1. Thomas A. Danjczek President Steel Manufacturers Association March 4, 2010 HBIA-IPIA Spring Meeting From the Steelmaker’s Perspective

2. Outline SMA Today’s Concerns Today’s Deterioration – US Steel Production China, China, China Scrap Trade Issue Is Enough Being Done? What does the U.S. need to do? Conclusion HBIA-IPIA Spring Meeting

3. The Steel Manufacturers Association (SMA) –34 North American companies: 29 U.S., 3 Canadian, and 2 Mexican –128 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 SMA HBIA-IPIA Spring Meeting

4. Production capability –EAF steel producers accounted for 60% of U.S. production in 2008 –62% first half 2009 –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 SMA HBIA-IPIA Spring Meeting

5. Alternative Iron Salesman - 2009

6. The Obvious Concerns -Our Jobs -US Recession and financial meltdown -Infrastructure Spending -Value of the RMB -Energy shortfalls and pricing -China, China, China -Global Steel Overcapacity -Subsidies and other trade distortions -US Legislation (111 th Congress and the 44 th President) HBIA-IPIA Spring Meeting

7. 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% PRESENT – 2009 1 st Half25m(45% utilization) 2 nd Half36m(62% utilization) Now 1.5m/week vs. 2.1m/week Year63m(Minimills at 63% of production) FUTURE – 2010 World Steel78m(up 19% over 2009), optimistic Peter Marcus68m(Back to 75m in 2012) US Poll69m(up 10% over 2009) Set the Stage HBIA-IPIA Spring Meeting

10. 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) HBIA-IPIA Spring Meeting

11. N. America:-45.1 Canada:-51.9 U.S.:-47.0 Mexico:-29.5 S. America:-30.3 Brazil:-31.4 EU27:-39.3 Turkey:-13.5 Russia:-26.8 Ukraine:-31.9 Asia:-2.2 Japan:-34.0 S. Korea:-14.9 China:+7.5 India:+1.6 Global Production:-16.4 Excluding China:-30.9 NAFTA Production Declines More Than Other World Regions Global Output Sharply Down, With Few Exceptions Global Crude Steel Production 2009 YTD vs. 2008 % Change Source: Worldsteel

12. The residential housing market has bottomed in the past 6 months – to 40-year lows. Home foreclosures are continuing to rise. Government incentives (e.g., a tax credit for first-time buyers) are helping, but limited. Tighter credit standards are reducing the pool of available new buyers. An uptick in the non- residential, commercial market is not expected until late next year. Source: U.S. Department of Commerce. The U.S. Construction Market Is Still Weak

13. While the “cash for clunkers” program has helped increase production and sales, “Detroit 3” production has declined by over 50% YTD vs. 2008. With the end of this incentive program and with unemployment likely to stay high for several years, automotive production and sales are unlikely to return to pre-crisis levels for the medium term. Source: Ward’s Automotive. * 2009 Annualized based on September year-to-date. The NAFTA Automotive Production Remains Deeply Depressed

14. 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 The U.S. has lost 3.3 million manufacturing jobs since 2000… imbalances cannot go on forever. HBIA-IPIA Spring Meeting

15. U.S. Scrap Consumption and Exports HBIA-IPIA Spring Meeting

16. RMDAS TM Ferrous Scrap Price Index Effective 2/20/10 HBIA-IPIA Spring Meeting

17. AMM“Exports of Ferrous Scrap” “The full-year export tally of 22,393,975 [in 2009] tonnes set a new annual record, rising 4.3 percent from the then-record 21467,530 tonnes shipped to foreign scrap consumers in 2008.” A Few Numbers… 2009 Exports 21.5M tonnes* 2009 Imports (E) 3.0M tonnes* 2009 Consumption 48.0M tonnes* (64/66 M 2005 to 2008) 2009 Shredded Exports 8.5M tonnes* 2009 HBI DRI? Pig Iron *USGS January 2010 HBIA-IPIA Spring Meeting

18. 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. HBIA-IPIA Spring Meeting

19. What does the US need to do Assume a Pro-Manufacturing Agenda –Business Tax Reform –Currency Adjustments –Energy –Reasonable regulatory measures (Environment/Labor) –Climate for investments Solve the structural problems that caused the recession- Real Foundation –Bad loans and securities on bank balance sheets –Huge trade deficits Policy incrementalism is not sufficient

20. Conclusion 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! HBIA-IPIA Spring Meeting

21. How have you managed metallics supplies during the down cycle? Who is involved in the metallics purchasing decision? Describe the decision making process. How do you value the metallics you buy (i.e., cost per iron unit purchased or cost per ton liquid steel produced or some other way)? Rank in order of importance the following metallics purchasing factors: –Price –Delivery schedule –Quality (conformity to specification) –Reliability (supplier reputation) –Other (specify) How do you value carbon content when buying metallics? HBIA-IPIA Spring Meeting Questions for SMA Panel at HBIA-IPIA/Cooper Consolidated Meeting

22. What types of ore-based metallics (DRI, HBI, DRI Fines, pig iron, and iron nuggets) do you use and in what percentages? How often (percentage of heats)? What do you consider the maximum percentage of HBI in a total charge? Pig iron? What would be the ideal physical and chemical characteristics of HBI for your application? Pig iron? Do you have experience using HBI and pig iron in the same charge? Explain. Do you have experience using HBI chips (fraction 4 mm-25 mm)? How do value HBI chips as compared with HMS 1/2 and HBI? Do you have experience using HBI fines (fraction below 4 mm)? How do value HBI fines as compared with HMS 1/2 and HBI? What are the major difficulties of using HBI fines n the EAF? What do feel would be the most effective usage of HBI fines? HBIA-IPIA Spring Meeting Questions for SMA Panel at HBIA-IPIA/Cooper Consolidated Meeting

23. (For SDI) What has been your experience using iron nuggets from the ITmk3 process? How do you value iron nuggets as compared with HMS 1/2, HBI, and pig iron? What are the principal differences between using iron nuggets and HBI? Pig iron? (For Tom) Do you see the North American market having room for additional high quality EAF capacity (i.e., flats, SBQ, fine wire, and forging bar)? If so, where? (For Tom) Do you have a feel for the volume of HBI and pig iron imports in 2010? Could HBI be used in the induction furnace? Will EAF steel production levels return to first half 2008 levels? If so, when? Specialized questions: What value would you place on reducing SiO2 in HBI from 4 percent to 2 percent? Can HBI be applied in induction furnaces? HBIA-IPIA Spring Meeting Questions for SMA Panel at HBIA-IPIA/Cooper Consolidated Meeting