1. Introduction The Western European steel industry has experienced a structural change during the last 20 years, a process that has not yet been finished. Until today 5 steel producers represent approx. 70% of the European steel market. The European steel recycling industry has consequently also experienced a structural change, a process that has not yet been finished. The European Commission is planning to build up a European Recycling Society. (Thematic Strategy on the prevention and recycling of waste). Moreover, Europe has the most restrictive environmental legislation. Therefore the thematic strategy is working on a simplification and modernisation of the existing legislation.

2. Introduction One of the targets of the Thematic Strategy is to establish conditions for the End-of-Waste. We are confident that steel scrap prepared in a manner to ensure direct charging can be classified as a secondary product as is already done in the USA. Currently 54% of the EU steel production is based on the consumption of steel scrap. Steel scrap is the second most important raw material for the steel industry both in the EU and world-wide. Steel recycling will contribute to the resource base, essential for sustained steel production growth.

3. EU Crude Steel Production (million tonnes) 2000-2003: EU 15 2004: EU 25 Source: IISI

4. EU Crude Steel Production (million tonnes) Source: IISI 20052004% Change F. R. Germany44 51346 374-4.0 Italy29 11228 4772.2 France19 48120 770-6.2 Spain17 82717 6840.8 United Kingdom13 20513 766-4.1 Belgium10 31811 697-11.8 Poland8 60810 593-18.7 Austria7 0316 5307.7 Netherlands6 9196 8481.0 Czech Republic6 1897 033-12.0 Sweden5 7135 978-4.4 Finland4 7394 832-1.9 Slovakia4 4924 439-2.9 Luxembourg2 1942 684-18.3 Hungary1 9631 9520.6 Slovenia5835651.2 Other E.U. (25) (e)3 5533 2808.3 European Union (25)186 442193 430-3.6 Turkey, biggest scrap buyer in EU 2520 96120 4782.4

5. Steel Scrap Consumption for the Crude Steel Production EU (million tonnes) 2000-2003: EU 15 2004: EU 25 Source: IISI * *provisional

6. EU 25 – Steel Production, Scrap Consumption and Deliveries 2005 Steel Production B.O.F.* E.A.F.** Other 186.4 million tonnes - all values provisional - 61.2% 38.5% 0.3% Steel Scrap Consumption (incl. own arisings) 100.6 million tonnes Steel Scrap Purchases by steelworks (incl. imports) 73 million tonnes Steel Scrap Export8.9 million tonnes Steel Scrap Import7.4 million tonnes Total Steel Scrap deliveries to steelworks in the EU 25 and elsewhere 82 million tonnes * Basic Oxygene Furnace ** Electric Arc Furnace Source: IISI, Statistic Bureau Germany

7. Steel Scrap Deliveries, old and new scrap in the EU 25 We think that steel scrap deliveries to steelworks will mostly be of the following combination in the EU 25: 65% old scrap 35% new scrap

8. Shredder Plants in the EU 25 Source: EFR Total no. Of Shredders: Approx. 220

9. EU Steel Scrap Trade Balance (million tonnes) Source: Statistic Bureau Germany 2000-2003: EU 15 2004: EU 25 * *provisional

10. EU 25 Steel Scrap Trade Balance (million tonnes) Exports Third Countries ex EUImports Third Countries into EU 2005*2004% Change2005*2004% Change Total8.8879.547-6.9Total7.4368.246-9.8 Biggest BuyersBiggest Suppliers Turkey2.8242.956-4.5Russia3.8174.282-10.9 India2.0730.640+223.9Switzerland0.5760.590-2.8 USA0.7712.005-61.7USA0.3400.364-6.6 China0.4080.398+2.5Norway0.2890.297-2.7 Pakistan0.3900.131+199.2Morocco0.1560.154+1.3 Switzerland0.3270.481-32.0Ukraine0.0950.217-55.5 Malaysia0.2980.834-64.6 South Corea0.2130.414-49.0 Taiwan0.1690.313-46.5 Norway0.1350.157-13.8 Indonesia0.1300.325-59.1* provisional Source: Statistic Bureau Germany

11. EU Steel Scrap Export 2005 (million tonnes) Biggest Buyers Total exports 8.9* India: 2.07 Turkey: 2.82 China: 0.41 USA: 0.77 Pakistan: 0.39 Switzerland: 0.33 Malaysia 0.29 * provisionalSource: Statistic Bureau Germany

12. EU Steel Industry highly concentrated 4 of the biggest steel producers have their headquarters in Europe. RankCompanyCountryRaw Steel Production in million tonnes 1Mittal SteelNetherlands66 2ArcelorLuxemburg (53 + 4.4*)57 3Nippon SteelJapan31 4JFEJapan31 5POSCOSouth Corea31 6Shanghai BaosteelChina24 7US SteelUSA21 8CorusUK20 9NucorUSA18 10ThyssenKruppGermany18 * Dofasco 4.4 Source: IISI

13. EU Steel Industry highly concentrated Until today 5 steel producers represent approx. 70% of the European steel market. Before beginning of 2004 the Arcelor Group was the biggest steel producer in the word. Its world market share was about 4%. Meanwhile the Mittal Group has taken over the world market leadership. If Mittal succeeds in taking over Arcelor, it would become a global player in the steel market with a raw steel production of more than 100 million tonnes/year world-wide. Target for 2015: 200 million tonnes/year. All signs indicate that the concentration process will go on. The forecast of Deutsche Bank Research: The world steel market will be dominated by steelworks with a yearly capacity of more than 100 million tonnes in 10 to 15 years from now.

14. Concentration of the EU Steel Scrap Industry Over 10 large companies handling over 100 000 tonnes of steel scrap per month. The biggest company group of these large companies has a turnover of approx. 10 million tonnes per year. 20% are larger medium-sized companies handling over 10,000 tonnes of steel scrap per month. 30% are normal medium-sized companies handling between 3,000 and 10,000 tonnes of steel scrap per month. 30% are smaller companies handling between 1,000 and 3,000 tonnes of steel scrap per month. Nearly 20% are very small companies handling less than 1,000 tonnes per month.

15. Concentration of the EU Steel Scrap Industry The concentration process in the EU steel industry resulted in yet another concentration process in the EU steel recycling industry. Among the 7 biggest European steel recycling companies are: TSR, Germany EMR, UK CFF, France Stena, Sweden Interseroh, Germany Scholz, Germany SIMS, UK

16. Concentration of the EU Steel Scrap Industry Currently the 7 steel reycling companies provide some 40% of the total steel scrap deliveries to steelworks in the EU and elsewhere. Currently Arcelor with its yearly steel scrap consumption of 15 million tonnes influences the European steel scrap market with divers instruments. Therefore, the necessary critical size of the European steel recycling industry has to be measured differently as five years ago. Effect: The concentration processs within the steel industry results in a further concentration process within the European steel recycling industry.

17. Forecast 2006 Economic Development (Source: EUROFER) % weight in total steel consumption of each sector Year 2005 Year 2004 QI/2005 QI/2004 QII/2005 QII/2004 QIII/2005 QIII/2004 QIV/2005 QIV/2004 QI/2006 QI/2005 QII/2006 QII/2005 Construction240.6-3.51.81.12.45.51.3 Structural Steelwork 9-0.1-5.11.91.4 4.81.6 Mechanical Engineering 131.30.72.40.71.01.71.1 Automotive180.0-1.62.1-0.5-0.42.5-1.5 Domestic Appliances 4-1.3-3.9-0.3-1.40.60.80.2 Shipyards1-2.1-5.6-1.6-2.61.22.00.5 Tubes131.43.8-0.62.5-0.23.12.3 Metalware131.60.92.81.61.20.90.8 Miscellaneous50.80.61.0-0.11.40,90.5 TOTAL1000.61.60.61.02.90.8

18. Forecast EU Steel Production Source: EUROFER

19. Forecast EU Steel Production The Western European steel industry only expects a marginal growth. Forecast Steel Production 20052006% Change EU 25186193+1 200520152015/2005 % p. a. EU 25186216+1 GUS113157+3 North America127141+0.5 Asia5661,157+8 World1,125*1,804+5 *provisionalSource: DB Research

20. Forecast EU Steel Production – High-Tech Steel The EU Steel industry concentrates on high-grade qualities where the global competition is not so strong. Examples for high-grade qualities: Constructing thinner and even more long-lasting steel products using new technologies (e. g. Tailored Blanks for the automobile industry). The so-called HSD steel (High Strength and Ductility). Components based on this material weigh less than those made of aluminium by showing equal performance figures

21. Forecast EU Steel Production – High-Tech Steel Europe will long-term continue to be an important place for the steel industry, since it benefits from manufacturing inter-connections with principal buyers (automobile, mechanical engineering, and electro-technology industries). The EU members from Eastern Europe still have a long way to go to complete the necessary structural changes of their steel industries.

22. Conclusion: Higher Steel Scrap Consumption world-wide We expect an increasing steel scrap consumption: McKinsey Until 2013 the steel scrap consumption will increase world-wide by 20%. Iron and Steel Statistics Bureau Until 2010 the electric arc furnace steel production will increase world-wide by 30% to 495 million tonnes. The consumption will increase accordingly: for steel scrap by 26% to 425 million tonnes for DRI/HBI by 35% to 70 million tonnes