Thomas A. Danjczek President Steel Manufacturers Association Pittsburgh, Pa. October 10, 2008 American Metal Market Conference Wire Rod and Wire Products Conference Is Enough Being Done?

SMA Long Products and Wire Numbers Concerns Scrap Energy Trade China Free Trade versus Protectionism Need to fix US Economy Conclusions Outline AMM Wire Rod and Wire Products Conference

The Steel Manufacturers Association (SMA) –35 North American companies: 30 U.S., 3 Canadian, and 2 Mexican –125 Associate members: Suppliers of goods and services to the steel industry SMA member companies –Operate 125 steel recycling plants in North America –Electric Arc Furnace (EAF) steelmakers using recycled steel AMM Wire Rod and Wire Products Conference SMA

Production capability –EAF steel producers accounted for 60% of U.S. production in 2007 –SMA represents over 70% of all U.S. steel production Recycling –SMA members are the largest recyclers in the U.S. –EAF steel producers are the largest recyclers in the world –Last year, the U.S. recycled over 75 million tons of steel Growth of SMA member companies –Highly efficient users of labor, energy, and materials –Modern plants producing world class quality products AMM Wire Rod and Wire Products Conference SMA

Product NameTotal – 8 months YTD – 8 months % Change 1. Blooms & Billets for Rerolling909,018746, % 2. Rebar6,008,4475,471,6279.8% 3. Wire Rod2,450,5192,064, % 4. Merchant Bars1,655,0131,539,7777.5% 5. Light Shapes1,277,0481,294, % 6. Parallel Flange Sections4,201,1064,232, % 7. Structure Angles & Channels1,418,4741,413,0270.4% 8. All Other Structural Shapes162,441158,7832.3% Subtotal of Products 6,7 and 85,782,0205,804, % Total Shipments17,173,04716,174,9346.2% Total Long Product Shipments January - August 2008 Quantity in Short Tons

SMA Long Products – TOTAL US IMPORTS Annual 2005 – 2007, January – July 2008 Quantity in Short Tons Product nameAnnual 2005Annual 2006Annual 2007Jan-Jul 2008 Blooms & Billets for Reroll676,6581,113,831557,113275,413 Rebar1,424,6492,587,8891,861,192752,747 Wire Rod2,467,5763,017,7261,510,400702,841 Merchant Bar256,281302,689250,830131,757 Light Shapes235,678291,322229,255110,751 Parallel Flange Sections255,818600,069420,841288,643 Structural Angles and Channels195,874284,734265,981121,137 All Other Structural Shapes184,371203,862199,506142,834 Total Imports5,696,9058,402,1215,295,1182,526,124

Product NameTotal – 7 months YTD – 7 months % Change 1. Blooms & Billets for Rerolling275,413331, % 2. Rebar752,7471,435, % 3. Wire Rod702,8411,074, % 4. Merchant Bars131,757154, % 5. Light Shapes110,751148, % 6. Parallel Flange Sections288,643266,6768.2% 7. Structure Angles & Channels121,137185, % 8. All Other Structural Shapes142,834132,8097.5% Subtotal of Products 6,7 and 8552,615585, % Total Imports2,526,1243,729, % Total Long Products Imports January – July 2008 Quantity in Short Tons

Product NameTotal – 8 months YTD – 8 Months % Change 1. Blooms & Billets for Rerolling208,69755, % 2. Rebar290,271189, % 3. Wire Rod19,67110, % 4. Merchant Bars77,66080, % 5. Light Shapes40,21244, % 6. Parallel Flange Sections555,293555,0730.0% 7. Structure Angles & Channels59,57872, % 8. All Other Structural Shapes27,81427,1652.4% Subtotal of Products 6,7 and 8642,685654, % Total Exports1,279,1961,036, % Total Long Products Exports January - August 2008 Quantity Short Tons

Apparent Domestic Consumption January – July 2008 Quantity in Short Tons Product NameTotal – 7 months YTD – 7 Months % Change 1. Blooms & Billets for Rerolling881,957928, % 2. Rebar5,906,8316,090, % 3. Wire Rod2,850,2412,876, % 4. Merchant Bars1,541,5761,431,0917.7% 5. Light Shapes1,212,8741,246, % 6. Parallel Flange Sections3,515,4773,456,3101.7% 7. Structure Angles & Channels1,333,2131,380, % 8. All Other Structural Shapes253,208240,5675.3% Subtotal of Products 6,7 and 85,101,8985,077,4160.5% Total16,613,42016,721, %

AMM Wire Rod and Wire Products Conference Concerns- The Obvious -US Recession and financial meltdown -Recent market fluctuation -Value of the RMB -Energy shortfalls and pricing -Federal Bailouts -Attracting talent to the steel industry -China, China, China -Global Steel Overcapacity -Subsidies and other trade distortions -US Legislation (111 th Congress and the 44 th President)

AMM Wire Rod and Wire Products Conference Concerns Discussed Today Scrap- Global barriers and restriction Energy- Foreign dependency and lack of growth Trade- Free trade verses Protectionism China- North American Steel Industry CANNOT compete against Chinese steel companies that are financed and controlled by their government.

AMM Wire Rod and Wire Products Conference

Energy Energy – Availability and Cost Utility Infrastructure (Generation & Transmission) Needs to Match Growth in Consumer Demand Diversity of Generation (Alternative Fuels – Climate Change) – Excess Reliance on Natural Gas NRC Expects up to 30 Applications for New Nuclear Generators Over Next Two Years - Cost was estimated in a range of $ /KW; Now Moody’s estimates are above $5000/KW - Florida’s Progress Energy filed for twin 1,100 MW generation units for 2016, at $14 Billion + over $3 Billion of transmission upgrades = $6,400/KW of generation

Energy Summary US power generation industry is at a critical juncture, with social pressures and pending legislation demanding massive changes. Competing demands for reliable, low-cost energy and climate change mitigation appear incongruent. Our Nation’s liquid fuel dependence on foreign resources continue to grow. Uncertainty of regulatory outcomes and rising costs impact industry’s willingness to commit capital investments, endangering near-term production capacity. The United States must foster new processes that address conflicting energy objectives simultaneously.

COMPLIANCE WITH THE WTO The National Association of Manufacturers (NAM) recently reviewed China’s compliance with its WTO commitments in the accession protocol. While progress has been made in certain areas, there are serious concerns and problems with effective compliance relating to: 1. Huge U.S. trade imbalance 2. Continued currency manipulation 3. Arbitrary VAT taxes and rebates 4. Massive counterfeiting and piracy 5. Discriminatory standards 6. Inadequate regulatory transparency

AMM Wire Rod and Wire Products Conference China Steel Comments China has NOT become the world’s Largest steel producer by accident, or by operation of free markets, or comparative advantage China is NOT a low-cost steel producer China has reached its position through a combination of subsidies, mandates, and planned intervention In finished goods containing steel, China’s exports to absorb overproduction Chinese steel industry is overbuilt and under-demolished

AMM Wire Rod and Wire Products Conference 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%) The U.S. has lost 3.3 million manufacturing jobs since 2000… imbalances cannot go on forever.

AMM Wire Rod and Wire Products Conference China Interferes with Raw Materials Markets China’s steel policy mandates such interference -Article 28: “Mineral resources belong to the state” -Article 30: The state will encourage large Chinese producers to “construct production supply bases of iron ores, chrome ores, manganese ores, nickel ores, scrap steel, and coking coal in foreign countries” -Article 30: The state will use its power to prevent “cut-throat competition” among Chinese mills for raw materials -Article 30: The export of “coke, iron alloy, cast iron, scrap steel, {and} steel billet …shall be restricted’ Examples of how China restricts critical exports: -Metallurgical coke -Ferroalloys and other nonferrous metals China has subsidized domestic iron ore production, as well as foreign ventures created to obtain iron ore from abroad

AMM Wire Rod and Wire Products Conference China Conclusions It’s About Competitiveness US wire rod producers have a competitive advantage in metallics due to US scrap and China’s need to import over half its ore; US producers are on par with China on availability and price of energy, while labor is much lower in China; China’s labor savings do not equal US efficiency and Transportation cost from China. US is competitive!!!

AMM Wire Rod and Wire Products Conference Free Trade vs. Protectionism Protectionism -Predatory Pricing -Trade distorting subsidies -Government Ownership -National power by protecting our industries and state -Piling up currency measures -One way trade Need “Balanced” Trade over “Mercantilism” Who’s the Protectionist? Is “Protectionism” the enemy of “Free Trade” 1. Taken in part from C. Blum

AMM Wire Rod and Wire Products Conference Need to fix US Economy Trade deficit is a major cause of US financial crisis To reduce the trade deficit and create jobs we need to: 1.Support policies that promote American interest by requiring full reciprocity fairness, and transparency in all US trade agreements. 2.Support actions to combat the illegal, mercantilist practice of prolonged currency misalignment, including legislation to make it actionable under US trade law. 3.Support Aggressive enforcement of US laws to halt foreign illegal trade activities such as dumping, subsidies and intellectual property theft. In addition, US policy must ensure that all goods sold here meet US food and product safety standards. 4.Support the elimination of tax disadvantages which undermine the competitiveness of US producers both at home and abroad or which discourage investment in America. 5.Support reduced US dependence on imported energy.

AMM Wire Rod and Wire Products Conference Is Enough Being Done? Answer to Questions 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 What part of “no” don’t you understand ?