1. Philippines COUNTRY REPORT Presented by: JOEL T. RONQUILLO Philippine Iron and Steel Institute 2011 SEAISI Economic, Environmental & Safety Seminar Nov. 21-22, 2011 Hotel Istana, Kuala Lumpur City Centre, Malaysia

2. Government forecasted a 7-8% GDP growth in 2011. GDP posted a 7.3% growth in 2010. ECONOMIC UPDATES: Apparent steel consumption growth of 14% (4.02M tons in 2010 vs 3.53M tons in 2009). World steel demand is projected to be 1,340 million tons in 2011 (an increase of 5.30% from 2010).

3. 200820092010 GROSS DOMESTIC PRODUCT3.71.17.3 Agriculture, Fishery and Forestry3.10(0.5) Industry4.9(0.9)12.1 Mining and Quarrying1.921.518.4 Manufacturing4.2(4.4)12.3 Construction7.69.810.5 Electricity, Gas and Water7.3(2.9)8.5 Services3.12.87.1 Transport, Comm., Storage4.20.61.9 Trade1.2110.7 Finance2.55.96.5 Ownership of Dwelling and Real Estate5.8(0.3)6.8 Private Services4.96.48.8 Government Services36.11.7 GDP Growth by Sector, 2008-2010

4. Performance of the Steel Industry in 2010 Apparent steel consumption reached 4.02 million MT in 2010, growing by 14% compared to 3.53 million MT in 2009.

5. Construction Light & Heavy Fabrication OthersPackaging 2009 Construction Light & Heavy Fabrication Others Packaging 2010 Comparative Steel Demand

6. Summary of Key Steel Statistics In Metric TonsYr-Yr 20102009Change CRUDE STEEL PRODUCTION 1,235,294969,41227% FINISHED STEEL PRODUCTION2,762,2212,773,736(0.4%) FINISHED STEEL IMPORT1,989,4421,711,01616% FINISHED STEEL EXPORT104,83673,76842% APPARENT STEEL CONSUMPTION Adjusted for double counting 4,017,1183,530,03414%

7. Apparent Consumption: SEMI-FINISHED STEEL In Metric TonsYr-Yr 20102009Change BILLETS Production1,050,000824,00027% Import1,169,9981,117,7895% Export-- Apparent Consumption2,219,9981,941,78914% SLABS Production-- Import64,286(100%) Export-- Apparent Consumption-64,286(100%) Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

8. Apparent Consumption: FINISHED STEEL In Metric TonsYr-Yr 20102009Change LONG PRODUCTS Production 12 2,132,5121,790,72419% Import642,827465,28538% Export829320159% Apparent Consumption2,774,5102,255,68923% FLAT PRODUCTS Production 1 0102,062(100%) Import1,346,6151,245,7318% Export104,00673,44842% Apparent Consumption1,242,6091,274,345(2%) 1 Covers hot rolled products only in order to avoid double counting 2 Excludes bar products converted from wire rods Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

9. Breakdown of Finished Steel Production in MT (2010 vs. 2009) In Metric TonsYr-Yr 20102009Change LONG PRODUCTS2,508,2182,216,50013% Bars 1 2,092,5481,848,46913% Shapes and Sections 1 201,074179,06512% Wires214,596188,96614% FLAT PRODUCTS254,003557,236(54%) Hot Rolled Coils- 102,062(100%) Cold Rolled Coils5,552104,477(95%) GI/Pre-painted/Zn-Al Coated Sheets198,095293,179(32%) Pipes and Tubes 2 50,35657,518(12%) Source: Industry Sources 1 Includes bar products converted from wire rods 2 2009 figures are revised due to new available information

10. Breakdown of Finished Steel Imports in MT (2010 vs. 2009) In Metric TonsYr-Yr 20102009Change Long Products642,827465,28538% Wire Rods336,854337,7300% Bars54,83121,722152% Shapes and Sections189,77156,328237% Sheet Piles29,94610,434187% Wires12,50323,306(46%) Rails2,1742,464(12%) Others (Alloy & Stainless Steels)16,74813,30126% Flat Products1,346,6151,245,7318% Plates275,587326,804(16%) Hot Rolled Coils/Sheets214,908277,742(23%) Cold Rolled Coils/Sheets292,648211,25739% GI Sheets/ Pre-painted/Zn-Al231,116150,79153% Tinplates/TFS188,190151,26324% Pipes and Tubes121,78198,63223% Others (Alloy & Stainless Steels)22,38529,242(23%) Sources: Bureau of Customs (BOC), Department of Trade and Industry (DTI) and Industry Sources

11. Breakdown of Finished Steel Exports in MT (2010 vs. 2009) In Metric TonsYr-Yr 20102009Change Bars / Sections465189146% Wires364130180% Hot Rolled Coils/Sheets21,79512,64772% Cold Rolled Coils/Sheets24,69520,67119% GI Sheets/ Pre-painted/Zn-Al40,83937,03410% Pipes and Tubes16,6783,096439% TOTAL104,83673,76842% Source: National Statistics Office

12. Steel Projects COMPANYLOCATIONDESCRIPTIONSTATUS TKC Steel ILigan City (Mindanao) New installation 1 st Blast Furnace 400,000 mtpy On-going testing operation New installation 2 nd Blast Furnace 400,000 mtpy On-going installation Commissioning - 3 Q 2012 New Carcar Manufacturing Corp. Davao City (Mindanao) New capacity Bar rolling mill 400,000 mtpy Start of construction - 3Q 2011 Commissioning - 4Q 2012 Cebu (Visayas) New capacity EAF to produce billets 400,000 mtpy On-going planning Commercial operation- Jan 2014 La Union (Luzon) New capacity EAF to produce billets 400,000 mtpy On-going planning Commercial operation- Jan 2014 Davao del Norte (Mindanao) New capacity EAF to produce billets 400,000 mtpy On-going planning Commercial operation - Jan 2014 Source: Industry Sources

13. ENVIRONMENTAL UPDATES: 20% drop of total suspended particulates (TSP) for the first quarter of 2011 at 131 µg/Ncm as against 163 µg/Ncm for the same period of 2010. TSP levels recorded for the third quarter of 2011 went down further at 120 µg/Ncm. 25% drop of TSP for the second quarter of 2011 at 125 µg/Ncm as against 166 µg/Ncm for the same period of 2010.

14. ENVIRONMENTAL UPDATES: Proposal from DENR to use EURO IV fuels by Jan. 01, 2016 for all new passenger and light duty motor vehicle types. Issues on the proposed DENR Administrative Order regarding oxygen correction factors and emission averaging and guidelines for employing the emission averaging approach for compliance purposes.

15. Thank You for your attention!