjusted annual rate.

Source: IISI for historical steel production and WSD's GSA for annual apparent steel consumption figures.

42
 WORLDSTEELDYNAMICS
WSD's Steel StockTrack
Million Avg. Daily
Company Last % Change % Change 52 WEEK 52 WEEK % Change % Change % Change Avg.# of 6-mo. Vol
Price 1-day 5-day High Low 1-mo. 6-mo. 1-yr Shares (000)

ARGENTINA MERVAL 2,429.28 -1.5 3.4 2,505.37 1,729.04 4.0 4.0 37.5 201.1 6,509
BOMBAY SENSEX 18,401.82 -0.3 1.3 18,475.27 14,835.08 2.9 13.7 22.6 1,512.3 17,112
BRAZIL BOVESPA 13.35 0.0 5.1 14.11 9.81 12.1 5.0 0.0 2,044.0 14,044,980
CHINA SHANGHAI A 2,768.99 -1.7 1.4 3,525.59 2,431.61 4.5 -12.5 -9.4 5,529.9 8,839,982
DOW JONES 10,271.21 -1.4 -0.5 11,258.01 9,252.93 0.4 -1.3 9.9 318.4 213,872

EGYPT HERMES INDEX 593.83 0.3 0.4 701.17 541.33 6.8 -6.1 0.8 491.8 86,621
GERMANY DAX 6,024.05 -0.9 -1.5 6,386.97 5,261.66 0.9 5.2 13.3 105.8 126,252
HONG KONG HANG SENG 20,981.82 -0.4 -0.4 23,099.57 18,971.52 3.5 5.5 3.2 514.0 1,509,007
ITALIA FTSE 20,404.44 -1.2 -2.7 25,127.38 18,642.94 -0.4 -8.4 -6.8 20.1 1,098,761
JAKARTA COMPOSITE 3,117.72 0.4 3.0 3,118.65 2,235.39 4.1 22.1 33.9 808,013.5 4,133,613
JAPAN NIKKEI 225 9,179.38 -2.0 -0.8 11,408.17 9,065.94 -1.3 -9.3 -11.6 20,518.1 1,373,650

LONDON FTSE 100 5,191.56 -0.4 -1.6 5,833.73 4,689.67 1.0 -3.1 9.1 277.2 1,143,585
MALAYSIA BURSA 7.17 -0.4 2.6 8.59 6.75 1.4 -0.8 -10.3 531.4 616
MALAYSIA KUALA LUMPUR 1,395.02 0.2 2.6 1,395.03 1,155.53 4.3 10.9 19.9 500.8 102,297
MEXICAN BOLSA 32,153.63 -0.8 0.4 34,223.87 27,598.89 0.4 -0.1 15.1 104.9 172,303
NASDAQ 1,823.00 -1.5 -0.5 2,059.42 1,585.56 -1.0 0.0 12.9 1,217.2 265,632

RUSSIA RTS 1,426.57 -1.3 -1.3 1,685.60 987.41 2.7 0.2 40.0 450.3 2,462,701
S&P 500 1,075.63 -1.7 -0.7 1,219.80 991.97 -0.7 -3.0 6.8 9,249.6 1,025,149
SOUTH AFRICA JSE 6,885.00 -1.6 -5.0 7,500.00 5,501.00 -0.4 10.3 17.7 0.9 284
THAILAND STOCK EXCHANGE 893.92 0.3 3.7 897.81 636.41 8.4 27.6 39.5 7,974.6 4,007,673
TORONTO COMPOSITE 11,710.18 -0.6 1.6 12,321.76 10,634.83 0.7 0.0 9.4 126.0 192,285
SUBTOTAL

Australian Dollar 0.888 -0.5 -0.5 0.94 0.81 0.5 -1.4 6.8
Brazilian Real 1.762 -0.4 0.6 1.92 1.70 0.7 2.8 4.7
British Pound 1.550 -0.6 -0.5 1.69 1.42 1.6 0.2 -6.1
Canadian Dollar 1.049 -0.8 -0.6 1.11 0.99 -0.5 -0.5 3.7
Chinese RMB 6.791 0.0 0.1 6.83 6.76 -0.2 0.5 0.6

Dollar to Euro 1.269 -1.0 -0.4 1.51 1.19 -1.4 -6.6 -10.9
Egyptian Pound 5.679 0.1 0.0 5.72 5.41 0.3 -3.3 -2.3
Indian Rupee 46.675 -0.2 0.2 49.20 44.19 1.5 -1.0 4.3
Japanese Yen 85.660 -0.3 0.6 95.06 84.73 2.1 6.4 9.9
Korean Won 1,183.130 -0.9 0.0 1,277.85 1,102.85 1.9 -3.0 5.4

Mexican Peso 12.762 -0.4 -0.2 13.81 12.13 0.1 0.4 1.0
Malaysian Ringgit 3.138 -0.1 1.0 3.55 3.12 2.3 8.4 12.4
Polish Zloty 3.135 -1.2 0.2 3.53 2.70 1.9 -6.9 -7.3
Russian Ruble 30.655 -0.5 -0.2 32.11 28.63 -0.6 -2.2 3.9
Swiss Franc 1.038 -0.5 1.3 1.17 0.99 1.5 3.7 2.5

Taiwan Dollar 31.916 0.0 -0.1 32.99 31.27 0.7 0.3 3.2
Thailand Bhat 31.540 -0.1 1.2 34.11 31.46 2.3 5.1 7.9
Turkish Lira 1.517 -0.3 0.2 1.63 1.44 1.0 1.0 -1.6
UAE Dirham 3.673 0.0 0.0 3.68 3.65 0.0 0.0 0.0
Ukrainian Hryvna 7.894 0.0 0.1 8.91 7.82 0.2 1.0 6.8

Texas Crude-$ per barrel 74.430 -1.3 -1.7 61.44 31.41 -2.8 -6.7 2.8
USA Nat Gas-$ per mmcf 4.238 0.0 -9.3 11.95 3.25 -10.2 -22.8 30.5
Gold- $ per ounce 1,226.750 -1.0 -1.9 1,265.30 937.85 -1.9 -8.2 -24.1
Tin-$ per pound 9.6 0.5 2.9 9.87 6.36 18.1 25.0 51.4
Aluminum-US Midwest-$ per pound 0.930 -2.3 -4.6 1.50 1.25 5.9 -1.3 7.3

Copper-$ per pound 3.306 -1.1 0.8 3.61 2.66 12.2 -1.6 21.8
Nickel-$ per pound 9.889 -0.5 1.7 12.52 7.13 15.9 5.2 15.6
Lead-$ per pound 0.943 -0.8 0.2 1.18 0.71 18.5 -11.0 16.1
Zinc-$ per pound 0.935 -2.1 1.7 1.20 0.72 15.7 -12.0 15.7

Lumber (2x4)-$ per thou feet 207.5 -1.2 -3.3 N/A N/A -5.9 -29.1 0.2
Kraftliner Paper (monthly) Euro/T 533.3 N/A 0.6 N/A N/A 1.5 22.4 38.9
PET Plastic (Purch Mag-monthly-Inde 71.0 N/A N/A N/A N/A 0.0 -6.6 26.8

USA 90 day T-note 0.140 0.0 0.0 N/A N/A -6.7 55.6 0.0
USA 10 year T-note 2.580 -2.3 -5.8 N/A N/A -13.7 -31.8 -25.2
Eurobond 1-year rate 1.306 -0.2 -0.5 N/A N/A 1.6 17.1 4.6

Source: Bloomberg

43
WORLDSTEELDYNAMICS
WSD's Steel StockTrack
Million
Company Last % Change % Change 52 WEEK 52 WEEK % Change % Change % Change Avg.# of Avg. Daily Market Cap
Price 1-day 5-day High Low 1-mo. 6-mo. 1-yr Shares 6-mo. Vol $ Billions USD

AK STEEL 13.730 -3.0 3.9 26.75 11.34 -4.7 -41.2 -32.9 109.5 10,769,334 1.503
CMC 13.520 -2.9 1.1 21.29 12.32 -0.1 -10.4 -20.9 114.1 2,597,924 1.542
GERDAU AMERI 11.380 0.0 -0.1 12.12 7.17 -1.2 42.1 52.8 432.5 1,901,614 4.921
ARCELORMITTAL 30.410 -2.7 0.4 49.41 26.28 -0.2 -22.8 -14.0 1,510.0 6,089,144 45.919
NUCOR 38.540 -2.0 -0.1 51.08 36.95 -3.2 -13.1 -17.3 315.8 4,830,896 12.173
STEEL DYNAMICS 14.450 -1.2 4.7 20.47 12.89 1.3 -13.6 -12.9 216.6 5,333,347 3.130
US STEEL 47.780 -3.6 5.8 70.95 33.25 7.9 -10.3 9.3 143.5 15,940,547 6.857

OLYMPIC 22.770 -5.0 2.2 36.75 21.41 -7.7 -29.2 -13.8 10.9 122,671 0.124
RELIANCE 39.150 -2.3 0.5 55.47 34.40 6.9 -11.1 10.0 74.2 1,039,322 2.906
WORTHINGTON 14.650 -3.0 4.3 17.97 10.70 5.5 -9.3 15.5 79.2 773,111 1.160

SCHNITZER 47.230 -1.1 4.7 60.12 37.00 0.2 -3.1 -8.4 27.9 618,149 1.318
SIMS GROUP 15.070 -1.8 -2.3 23.60 13.58 1.6 -13.8 -24.2 180.6 132,711 2.721

MASSEY COAL 32.520 -1.8 3.2 54.80 25.52 10.9 -26.5 11.2
WALTER ENERGY 77.360 -0.8 7.4 99.45 49.60 15.3 -2.9 33.7 53.4 2,538,780 4.128

CSN 28.720 0.0 -0.1 36.98 24.06 3.9 -2.9 8.0 272.0 4,162,636 4.433
GERDAU 24.080 0.0 -2.7 31.88 21.25 -1.2 -7.4 8.0 1,417.8 4,953,007 19.372
TENARIS 36.240 -1.9 2.7 47.79 27.95 -6.9 -22.0 21.7 590.3 2,345,032 21.391
TERNIUM 32.900 -0.6 -1.0 43.52 22.22 -7.3 3.9 39.8 200.5 340,552 6.596
USIMINAS 48.760 0.0 -1.5 66.20 40.40 -6.2 -0.1 3.1 493.6 471,220 13.656

ANSHAN 11.600 -1.9 -0.3 18.36 9.05 7.0 -15.7 -27.0 1,085.8 17,806,860 1.855
BAOSTEEL 6.380 -2.7 -0.6 9.72 5.72 3.1 -20.4 -12.6 17,512.0 53,045,880 16.453
MAANSHAN 3.510 -1.4 0.6 5.48 3.10 3.5 -20.4 -29.8 7,787.2 24,345,340 27.333
WUHAN 10.060 -1.7 -2.3 12.36 8.47 5.0 -9.8 10.7 1,150.0 8,839,890 1.704

BLUESCOPE 2.240 -2.6 -3.4 3.40 2.03 0.4 -8.9 -27.5 2,054.7 15,386,470 4.602
CHINA STEEL (TAIWAN) 30.650 -0.3 -0.8 34.66 28.03 2.5 -3.3 6.8 13,231.5 27,480,050 59.723
POSCO ADR 106.750 1.5 3.6 150.50 87.80 1.2 -9.4 12.6 348.7 466,889 37.229
THYSSENKRUPP 22.745 -0.8 -2.0 28.25 19.68 3.2 -5.5 -5.3 464.1 3,452,982 8.315
VOEST ALPINE 24.140 -1.9 1.0 31.29 20.61 4.8 -12.1 15.8 168.4 551,460 3.202

SAIL IN 191.700 -0.3 -0.5 267.00 150.25 -3.7 -7.6 18.7 4,130.4 4,566,468 16.964
ISPAT IDUSTRIES 17.900 0.0 0.3 24.95 16.45 -0.3 -5.3 -17.1 1,221.8 10,026,700 0.469
TATA 518.900 -0.7 -1.6 739.00 407.50 1.9 -7.5 17.4 887.4 8,196,260 9.866
JSW 1,138.400 0.6 2.2 1,350.05 652.00 1.4 11.4 63.6 187.1 2,031,085 4.562

JFE 2,686.000 -0.9 1.9 3,870.00 2,511.00 5.2 -15.1 -23.0 7.2 3,071,856 19.267
KOBE 186.000 -1.1 3.9 224.00 142.00 4.5 18.5 5.1 3,115.1 14,390,360 6.764
NIPPON STEEL 288.000 -1.4 1.4 395.00 280.00 0.0 -10.6 -23.4 79.5 26,195,660 22.886
SUMITOMO METAL 211.000 -1.9 1.4 293.00 192.00 3.9 -13.9 -12.8 56.1 23,118,660 11.838
TOKYO STEEL 979.000 -1.4 3.9 1,298.00 880.00 -1.7 6.2 -12.0 149.0 958,237 1.703

EVRAZ 25.790 -2.7 3.6 43.15 21.59 9.5 -22.3 13.4 437.9 1,501,934 11.293
MAGNITOGORSK 0.630 0.0 0.0 1.09 0.67 11.6 -17.8 28.6 11,174.0 9,377 7.040
MECHEL 23.210 -0.5 6.6 31.79 10.35 21.8 -5.7 114.9 416.3 3,231,604 9.662
SEVERSTAL 12.597 0.0 0.0 14.80 6.35 17.4 12.2 78.4 1,007.7 4,066 0.414

SUBTOTAL 436.993

CVRD 43.900 0.0 2.4 51.60 32.17 7.3 -2.7 35.2 5,288.2 18,230,890 232.150
BHP-BILLITON** 37.900 -1.0 -6.2 44.93 35.58 -1.0 -7.6 2.1 3,356.1 17,629,850 127.196
RIO TINTO** 51.530 -2.2 1.8 62.24 36.97 4.9 -3.4 34.0 2,274.7 3,454,820 117.214

SUBTOTAL 476.559

TOTAL 913.552

PMI Last 6 month's

Value Price
USA 55.5 58.4
Brazil 51.8 57.8
Canada 54.0 50.8
China 51.2 55.8
Eurozone 56.7 52.4
France 53.9 55.4
Germany 61.2 53.7
Hungary 53.5 53.9
Japan 52.8 52.5
South Africa 49.5 53.6
UK 57.3 56.6

Source: Bloomberg

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 WORLDSTEELDYNAMICS
Container Traffic - TEUs Deployed by Month
(million TEUs=Twenty-foot equivalent unit)
Chg
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10 vs 09

Jan 19.0 20.8 19.0 21.3 21.3 22.1 27.4 33.9 28.0 23.6 -15.7%
Feb 19.8 20.9 19.1 21.1 21.4 22.2 27.4 34.2 26.6 23.2 -12.9%
Mar 20.0 21.0 19.4 21.0 21.3 20.7 27.6 33.7 25.5 23.4 -8.3%
Apr 20.0 21.1 19.0 20.9 21.2 22.5 27.8 33.7 25.1 23.5 -6.4%
May 19.6 20.3 19.1 21.0 21.4 22.5 28.4 33.3 24.5 23.9 -2.6%
Jun 20.0 20.2 19.1 20.9 20.5 22.9 30.4 33.8 24.5 23.6 -4.0%
Jul 20.0 20.2 19.4 20.0 20.7 23.4 31.5 33.0 24.3 23.9 -1.7%
Aug 19.7 20.3 19.7 19.9 21.0 24.1 31.5 33.1 24.5 33.4 36.6%
Sep 20.2 20.1 19.9 20.6 21.1 25.3 32.2 33.2 24.0
Oct 21.0 19.9 19.9 20.8 21.8 26.2 32.2 34.9 23.8
Nov 21.6 20.3 21.3 21.2 22.2 27.3 33.5 28.7 23.7
Dec 21.5 20.1 21.2 21.2 22.2 27.2 33.6 28.4 23.5
Total 242.4 245.1 236.1 249.8 256.0 286.3 363.5 394.0 298.1
% change 1.1% -3.7% 5.8% 2.5% 11.8% 27.0% 8.4% -24.4%

(NOTE: August 2010 rate based on 22 days of data.)

Port receipts 248.3 270.1 310.3 351.2 387.9 428.1 473.9 446.9 370.5
% change 8.8% 14.9% 13.2% 10.5% 10.4% 10.7% -5.7% -17.1%

Top 100 Ports 205.0 224.6 255.7 290.0 322.0 354.8 397.2 406.9 353.3
% of Total 83% 83% 82% 83% 83% 83% 84% 91% 95%

By Region
East Asia 58 64 78 92 107 125 146 149 135
South East Asia 31 35 39 45 48 50 55 59 51
Northern Europe 29 31 34 38 41 44 50 47 37
Mid-East 8 10 12 15 16 18 18 20 20
North America West Coast 17 19 21 23 25 27 19 24 19
West Mediterranean 14 15 17 18 19 20 22 22 18
North East Asia 25 25 28 30 32 34 36 32 18
North America East Coast 13 13 16 16 17 17 18 16 13
East Med/Black Sea 8 10 11 13 15 17 19 15 13
Indian Subcontinent 6 6 8 9 10 12 14 10 10
South America East Coast 4 5 6 7 8 9 9 6 6
Central America 4 4 6 7 7 8 10 7 5
Scandanavia/Baltic 4 4 5 5 6 7 8 7 5
Australasia 5 6 6 7 7 8 8 6 4
Red Sea 2 2 2 3 4 4 4 4 4
Southern Africa 2 2 3 3 3 4 4 3 4
Caribbean 5 5 5 6 6 7 8 6 2
South America West Coast 2 3 3 3 4 5 5 5 2
South America North Coast 2 1 1 2 2 2 2 1 2
West Africa 3 4 4 4 4 4 4 2 1
Iberian Peninsular 1 1 2 2 2 2 2 2 1
Indian Ocean 0 0 1 1 1 1 0 0 0
North Africa 1 1 1 1 1 1 1 0 0
North America Gulf Coast 2 2 2 2 2 2 11 3 0
South Pacific 0 0 0 0 0 0 0 0 0
East Africa 1 1 1 1 1 1 1 1 0
North Pacific 0 0 0 0 0 0 0 0 0
Northern Europe Inland Waterway 0 0 0 0 0 0 0 0 0

(Note: This is ships deployed each month and the TEU's on those ships. It's the sum of 165-170 ocean routes each month.)
TEU = Twenty foot equivalent unit

Source: Containerisation International

45
 $ Per Day $ Per Day $ Per Iron Ore Tonne

0
100
120

20
40
60
80
Jan-05

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
50,000
100,000
150,000
200,000
250,000
300,000

0
Apr-05
Jan-05 Jan-05
Jul-05
Apr-05 Apr-05

Source: SSY
Oct-05
Jul-05 Jul-05

Source: SSY
Source: SSY
Jan-06
Oct-05 Oct-05
Jan-06 Apr-06
Jan-06
Apr-06 Jul-06
Apr-06
Jul-06 Jul-06 Oct-06

Oct-06 Oct-06 Jan-07

Jan-07 Jan-07 Apr-07

Apr-07 Apr-07 Jul-07

46
Jul-07 Jul-07 Oct-07
Oct-07 Oct-07
Jan-08
Jan-08 Jan-08
Apr-08
Apr-08 Apr-08
Jul-08
Jul-08 Jul-08
Oct-08
WORLDSTEELDYNAMICS

Oct-08 Oct-08
Jan-09
Capesize Daily Rate Brazil to China

Jan-09 Jan-09
Apr-09
Apr-09 Apr-09

Panamax Daily Rate Transatlantic Route

Jul-09
Jul-09 Jul-09

Oct-09 Oct-09
Oct-09
Capesize Average Daily Earnings Pacific Round Voyage

Jan-10 Jan-10
Jan-10
Apr-10 Apr-10
Apr-10
Jul-10 Jul-10
Jul-10
 WORLDSTEELDYNAMICS
China Imports by Product
thousand tonnes

Ingots & Semis Bars & W.R. Shapes Plates Sheets Pipes Others Total Scrap Pig Iron
% Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg
2005 1,353 -65% 1,080 -22% 620 -22% 1,123 -49% 21,917 -4% 1,080 -18% 567 -16% 27,170 -18% 10,136 -1% 270 -67%
2006 508 -62% 1,120 4% 299 -52% 1,004 -11% 20,711 -6% 970 -10% 1,567 176% 18,973 -30% 5,386 -47% 170 -37%
2007 391 -23% 1,060 -5% 280 -6% 1,321 32% 11,981 -42% 770 -21% 1,396 -11% 17,199 -9% 3,395 -37% 695 309%
2008 281 -28% 960 -9% 271 -3% 1,440 9% 10,466 -13% 1,060 38% 1,137 -19% 15,615 -9% 3,590 6% 356 -49%
Jan-09 153 856% 50 -38% 14 -30% 99 6% 593 -43% 35 -57% 62 -42% 1,006 -30% 693 165% 64 -26%
Feb-09 338 2013% 40 -50% 20 -5% 123 15% 758 -12% 87 16% 56 -41% 1,422 13% 1,126 509% 103 199%
Mar-09 465 2225% 50 -44% 26 -13% 138 3% 920 -9% 55 -53% 78 -32% 1,732 14% 1,363 336% 321 4930%
Apr-09 666 3818% 50 -50% 23 5% 123 6% 1,206 14% 81 -15% 127 10% 2,276 50% 1,475 414% 513 717%
May-09 699 3579% 60 -25% 24 4% 120 -4% 1,312 43% 53 -24% 78 -32% 2,346 74% 1,657 761% 384 13144%
Jun-09 379 2129% 70 -13% 25 9% 126 10% 1,257 45% 52 -21% 94 -7% 2,003 58% 1,263 534% 419 2350%
Jul-09 576 4700% 80 0% 18 -45% 122 10% 1,357 33% 49 -32% 112 -3% 2,314 60% 1,295 329% 271 2270%
Aug-09 357 2875% 80 0% 18 -14% 106 -29% 1,242 37% 43 -43% 100 5% 1,946 45% 1,019 277% 296 4083%
Sep-09 282 1467% 95 19% 21 17% 162 33% 1,454 73% 45 -63% 129 65% 2,188 71% 1,303 369% 423 4373%
Oct-09 331 1847% 80 0% 17 -15% 99 -22% 1,152 54% 37 -56% 88 7% 1,804 56% 1,024 336% 275 5556%
Nov-09 306 2682% 90 29% 15 -21% 89 -20% 970 53% 38 -69% 85 39% 1,593 55% 652 54% 283 8835%
Dec-09 96 -9% 100 67% 18 -14% 90 -31% 1,160 102% 48 -38% 62 5% 1,574 53% 823 28% 267 143%
Jan-10 38 -75% 80 60% 21 50% 106 7% 1,024 73% 37 6% 73 18% 1,379 37% 612 -12% 114 79%
Feb-10 49 -86% 70 75% 15 -25% 94 -24% 876 16% 33 -62% 46 -18% 1,183 -17% 465 -59% 64 -37%
Mar-10 81 -83% 122 144% 25 -4% 115 -17% 1,245 35% 41 -25% 71 -9% 1,700 -2% 739 -46% 84 -74%
Apr-10 66 -90% 100 100% 18 -22% 123 0% 1,157 -4% 46 -43% 46 -64% 1,556 -32% 558 -62% 122 -76%
May-10 18 -97% 100 67% 23 -4% 115 -4% 1,035 -21% 37 -30% 42 -46% 1,370 -42% 360 -78% 16 -96%
Jun-10 18 -95% 110 57% 40 60% 125 -1% 1,125 -11% 40 -23% 32 -66% 1,490 -26% 323 -74%

China Exports by Product

thousand tonnes

Ingots & Semis Bars & W.R. Shapes Plates Sheets Pipes Others Total Scrap Pig Iron
% Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg
2005 7,236 18% 6,090 37% 830 76% 1,827 98% 6,643 37% 3,050 81% 748 7% 26,424 37% 2 -67% 2,243 74%
2006 9,076 25% 11,079 82% 2,654 220% 5,056 177% 15,324 131% 5,874 93% 1,330 78% 50,393 91% 40 1950% 867 -61%
2007 6,457 -29% 16,250 47% 5,466 106% 9,280 84% 19,070 24% 8,606 47% 1,793 35% 66,922 33% 32 -19% 689 -21%
2008 1,319 -80% 12,629 -22% 3,540 -35% 8,648 -7% 20,152 6% 9,909 15% 2,268 26% 58,465 -13% 204 535% 251 -64%
Jan-09 0 -100% 127 -84% 65 -72% 328 -61% 472 -58% 613 -23% 143 -12% 1,748 -57% 0 -43% 1 -92%
Feb-09 0 -100% 194 -62% 48 -75% 308 -57% 372 -58% 453 -17% 82 -28% 1,457 -51% 0 -98% 1 -97%
Mar-09 1 -89% 140 -84% 64 -80% 290 -67% 370 -70% 518 5% 171 -10% 1,554 -61% 1 -97% 0 -97%
Apr-09 0 -100% 106 -91% 70 -78% 173 -78% 307 -79% 482 -24% 133 -35% 1,271 -72% 1 -99% 1 -97%
May-09 0 -100% 146 -89% 68 -83% 143 -81% 337 -82% 375 -50% 143 -47% 1,212 -78% 1 -99% 1 -98%
Jun-09 6 -73% 189 -86% 67 -82% 175 -71% 325 -82% 408 -39% 147 -23% 1,317 -74% 1 145% 1 -98%
Jul-09 1 -100% 171 -91% 141 -71% 223 -76% 507 -80% 470 -53% 154 -41% 1,667 -77% 0 -98% 5 -84%
Aug-09 2 -100% 213 -90% 129 -73% 273 -68% 767 -74% 416 -55% 171 -20% 1,971 -76% 1 -9% 13 68%
Sep-09 1 -100% 231 -84% 162 -58% 403 -54% 867 -66% 509 -49% 181 -7% 2,354 -65% 0 182% 1 -86%
Oct-09 1 -99% 327 -49% 148 -29% 294 -54% 1,186 -32% 473 -54% 150 -9% 2,579 -43% 0 116% 80 710%
Nov-09 21 -32% 306 -1% 133 77% 327 -5% 1,363 52% 450 -55% 148 0% 2,748 -2% 3 3449% 80 1346%
Dec-09 9 -50% 321 12% 151 101% 400 -7% 1,620 67% 503 -53% 199 29% 3,203 7% 1 474% 52 7627%

Jan-10 9 272 114% 176 171% 331 1% 1,319 180% 457 -25% 169 18% 2,733 56% 0 159% 18 1122%
Feb-10 2 282 45% 180 275% 265 -14% 1,105 197% 407 -10% 116 41% 2,357 62% 45 9001% 10 641%
Mar-10 1 0% 452 223% 242 278% 333 15% 1,537 316% 459 -11% 176 3% 3,200 106% 46 8415% 42 10163%
Apr-10 3 428 304% 241 244% 450 160% 2,350 666% 503 4% 173 30% 4,148 226% 45 4522% 192 36810%
May-10 41 603 313% 230 238% 452 216% 2,628 680% 599 60% 238 66% 4,791 295% 60 7135% 96 6569%
Jun-10 60 900% 750 297% 280 318% 520 197% 3,030 832% 670 64% 310 111% 5,620 327%

China Net-Imports by Product

thousand tonnes

Ingots & Semis Bars & W.R. Shapes Plates Sheets Pipes Others Total Scrap Pig Iron
% Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg % Chg
2005 -5,883 156% -5,010 63% -210 -164% -704 -156% 15,274 -15% -1,970 443% -181 546% 746 -95% 10,134 -1% -1,974 315%
2006 -8,568 46% -9,959 99% -2,355 1021% -4,052 476% 5,388 -65% -4,904 149% 237 -231% -31,420 -4312% 5,346 -47% -697 -65%
2007 -6,066 -29% -15,190 53% -5,186 120% -7,959 96% -7,089 -232% -7,836 60% -397 -268% -49,723 58% 3,363 -37% 6 -101%
2008 -1,038 -83% -11,669 -23% -3,269 -37% -7,209 -9% -9,685 37% -8,849 13% -1,131 185% -42,850 -14% 3,386 1% 105 1720%
Jan-09 153 -325% -77 -89% -51 -76% -229 -70% 121 -237% -578 -19% -81 42% -742 -72% 693 165% 62 -9%
Feb-09 338 2500% -154 -64% -28 -83% -185 -70% 386 -1330% -366 -22% -26 37% -35 -98% 1,125 629% 101 -2143%
Mar-09 464 4118% -90 -89% -38 -87% -152 -80% 550 -327% -463 23% -93 22% 178 -107% 1,362 367% 320 -6044%
Apr-09 666 16550% -56 -95% -47 -84% -50 -93% 899 -318% -401 -26% -6 -93% 1,005 -133% 1,474 588% 512 1011%
May-09 699 23200% -86 -93% -44 -88% -23 -96% 975 -201% -322 -53% -65 -58% 1,134 -128% 1,656 1116% 382 -746%
Jun-09 373 -7560% -119 -91% -42 -88% -49 -90% 932 -197% -356 -41% -53 -40% 686 -118% 1,262 534% 418 -2333%
Jul-09 575 -358% -91 -95% -123 -72% -101 -87% 850 -155% -421 -54% -42 -71% 647 -111% 1,295 362% 266 -1313%
Aug-09 355 -164% -133 -93% -111 -75% -167 -76% 475 -123% -373 -56% -71 -40% -25 -100% 1,018 278% 283 -40653%
Sep-09 281 -245% -136 -90% -141 -62% -240 -68% 586 -134% -464 -47% -52 -56% -166 -97% 1,302 369% 421 -63563%
Oct-09 330 -444% -247 -56% -131 -30% -195 -62% -34 -97% -436 -54% -62 -25% -775 -77% 1,024 336% 194 -3959%
Nov-09 285 -1525% -216 -10% -118 111% -238 2% -393 50% -412 -53% -63 -28% -1,155 -35% 649 54% 203 -8709%
Dec-09 87 -1% -221 -2% -133 146% -310 3% -460 17% -455 -54% -137 44% -1,629 -17% 823 28% 215 97%
Jan-10 29 -81% -192 149% -155 204% -225 -2% -295 -344% -420 -27% -96 19% -1,354 82% 612 -12% 97 55%
Feb-10 47 -86% -212 38% -165 489% -171 -8% -229 -159% -374 2% -70 169% -1,174 3254% 419 -63% 54 -46%
Mar-10 80 -83% -330 267% -217 471% -218 43% -292 -153% -418 -10% -105 13% -1,500 -943% 693 -49% 42 -87%
Apr-10 63 -91% -328 486% -223 374% -327 553% -1,193 -233% -457 14% -127 2012% -2,592 -358% 513 -65% -69 -114%
May-10 -23 -103% -503 485% -207 370% -337 1352% -1,593 -263% -562 75% -196 201% -3,421 -402% 300 -82% -80 -121%
Jun-10 -42 -111% -640 438% -240 471% -395 702% -1,905 -304% -630 77% -278 425% -4,130 -702% 323 -74% 0 -100%

Note: Plate = Cut Plate

Source: WSD estimates

********************************************************************************************************************************
The information contained in this report is based upon or derived from sources that are believed to be reliable; however, no representation is made that such
information is accurate or complete in all material respects, and reliance upon such information as the basis for taking any actions is neither authorized nor
warranted.

A variety of factors, including changes in prices, shifts in demand, variations in supply, international currency movements, technological developments,
governmental actions and/or other factors, including our own misjudgments or mistakes, may cause the statements herein concerning present and future
conditions, results and trends to be inaccurate.

The officers, directors, employees or stockholders of World Steel Dynamics Inc. do not, directly or indirectly, hold securities of, and/or that are related to, any
of the companies that are referred to herein. World Steel Dynamics Inc. may act as a consultant to one or more of the companies mentioned in this report.

Copyright  2010 by World Steel Dynamics Inc., all rights reserved.

47