Thomas A. Danjczek President Steel Manufacturers Association May 10, 2010 Milwaukee, WI LONG PRODUCTS SUPPLY CHAIN SYMPOSIUM ACTIONS FOR ECONOMIC RECOVERY From the Steelmaker’s Perspective

Outline SMA Set the Stage -U.S. Steel Production -SMA Long Product Data -Global Steel Outlook Trade Issues -China -Scrap -Raw Materials Environmental / Safety Washington, DC Issues Is Enough Being Done? What does the U.S. need to do? Conclusion Long Products Supply Chain Symposium

The Steel Manufacturers Association (SMA) –34 North American companies: 29 U.S., 3 Canadian, and 2 Mexican –Operate 125 steel recycling plants in North America –Electric Arc Furnace (EAF) steelmakers using recycled steel –EAF steel producers accounted for nearly 2/3 of U.S. production in 2009 –SMA represents approximately 90 million of U.S. 120 million ton capacity (75%) –128 Associate members - Suppliers of goods and services to the steel industry SMA Long Products Supply Chain Symposium

US Steel Production (All in Million Net Tons) (Numbers are Approximate) PAST – From 1986 through 2008, U.S. steel production has been around 100 m tons – up & down 10% st Half25m(45% utilization) 2 nd Half36m(62% utilization) Now 1.5m/week vs. 2.1m/week Year63m(Minimills at 63% of production) 2010 (from November 2009) World Steel78m(up 19% over 2009), optimistic Peter Marcus68m(Back to 75m in 2012) US Poll69m(up 10% over 2009) 2010 – Today (Through March 30) Capacity Utilization (67.7%); or approximately 80 million tons annual rate 42.9% in 2009 Set the Stage Long Products Supply Chain Symposium

United States Million MT 2009 (e)2010(f) Change (%) Crude Steel Use % Finished Steel Use % Exports % Imports % Canada Million MT 2009 (e)2010(f) Change (%) Crude Steel Use % Finished Steel Use % Exports % Imports % Mexico Million MT 2009 (e) 2010 (f) Change (%) Crude Steel Use % Finished Steel Use % Exports % Imports % Source: Worldsteel Economic Studies Committee, April 2010 The Worldsteel Short Range Outlook Long Products Supply Chain Symposium

Source: Worldsteel World Crude Steel Capacity ,062 1,095 1,170 1,245 1,356 1,453 1,583 1,816 1,917 1,997 2,055 1, ,100 1,350 1,600 1,850 2, (e)2011(e) Steel Capacity (million metric tonnes) Current Average Growth Rate (CAGR) World Crude Steel CapacityCAGR 2012(e) Global Steel Capacity Continues to Increase Long Products Supply Chain Symposium

SMA Long Product Summary Data – (4/16/10) Long Products Supply Chain Symposium

SIMA Import License Data Detail for March as published April 13, 2010: PRODUCTTONS Rebar 40,147 Wire Rod 130,187 Merchant Bar 16,374 Light Shapes 6,129 Parallel Flange Sections 23,056 Structural Angles & Channels 5,092 All Other Structural Sections 14,751 Total Licenses235,737 Long Products Supply Chain Symposium

Product Name Total – 1 st Q 2010 (3 months) YTD 2009% Change 1. Bloom & Billets for Rerolling423,447132, % 2. Rebar1,446,1131,342,4817.7% 3. Wire Rod693,357427, % 4. Merchant Bars454,931364, % 5. Light Shapes273,876229, % 6. Parallel Flange Sections920,376608, % 7. Structural Angles & Channels378,158320, % 8.All Other Structural Shapes79,26538, % Subtotal of Products 6, 7, and 81,377,800967, % Total Shipments (excludes blooms & billets)4,246,0773,331, % Total Mill Shipments – 1 st Quarter 2010 (Total Mill Shipments = Net Domestic Mill Shipments plus Exports; Table in Short Tons) Long Products Supply Chain Symposium

Globalization and Consolidation Developments Have Dramatically Changed the NAFTA Steel Landscape Acquiring Company Acquired Company Arcelor MittalNucorDuferco/NLMK ArcelorConnecticut SteelWinner Steel DofascoTrico MittalBirmingham Evraz Ispat InlandCorus TuscaloosaOregon Steel ISGWorthington-DecaturClaymont Steel LTV MarionIpsco Canada US Steel Plate Weirton Nelson Steel Harris Steel Severstal Acme-Riverdale Auburn SteelArcelor Mittal-Sp. Pt. North Star Arizona Rouge WCI Georgetown American Iron Reduction Sicartsa Bayou LMP Steel & Wire CSN Heartland US SteelGerdau Ameristeel Lone StarSheffield Essar NationalChaparral Algoma LTV TinCo-Steel Minnesota Steel ISG IH#2 Pkl.North Star StelcoSidetul Tultitlan Quanex Macsteel BlueScope Corsa IMSA Steelscape OAO TMK SSAB Ipsco Tubular (U.S.) ICH/Grupo Simec Ipsco Plate (U.S.) Republic Steel Dynamics Ternium GalvPro-Jeffersonville HylsaThe Techs IMSARoanoke Steel Steel of West Virginia Tenaris Maverick Tube (U.S.) Prudential Canada Hydril Company Wheeling Pitt 1/1/09 Bethlehem The David J. Joseph Co. (Scrap) Omnisource (Scrap) Red = Long Product Producer Long Products Supply Chain Symposium

China’s Trade Surplus with the U.S. YearChina’s Trade Surplus 2001$22 billion (year China joined WTO) 2006$177 billion 2007 $262 billion (up 47.7%) 2008 $290 billon 2009 $196 billion The U.S. has lost 3.3 million manufacturing jobs since 2000… imbalances cannot go on forever. Long Products Supply Chain Symposium

U.S. Scrap Consumption and Exports Long Products Supply Chain Symposium 2009 – Exports 22.3mt Imports (e)3.0mt U.S. Consumption48.0mt

RMDAS TM Ferrous Scrap Price Index Effective 4/20/10 Long Products Supply Chain Symposium

Raw Material Export Restrictions are Continuing to Disadvantage U.S. Steel Producers Many countries continue to impose a variety of restrictions on exports of vital raw materials –Export prohibitions –Export duties –Export quotas –Other measures Trade-distorting restrictions on exports of raw materials –Give domestic producers in the exporting country an unfair advantage –Increase worldwide costs of production –Do not accord with the justifications given –Place a heavy burden on steel industries in developing countries that do not have substantial iron ore reserves or steel supplies scrap

US Steel Industry, Then and Now Smoke pouring into the air from a Pittsburgh steel mill, Image by Corbis - Bettmann Electric Arc Furnace facility Image by SMA.

U.S. Steel Industry – Energy / TON Source: Dr. John Stubbles Long Products Supply Chain Symposium

EAF Steelmaking is Energy Efficient Long Products Supply Chain Symposium

SMA Climate Change Policy – Federal Legislation Needs to Address the Following: 1.Reward Recycling 2.Recognize Steel Industry Improvement Limitations 3.Include Global Participation and Monitoring with No Exemptions Available for Any Nation 4.Prevent Double Counting of Carbon Costs 5.Promote GHG Emissions Reductions From Efficiency and Technology Improvements and Not Demand Destruction of North American Steel Production 6.Preempt Competing State Carbon Regulation Policies with a Single Federal GHG Policy, to Ensure a Level Playing Field within the U.S. 7.Avoid Unintended Consequences Long Products Supply Chain Symposium

Is Enough Being Done? Raw Materials Energy China Trade No Barriers continue Lack of policy continues Currency manipulation, Subsidies, Not playing by the rules Distortions continue, Who’s the protectionist No long term structural policy changes are being proposed in Washington for taxes, trade imbalance, and energy. Long Products Supply Chain Symposium

What does the US need to do? Assume a Pro-Manufacturing Agenda –Business Tax Reform –Border Adjustable Taxes –Currency Adjustments –Energy Independence –Reasonable regulatory measures (Environment/Labor) –Climate for investments (Jobs, Jobs, Jobs) and Infrastructure Solve the structural problems that caused the recession- Real Foundation –Bad loans and securities on bank balance sheets –Reduce huge trade deficits Policy incrementalism is not sufficient Long Products Supply Chain Symposium

Conclusion The decline in U.S. Manufacturing has been so severe, policy incrementalism is not sufficient. U.S. Steel Industry in Better Position Today to Manage the Down Cycle (but what a down cycle!) ― Improved Economics From Consolidations, i.e. “Reacted Quicker”; ― Improved Control of Variable Costs ― Scrap-Based Metallics (In 2009, U.S. will be nearly 2/3 EAF-based ― Energy Costs ― Transportation Costs ― Labor Efficiency (U.S. at Below 2MH/Ton; Minimills Often Below 1MH/Ton) ― Improved Inventory Control (Inbound Materials, Steel, and Customer Products). NOT THE OLD INVENTORY OVERHANG! ― Concerns with Scrap, Climate Change, Energy, U.S. Debt, Taxes, Currency, but especially Climate for Investment ― Still Challenging – But Reasons for Meaningful Long-Term Optimism! Long Products Supply Chain Symposium