Metal Strategies Inc. Brandywine Business Park, 1205 Ward Avenue / Suite #1, West Chester, PA USA Tel: (610) Fax: (610) Metal Strategies Inc. Brandywine Business Park, 1205 Ward Avenue / Suite #1, West Chester, PA USA Tel: (610) Fax: (610) PERSPECTIVES ON NORTH AMERICAN STEEL INDUSTRY PROSPECTS Joint AISI / SMA Conference Washington, D.C. Christopher Plummer Managing Director May 18, 2005

 Eight months of downward market correction, more focused in sheet  Spot prices down 30% since September, contract prices up 15-20%  Contract raw material prices up by 70% to 110%, spot moving down  China demand slowing following May 2004 fiscal policy initiative  Auto market under pressure – especially traditionals, and SUV CURRENT SITUATION

STEEL OUTLOOK SUMMARY Positive outlook despite current conditions -- still plenty of life left in this expansion – profits down for many, but earnings and cash flow still very good  Supply moving in balance with demand:  Imports down consistently (-30%) v. month-ago, since peaking in August  Inventories coming down, aided by consolidation impact of selected shut-downs by steel mills, and inventory liquidation by distributors in second quarter  Underlying demand still healthy (3 markets below account for two-thirds use):  Industrial equipment spending is still strong (+7%)  Non-residential construction just recovering - up 7% in 2005 and 10% in  Auto sector difficulties tempered by ongoing strong transplant sector output  Scrap, alternative iron, and spot iron ore, coke and coal prices moderating, while contract steel prices up 15-20% (50-55% sheet, 10-15% all other, under contract)

WORLD STEEL PRODUCTION World steel production was up 6.5% through March, following increases of 8.9% and 6.8% in 2004 and 2003, respectively. China accounted for 92% of the y-t-d worldwide net gain and 25% of total world production. Steel Production: March 2005 Percent Change, Year Ago Month: 6.5% Year-to-Date: 6.5% Steel Production: March 2005 Percent Change, Year Ago Month: 6.5% Year-to-Date: 6.5% World Excluding China World Excluding China World Total In the five years from 1998 to 2003, China and the former-USSR states increased production by a cumulative 140 MT, equal to 70% of the combined total output in 2003 of both the U.S. or Japan.

WORLD CRUDE STEEL OPERATING RATE Operating rates recovered from 76% in 2000, to a peak of 87% in 2004, and have moved moderately downward since late World Crude Steel Operating Rate % World Crude Steel Operating Rate %

CHINA Chinese fiscal policy actions since May 2004 have had a moderately negative impact world steel market conditions, with China posing the largest market risk now and in the coming years.  Chinese production up 24% through March – likely to reach >330 MT in  GDP growth stable at 9% in 2005, although reductions clearly showing in some industrial investment sectors, non-residential construction and consumer durables.  Output in Russia, Ukraine and Eastern Europe slowing since early-2004 at least in part to reduced export opportunities in China.  Stepped-up growth in India, Russia and Eastern Europe will likely offset some of the expected shift to slower steel demand growth in China in the next few years.

U.S. SPOT STEEL PRICES U.S. spot hot rolled sheet steel prices have fallen back 30% from the recent record high in October, while SBQ prices are still at record levels despite falling scrap prices and auto output. HR Sheet Price HR SBQ Price

U.S. FINISHED STEEL IMPORTS Finished steel imports were up 15% through February, but have declined by a cumulative 31% since peaking in August 2004 at 2.9 MT; following 55% increase in 2004, and 23% decline Tons (Bars, Left) 000 Tons (Bars, Left) Market Share % (Line, Right) Market Share % (Line, Right)

STEEL ENERGY AND RAW MATERIAL COSTS In the 40 months from January 2002 to May 2005, raw material and energy input costs for U.S. steelmakers have increased dramatically. +165% +157% +3% +114% +465% +246% +18% +123% +338% +131% Percent Change v Top= 2004 (Peak or Avg.) Bottom=2005 Percent Change v Top= 2004 (Peak or Avg.) Bottom=2005

STEEL TRANSPORTATION Transportation equipment investment has not kept pace with steel and related raw materials demands with freight-car builds shown here, but same holding generally true for barges and ocean shipping Ocean shipping rates increased 4.5 fold between early 2003 and mid-2004 U.S. Scrap Demand = domestic consumption plus exports U.S. Steel Shipments U.S. Scrap Demand U.S. Railcar Builds

EXCHANGE RATES – INDEX The real trade-weighted US$ index (major currencies) has increased 2% y-t-d through April after the December trough (reaching the lowest level since 1995), but is still some 27% below the recent Feb peak, 33% below the all-time record high in Jan. 1985, and only 6% above the July 1995 record low. Broad Currency Group Major Currencies Data through April 2005 US$ Real Trade-Weighted Index

STEEL END-MARKET OVERVIEW Three broad sectors – construction, autos, and industrial equipment – account for 75-80% of total U.S. steel consumption. Construction 40% Autos 20% Ind. Equip % Energy-4% Containers 4% Appliances, Office Furniture 2.5% All Other 15% 60% Non-Residential 30% Public Works 10% Residential 60% Non-Residential 30% Public Works 10% Residential 55% Light Trucks/ SUVs 30% Passenger Cars 5% Commercial Trucks, Buses 10% After Market 55% Light Trucks/ SUVs 30% Passenger Cars 5% Commercial Trucks, Buses 10% After Market Off-Highway Vehicles Freight Cars Barges, Ships Other Industrial Equip. Off-Highway Vehicles Freight Cars Barges, Ships Other Industrial Equip.

AUTO PRODUCTION NAFTA output looks to be down 2% to 4% in 2005, including potential declines in light trucks-SUVs (not unusual--has declined 7 of last 25 years). Output still at high plateau (15-to-17 million units) since Passenger Cars Light Trucks MSI estimates that the automotive sector accounts for approximately 20% of total U.S. steel consumption. Forecast (M Units) 2005: : : : : : 17.2 Forecast (M Units) 2005: : : : : : 17.2

EQUIPMENT SPENDING, MFG OPERATING % Real U.S. industrial equipment spending through Q4-2004, which was up 10% v. year-ago and 5.5% y-t-d, is now just 7% below the recent highs of early-2001), while manufacturing capacity utilization is moving back up toward the 80% level, with big gains in H Industrial Equipment excludes: (a) Computers (related); (b) Transportation; (c) “All Other”. Industrial Equipment -1 (Bars, Left Scale) Industrial Equipment -1 (Bars, Left Scale) Manufacturing Capacity Utilization (Line; Right Scale) Manufacturing Capacity Utilization (Line; Right Scale)

NON-RESIDENTIAL CONSTRUCTION We look for good growth (5% to 10% per year) from 2005 to The recent downturn was a bit steeper in magnitude compared to the 1990-’93 and construction recessions, with investment declining by a cumulative 33% between 2000 and Forecast… Non-Residential Construction (Real $ Value Put-in-Place) Non-Residential Construction (Real $ Value Put-in-Place)

U.S. STEEL INDUSTRY CONSOLIDATION (Percent Change, 2000 compared to 2005) Mittal Steel weighted average share of all markets served = ~ 33% (major product range-15-40%+) -FRP acquisition price ($/ton, going-concern basis) 2002= $110…… ’04=$170……2005=$225