Metals Consulting International LimitedPage 1/12 World Steel Industry June 2009

Metals Consulting International LimitedPage 2/12 WORLD STEEL INDUSTRY AGENDA Global steel demand –By region –By end-use –By form –By product Demand forecast Steel supply Industry issues Opportunities …

Metals Consulting International LimitedPage 3/12 GLOBAL STEEL DEMAND Demand by Region † World RegionDemand, mt EU (27)182 Other Europe29 CIS50 NAFTA130 C & S America43 Middle East / Africa68 Asia & Oceania693 World1195 Figures are millions of metric tonnes of finished steel products Note – all figures in this report are to be treated as indicative estimates supplied by Metals Consulting International Limited [‘MCI’] rather than as precise or definitive assessments. For further clarification or support please contact us by

Metals Consulting International LimitedPage 4/12 GLOBAL STEEL DEMAND Demand by End-Use Figures are MCI estimates of world steel consumption, in millions metric tonnes. End UseDemand, mt Construction575 Machinery285 Transport135 Appliances55 Fabrication40 Oil and gas40 Shipbuilding20 Other45 Total1195 Transport includes approx. 90m 950 kg/car [flat steel products 640kg/car + long products 190kg + yield loss and parts supply] thus ~85mt just for light passenger vehicles (heavy and light trucks, buses, rail wagons represent additional steel demand). Appliances (white goods) amount to ~400m units at kg steel (including yield loss) per appliance. Figures above include demand across other steel segments including engineering steel or special bar quality (SBQ) steel of ~46mt, fasteners at around ~21mt.

Metals Consulting International LimitedPage 5/12 GLOBAL STEEL DEMAND Demand by Form Demand estimates above exclude certain products not in flat / long / tubular form that are made from semi-finished steel. These include steel wheels produced from ingots or continuous cast rounds, for which world demand currently amounts to ~5 million units [3.5m forged; 1.5m cast and at ~350kg/wheel representing ~2mt steel demand]. FormDemand, mt Flat555 Long520 Tube120 Total1195 Figures are MCI estimates, in millions metric tonnes finished steel products.

Metals Consulting International LimitedPage 6/12 GLOBAL STEEL DEMAND Demand by Product – Flat Products ProductDemand, mt Plate110 Hot rolled coil & sheet196 Cold rolled steel117 Coated flat products132 Total555 Figures are 2008 estimates, and include electrical steel (silicon steel) demand of ~11 mt and tin mill product demand of ~13mt.

Metals Consulting International LimitedPage 7/12 GLOBAL STEEL DEMAND Demand by Product – Long Products ProductDemand, mt Heavy sections44 Light sections46 Bar280 Rod150 Total520 Figures are 2008 estimates. Heavy / light section cut-off is 80mm. Demand assessments include ~160mt rebar [excluding bar-in-coil] within bar, and include demand for other downstream products (e.g. wire, wire rope) obtained by further processing. Heavy sections figures include rail demand of ~10 mt/year.

Metals Consulting International LimitedPage 8/12 GLOBAL STEEL DEMAND Demand by Product – Tubes ProductDemand, mt Welded83 Seamless37 Total120 Figures are 2008 estimates of world demand. Welded tube estimate includes large diameter pipe (LDP) consumption of approximately 18mt.

Metals Consulting International LimitedPage 9/12 DEMAND FORECAST World steel demand in 2009 and world finished steel demand ~1195 mt Level of full year 2009 consumption: –Will be lower due to the credit crisis –Will be critically dependent on construction sector – thus infrastructure spending e.g. in China –Is assessed by MCI at ~1060mt –This is an average of recent IISI / OECD forecasts Recovery expected in 2010 MCI tentative 2010 demand forecast is ~ 1175 mt – if China stimulus progresses as planned † †: China’s fiscal stimulus package is a $585 billion increase in spending on transportation construction [roads, rail], earthquake reconstruction, rural infrastructure modernisation projects, environmental protection, housing, indigenous innovation [technological capabilities] and healthcare / education. Geared largely to steel intensive building and construction, MCI appraise this package as one of the most important factors shaping the future recovery of Chinese / world steel demand in 2009 and 2010.

Metals Consulting International LimitedPage 10/12 STEEL SUPPLY Top 5 producers / development options ProducerOutput mtBusiness development path ArcelorMittal116 Rationalisation of high cost inland sites [Chicago area, USA; France, Germany] Nippon Steel36Consolidation of Japanese industry JFE34Merger with Nippon Steel POSCO31 Acquisition of the Vietnamese Steel Corporation; regional jv's with Asian partner(s) Baosteel29Organic [especially export oriented] volume growth Outputs are 2008 crude steel production figures [source: IISI]. Development paths are MCI’s own estimates of possible development paths. Please note that these development options have been elaborated by MCI without consultation with the steelmakers.

Metals Consulting International LimitedPage 11/12 INDUSTRY ISSUES Some current topics for discussion Globalisation Q: How does ArcelorMittal get to 250 mt? A: Emphasis on demand side not supply side – construction markets especially CO2 Q: How to respond to increasing environmental and emissions costs? A: Increasing geographic polarisation between melting and rolling of steel Technology Q: What will the next technology leap comprise? A: More ‘near net shape’ casting including technology licensing e.g. of Castrip ® China Q: What are the main problems or allegations? A: Direct and indirect subsidies; capacity expansion during time of stagnant world steel demand; increasing international adoption of trade barriers as a result, to the detriment of the industry worldwide

Metals Consulting International LimitedPage 12/12 OPPORTUNITIES … Can MCI help your firm develop a presence in the international steel sector? Can we help you raise funds for investment? Or assist you perhaps with a strategic appraisal of your business? If so please contact us for a no obligation discussion … Please contact: Andrzej Kotas, Managing Director, MCI Website: Mobile: +44 (0)