European Steel Plate Market Chances and Challenges Dr. Günter Luxenburger Chief Sales Officer DILLINGER HÜTTE International Steel Plate Conference - Frankfurt1

Short profile of Dillinger Hütte Group Trends and developments in the steel market Specific view to the quarto plate market / Linepipe market Other important external conditions International Steel Plate Conference - Frankfurt2

Dillinger Hütte and Saarstahl – leading companies with their products SHS-Stahl-Holding-Saar Saarstahl - Germany Dillinger Hütte - Germany Dillinger France Long products Heavy forgings Quarto plates Pig Iron production: Up to 5 Mio t/a Pig Iron production: Up to 5 Mio t/a International Steel Plate Conference - Frankfurt3

Stand International Steel Plate Conference - Frankfurt4

Key data of Dillinger Hütte Group Plate capacity:2.300 kt/a Dillinger Germany:1.500 kt/a Dillinger France: 800 kt/a Focus on:- thick, large, heavy plates - stringent specifications - top services Employees in the group:7.600 Dillinger Germany5.300 Dillinger France 600 (using slabs of DH) International Steel Plate Conference - Frankfurt5

Trends and developments in the steel market Short overview about Dillinger Hütte Group Specific view to the quarto plate market Other important external conditions International Steel Plate Conference - Frankfurt6

GDP Forecasts (IMF: January 2015) Stahl-Zentrum International Steel Plate Conference - Frankfurt7

Source: European Commission, Markit, IFO International Steel Plate Conference - Frankfurt8

Worldwide production of crude steel Average growth rates (% per annum) YearsGrowth ,1 % ,2 % ,4 % I. II. III. II. III. 2011:1,537 Mio t 2012:1,559 Mio t 2013:1,649 Mio t 2014:1,662 Mio t I. *) Estimation Source: Worldsteel, WV, DH calculations Development: [mio mt] +5,1 % +1,2 % +5,4 % Outlook 2015:1,730 Mio t* Outlook 2016:1,773 Mio t* International Steel Plate Conference - Frankfurt9

Quelle: Eurofer Konjunkturkommission, Feb. 15 Steel Market EU International Steel Plate Conference - Frankfurt10

Apparent Consumption, Finished Steel (in Mill. t, change in % to the previous year) e=estimated, f=forecast, Source: own calculations International Steel Plate Conference - Frankfurt11

China: Light Growth in 2015 – Further high Export Volumes Stahl-Zentrum Market Supply Rolled Steel (Mio t) Export Steel Mill Products (Mio t) Alloyed unalloyed Forecast 2015: 723 Mio. t, + 1,5 % International Steel Plate Conference - Frankfurt12

Specific view to the quarto plate market Activity of Dillinger Hütte Group Trends and developments in the steel market Other external conditions International Steel Plate Conference - Frankfurt13

General Trend Quarto Plate – Situation not new! -Mild improvement of demand in Europe for 2014 and However overcapacity in Europe and worldwide will remain in next years -Increasing protectionism worldwide -Structural changes observed: Trend to self sufficiency in consuming markets (more local content) Delocalization of customers / demand High competition Price pressure Low profitability International Steel Plate Conference - Frankfurt14

Actual trends in the QP-market  Positive: –Weak € makes European producers more competitive in Export markets – Weak € makes European customers more competitive in their export markets –Low oil and gas prices helps some countries (also Europe) to support the economy –General expectation for infrastructure spendings due to Junker‘s plan International Steel Plate Conference - Frankfurt15

Actual Trends in the QP- Market  Negative: –Slow down in China in steel consumption  export pressure – high imports to Europe for specific product – commodity quarto plate extremely increased, mainly by China! –Low oil and gas prices will reduce investments for linepipe, offshore and petrochemical plants in short term Question: how oil price will develop in the next quarters?! International Steel Plate Conference - Frankfurt16

Fair Trade Actions on EU-level New action started: Intensive monitoring of European plate mills (volume, pricing, injury of the European plate industry) Successful action against tricky B alloying against the rules of the EN- standards in order to apply VAT-rebate for Chinese mills New action against Cr as alloying element to bypass again the existing rules of WCO/EN10020/EN10025 New action to sensibilise authorities and end-users International Steel Plate Conference - Frankfurt17

Imports of Quartoplate from 3rd countries into EU 28 by selected countries of origin in 2009 : 2010 : 2011 : 2012 : 2013 : * = Serbia/Monten. probably thick / wide cut-to-length plate t.p.m. Stahl-Zentrum International Steel Plate Conference - Frankfurt18

Total 3rd Country Imports of Quarto Plate into EU 28 - per quarter t.p.m. Imports Q4/2014 = Oct.-Dec. 2014; Prior Surv.2 *) = Q1/15 = January 2014 % variations y-o-y *) = up to year 2012 = import licences *) +40,3 % Stahl-Zentrum International Steel Plate Conference - Frankfurt19

Consumption / Market Supply in kt / month - 2,9% Q4/14 = Oct./Nov ,3% + 5,0 % - 0,2 % Quartoplate excl. pipe plate - Apparent Consumption / Market Supply EU 28 Stahl-Zentrum International Steel Plate Conference - Frankfurt20

Quartoplate Deliveries of Eurofer mills into EU t.p.m. per year -2,9% updated: ,6% Stahl-Zentrum International Steel Plate Conference - Frankfurt21

Difference between Eurofer and EU 27: MRM, Huta Batory, Huta Pokoj, Palini & Bertoli, Marcegaglia, F.I.L., Stomana plus stainless steel production at Eurofer mills. Eurofer Q4/2014 = Oct.-Dec. 2014; EU28 Q4/14 = Oct./Nov % variation y-o-y Total Production Quarto Plate EU 28 and Eurofer t.p.m. + 18,7% + 8,5% -6,3% -10,8% + 23,4 % + 8,1 % - 3,9 % - 9,6 % +3,8% +4,3% Updated : EU 28 = 1-11/14 Stahl-Zentrum International Steel Plate Conference - Frankfurt22

stockpiling: 28 months Stock variation in kt Inventory in kt Q4/14 = End of December 2014 *) = extrapolated from statistical figures for the German market; inventory at end of period; partly estimated de-stocking 18 months Development of inventory *) of Quarto Plate at EU stockholder / SSC accumulated investory increase: 1,35 million tons or 50 % from beginning of 2006 till Q2/08 Stahl-Zentrum International Steel Plate Conference - Frankfurt23

83,9 % 90,2 % 86,7 % 52,9 % 65,3 % 70,6 % 67,8 % 61,5 % Capacity Utilization Quarto Plate of Eurofer mills*) Q4/2014 = October-December 2014 *) = Situation November 2013 Percent updated: ,1 % Stahl-Zentrum International Steel Plate Conference - Frankfurt24

Consumer segments for QP vs 2012: mixed picture *** 2014 *** ** *** **** *** 2015 **** Yellow goods Heavy machinery Shipbuilding Offshore Oil & Gas Linepipe Wind-Energy Pressure Equipment Trend ? ? Construction ******* European total consumption forecast +2 % +2,3 % International Steel Plate Conference - Frankfurt25

Quo vadis – plate market: 1. plate consumption slowly further recovering in Europe, but still far under existing capacity 2. Sales for non line pipe plates – in EU: slight improvement expected 3. Demand for shipbuilding plates  recovery in Asia in progress 4. Demand for line pipe plates recovered in 2014  uncertainty in Stock inventories in reasonable conditions  continuous buying activity over the year in Europe to be expected 6. Prices too low compared to cost situation  price hikes as soon as the market allows it! International Steel Plate Conference - Frankfurt26

Other important external conditions Specific view to the quarto plate market Short overview about Dillinger Hütte Group Trends and developments in the steel market International Steel Plate Conference - Frankfurt27

Remaining Competitive in a Challenging Climate - frame conditions in EU have to be supportive, reliable and stable for the (steel) - industry  EU administration and national governments bear a high responsibility! - keep steel (consuming) industry in the EU – keep the jobs in EU! - yes: to fair trade - no: to unfair trade, dumping or unfair trade barriers! - the steel companies in EU have still a lot of chances by marketing innovative and customer oriented products & services! - adjusting capacities is an issue not only in Europe – a general political solution is not realistic. Solution will take time! - The best performer will win the race! International Steel Plate Conference - Frankfurt28

Do you recognize „DILLINGER“ ?! International Steel Plate Conference - Frankfurt29