1. European economic & steel demand outlook Metal Expert Conference, Stresa, Italy Terrence Busuttil, 8 - 9 April 2013

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3.  Global macroeconomic outlook  Medium term steel demand drivers  Short term macro outlook  Steel using sectors  Steel demand outlook 3 Item 1

4. Moderate recovery expected in 2013  Advanced economies to remain weak with similar growth as 2012  Developing economies to grow 4.9% in 2013 from 4.7% in 2012 Source: Global Insight, March 2013 4 Global GDP developments (%, real 2005 USD billions) 20092011201220132014 EU27-4.31.6-0.30.00.8 Germany-5.13.10.91.01.4 France-3.11.70.0-0.20.5 Italy-5.50.6-2.4-1.7-0.4 Spain-3.70.4-1.4-1.6-0.6 Turkey-4.88.52.54.0 MENA1.72.63.62.63.8 NAFTA-3.22.02.31.93.0 Global-1.93.02.6 3.5

5.  Global macroeconomic outlook  Medium term steel demand drivers  Short term macro outlook  Steel using sectors  Steel demand outlook 5 Item 2

6. Consumer deleveraging progressing in USA but only starting in Europe  Deleveraging in Germany & USA to support consumption in 2013  Disposable incomes under pressure in Italy, Portugal and Spain making deleveraging difficult and contributing to falling consumption in 2013 Consumer debt (% of disposable income) Note: Germany, USA & Japan peaked in 2007 Source: Haver Analytics 6 ItalyGreecePortugalSpainFranceGermanyUSAJapan 2000432798776810990132 200766701361358996125135 200866771401348993122133 200971781431339493123131 201073911411379991115130 201174NA14213610088109129 Change in consumer debt ratio (% of disposable income) 2000-20072343385821-13353 2007-20118NA6111-8-16-6

7. Public sector deleveraging in S.Europe to continue  Contracting GDP in S.Europe implies greater expenditures cuts and/or increasing taxes Fiscal balance (% of GDP ) Change in fiscal balance to GDP (points) Source: Global insight March 2013 Note: positive change in fiscal tightening signals improving fiscal balance 7 2011201220132014 2011201220132014 Germany -0.80.2-0.1-0.3 3.40.9-0.3-0.2 France -5.2-4.7-3.9-3.0 1.90.50.80.9 Italy -3.9-3.0-2.4-1.8 0.70.90.6 Spain -9.4-6.7-6.1-4.8 0.32.70.61.3 MENA 3.84.62.80.6 3.80.8-1.9-2.2 Turkey -1.4-2.0-2.3-2.5 -1.4-0.6-0.3-0.1 USA -9.0-7.6-5.9-4.7 0.41.41.71.2

8. Contracting output makes deleveraging challenging in Europe  EU27 unemployment rate has risen by 3.9 points from the lowest point in 2008Q1 and average real GDP declined -0.35% per quarter Eurozone: Annualized real GDP vs. unemployment rate (%, SA) USA: Annualized real GDP vs. unemployment rate (%, SA) Source: Haver Analytics 8

9. But reforms supporting cost competitiveness in S.Europe  Cyclical fall in demand and structural reforms support falling unit labour costs in Greece, Portugal and Spain but weak reforms in Italy undermine productivity growth Unit labour costs* (4-quarter average, SA, 2000 = 100) Note: *Defined as nominal compensation of employees per unit of real GDP Source: Haver Analytics 9 Current account balance (4-qtr moving average, billions of euro)

10. Consumption

11. Sharp contraction in S.Europe retail sales volume but N.Europe sales generally elevated  Deleveraging underpins fall in S.Europe retail sales Europe (3 month average, SA, 2005=100) Note: N.Europe: Austria+Belgium+France+Germany; S.Europe: Portugal+Greece+Spain+Italy Source: Haver Analytics USA (2007=100, SA) 11

12. Investment

13. Falling capacity utilization in S.Europe postpones need for machinery & equipment investment; negative sentiment spills over into N.Europe Europe (%, SA) Source: Haver Analytics Note: European capacity utilization weighted by real GDP  Contracting domestic demand reduces the need for additional investment USA (%, SA) 13

14. Falling business credit in S.Europe reflects falling supply and demand but credit generally supportive in N.Europe  The European Central Bank has ensured the provision of liquidity to solvent banks but uncertainty curtails credit supply while contracting domestic output reduces loan demand Europe: Corporate credit (billions of euro, NSA) Source: Haver Analytics US: Commercial & industrial loans (%, y-o-y) 14

15.  Global macroeconomic outlook  Medium term steel demand drivers  Short term macro outlook  Steel using sectors  Steel demand outlook 15 Item 3

16. Indicators point towards an easing of the recession  Eurozone PMI still contacting but rate of decline easing; German IFO averages 106.1 in Q1’2013 from 101.4 in Q4’2012 Manufacturing output (2005=100, SA, 3 month average) Eurozone: manufacturing output vs. Purchasing Managers Index (>50=expansion) 16 Source: Haver Analytics

17.  Global macroeconomic outlook  Medium term steel demand drivers  Short term macro outlook  Steel using sectors  Steel demand outlook 17 Agenda item 4

18. Steel using sectors in Europe still contracting Car sales (3 month average, SA, annualised)  Southern European auto sales down 2 mn units from 2006; modest fall in in Northern Europe. In 2012 sales were down 8.5%; further decline in 2013 Source: Haver Analytics 18 Construction output (2005=100, SA)

19.  Global macroeconomic outlook  Medium term steel demand drivers  Short term macro outlook  Steel using sectors  Steel demand outlook 19 Item 5

20. EU27 demand to remain below peak levels 20 Apparent steel use (finished, 2007=100) Source: worldsteel Short Range Outlook April 2013 *EU27 less Italy & Spain

21. And declining as a share of global apparent steel use 21 Apparent steel use (finished, 2007=100) Source: worldsteel Short Range Outlook April 2013  EU27 share of global ASU falls to under 10% from under 30% in 1975

22. 22 Regional trade flows (net-exports, Mt) Encouraging EU27 producers to seek export markets Source: worldsteel; MENA includes intra-trade flows  EU27 remained a net-exporter of steel for the fourth straight year in 2012  EU27 steel exports increased to 26% of apparent steel use in 2012 from 15% in 2007 200720082009201020112012 EU27-10.3-0.511.89.53.010.8 MENA-35.9-43.1-44.5-41.1-42.3-44.3 CIS49.848.145.844.841.440.0 Turkey1.95.37.25.56.77.2 NAFTA-29.8-25.8-17.8-25.1-19.8-24.9

23. With exports also supported by weaker euro 23 Trade weighted value of the euro (2005=100)  Falling value of the euro also supports exports Source: Haver Analytics

24. And apparent steel use growth in emerging markets 24 Apparent steel use (% year-on-year, finished)  North Africa sees increased share of EU27 steel exports  Continued emerging market growth will incentivize EU producers to search for new markets in the presence of weak domestic demand. Source: worldsteel 2007200820092010201120122013(f) Average (2007-13) % of 2007 EU275.4-7.8-34.921.06.8-9.3-0.5 -2.7-29.9 NAFTA-8.5-7.9-36.033.29.47.82.9 0.1-4.7 Turkey12.0-9.7-16.030.714.35.77.5 6.428.7 MENA22.58.10.33.61.42.23.2 5.920.2 ASIA9.54.19.29.67.31.83.2 6.440.5

25. Conclusions  Global apparent steel use to reach a new record in 2013 as developing markets remain key growth drivers at the margin  Domestic demand in Europe to remain weak as deleveraging to weigh negatively on apparent steel use  European steel demand expected to continue contracting in 2013 against the backdrop of declining steel using sectors. Pickup expected in 2014  Against the backdrop of contacting domestic demand, European producers will continue seeking growing export markets 25

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