Steel Industry Update/244 November 2009

Locker Associates, 225 Broadway, Suite 2625 New York NY 10007 Tel: 212-962-2980

Table 1: Selected U.S. Steel Industry Data, September & Year-To-Date

Month of September Year-to-Date
(000 net tons) 2009 2008 % Chg 2009 2008 % Chg
Raw Steel Production ........................6,367 8,644 -26.3% 44,789 83,747 -46.5%
Capacity Utilization .......................... 62.1 84.5 -- 48.0 89.7 --
Mill Shipments ................................ 5,793 7,920 -26.9% 42,791 80,970 -47.2%
Exports .............................................. 990 1,394 -29.0% 6,434 10,550 -39.0%
Total Imports................................ 1,211 2,949 -58.9% 11,802 24,335 -51.5%
Finished Steel Imports .....................1,026 2,455 -58.2% 10,794 19,395 -44.3%
Apparent Steel Supply*......................5,829 8,981 -35.1% 47,150 89,815 -47.5%
Imports as % of Supply* .................. 17.6 27.3 -- 22.9 21.6 --
Average Spot Price** ($/ton) ............... 605 1,084 -44.1% 600 970 -38.1%
Scrap Price# ($/gross ton) ................... 269 572 -53.0% 212 489 -56.7%
Source: AISI, Purchasing Magazine *Excl semi-finished imports **Avg price of 8 carbon products #shredded bundles

Table 2: World Crude Steel Production by Region, September & Year-To-Date

(000 metric tons) Month of September Year-to-Date
Region 2009 2008 % Chg 2009 2008 % Chg
European Union ................................
13,171 17,260 -23.7 97,165 160,111 -39.3
Other Europe................................
2,549 2,529 0.8 20,868 25,093 -16.8
C.I.S. ................................ 8,085 9,311 -13.2 68,891 95,331 -27.7
North America ................................
7,200 10,633 -32.3 56,878 103,508 -45.1
South America................................
3,551 4,198 -15.4 26,265 37,703 -30.3
Africa ................................ 1,152 1,433 -19.6 10,694 13,630 -21.5
Middle East................................
1,407 1,381 1.9 12,477 12,209 2.2
Asia ................................ 69,241 60,255 14.9 568,805 581,599 -2.2
Oceania ................................ 675 723 -6.6 3,994 6,591 -39.4
Total................................107,030 107,723 -0.6 866,037 1,035,774 -16.4
Countries
China………………… 50,711 39,390 28.7% 420,401 391,032 7.5%
Japan………………... 8,270 120,086 -18.0% 60,927 92,343 -34.0%
United States……….. 5,380 7,842 -31.4% 40,236 75,974 -47.0%
Russia………..……… e4,860 6,098 -20.3% 41,681 56,955 -26.8%
India.………………… e4,620 4,630 -0.2% 41,748 41,108 1.6%
South Korea..………. 4,440 4,550 -2.4% 35,148 41,293 -14.9%
Germany.…………… 3,171 4,050 -21.7% 22,647 36,234 -37.5%
Ukraine …………….. e2,508 2,482 3.9% 21,517 31,619 -31.9%
All Others…………... 25,578 78,923 -132.4% 181,732 269,216 -32.5%
Source: World Steel Association, 11/09; e=estimate
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Table 3: U.S. Steel Imports, September 2009 & 2008

(000 tonnes) Sep '09 Aug '09 % Chg Sep '08 % Chg
Japan 94 70 33.8% 126 -25.7%
EU 207 129 60.6% 316 -34.4%
Canada 462 312 48.0% 549 -15.9%
Brazil 75 100 -25.1% 107 -30.0%
Korea 64 86 -25.7% 246 -74.0%
Mexico 110 117 -5.8% 235 -53.1%
Russia 1 28 -96.1% 82 -98.7%
China 42 31 35.1% 568 -92.6%
Australia 34 16 113.5% 77 -55.6%
South Africa 1 na -- 13 -91.5%
Indonesia na na -- 1 --
Turkey 11 15 -26.5% 107 -89.7%
Ukraine na 14 -- 72 --
India 40 9 340.8% 238 -83.3%
Others 63 48 30.9% 212 -70.4%
Total 1,203 975 23.4% 2,949 -59.2%
Source: Worldsteel.org, 11/3/09

Table 4: Global Steel Production Utilization Rates, 2007-2011F

2007 2008 2009 2010F 2011F
China 91% 81% 84% 88% 91%
Japan 93% 91% 70% 81% 81%
Korea 86% 89% 79% 79% 80%
India 94% 92% 93% 96% 94%
Taiwan 100% 97% 80% 75% 82%
Other Asia 66% 61% 57% 56% 565
Asia Total 90% 83% 81% 85% 88%

US 87% 81% 55% 72% 78%

Latin America 85% 84% 60% 74% 89%
Europe Total 92% 87% 69% 81% 84%
World Total 90% 84% 75% 82% 86%
Source: Goldman Sachs Pan Asia Steel Report, 11/13/09

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright © 2009 by Locker Associates Inc. All rights
reserved. Reproduction in any form forbidden w/o permission. Some material in this Update is excerpted from American Metal Market (AMM), which is
available by sub by calling 800-247-8080. Locker Associates, 225 B’way, #2625, NY NY 10007 Ph: 212-962-2980 email: lockerassociates@yahoo.com

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Exhibit 1: US Iron Ore, Coking Coal and Steel Prices, 2003-2012E

Source: Goldman Sachs, 10/8/09

Table 5: Coal and Iron Ore Price, FOB Australia 2000-2013F

(US$/tonne) Hard Coking Coal (1) Iron Ore Fines (2)
Year New % Chg Old New % Chg Old
2000/01 40 -5% 17 4%
2001/02 43 8% 18 4%
2002/03 48 13% 17 -2%
2003/04 47 -4% 19 9%
2004/05 58 24% 22 19%
2005/06 125 117% 38 72%
2006/07 116 -7% 46 19%
2007/08 98 -16% 50 9%
2008/09 300 206% 90 80%
2009/10 129 -57% 60 -33%
2010/11F 180 40% 155 72 20% 66
2011/12F 160 -11% 155 72 0% 60
2012/13F 133 -17% 133 69 -5% 60
Source: Goldman Sachs JBWere Report, 10/6/09; (1) premium grade, low-vol brands, 70 CSR and
above; (2) Hamersley fines

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Exhibit 2: Chinese Imports of Coking Coal, 2006-July, 2009 and Trade, 2002-2009F

Source: Goldman Sachs JDWere Report, 10/6/09

Exhibit 3: Chinese Iron Ore Imports, 2002-YTD

Source: Goldman Sachs JBWere Report, 10/6/09

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Exhibit 4: Seaborne Trade of Iron Ore, China and Rest of World, 1980-2010F

Source: Goldman Sachs JBWere Report, 10/6/09

Exhibit 5: Supply and Demand for Seaborne Metallurgical Coal, 2006-2012F

Source: Goldman Sachs JDWere Report, 10/6/09

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Exhibit 6: Asian Mills Crude Steel Production and Utilization Rates, January 2007-July, 2009*

Source: Goldman Sachs Pan Asia Report, 10/13/09; *not including Japan

Exhibit 7: Japanese Crude Steel Production and Utilization Rates, January 2007-July, 2009

Source: Goldman Sachs Pan Asia Report, 10/13/09

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Exhibit 8: European Steel Market (EU27) Crude Steel Production, 2003-2010E

Source: Goldman Sachs Europe Steel Report, 10/13/09

Table 6: Real GDP Growth Trends Across Regions, 2003-2010E

(YoY %) China Korea ASEAN Japan BRICS LA EU US World
2003 10.0 3.1 5.6 1.4 7.9 2.0 1.3 2.5 3.4
2004 10.1 4.7 6.0 2.7 8.4 6.5 2.3 3.6 4.7
2005 10.4 4.2 5.4 1.9 8.5 4.7 2.1 3.1 4.3
2006 11.7 5.1 5.7 2.0 9.5 5.6 3.2 2.7 5.0
2007 13.0 5.1 6.3 2.3 10.4 5.7 2.9 2.1 5.0
2008 9.0 2.2 4.8 (0.7) 7.5 4.1 0.8 0.4 2.7
2009E 9.4 (0.6) 1.4 (5.7) 5.1 (1.7) (3.8) (2.5) (0.8)
2010E 11.9 3.7 4.9 1.4 9.0 4.2 1.4 2.0 4.1
Source: Goldman Sachs Pan Asia Report, 10/13/09

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Exhibit 9: U.S. Iron Ore and Coking Coal 2003-2012E

Source: Goldman Sachs US Steel Report, 10/8/09

Exhibit 10: US Hot-rolled Coil Steel and Raw Materials Prices, 2003-2012E

Source: Goldman Sachs US Steel Report, 10/8/09

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Exhibit 10: Manufacturing Payroll, 2006-October 2009

Source: The Friday Report, 11/13/09

Table 7: U.S. Spot Market Steel Prices, Actual and Forecast July, 2009-January, 2010F
($/ton) Jul’09 Aug’09 Sep’09 Oct’09 Nov’09F Dec’09F Jan’10F
HR sheet 430 475 535 535 525 530 545
CR sheet 517 568 625 630 620 625 655
HD gal sheet 555 580 630 645 630 645 660
Electrogal sheet 565 594 635 660 645 660 675
Coiled plate 506 525 581 587 578 588 600
HR plate 604 613 632 648 640 648 660
Structural beam 661 640 633 653 633 660 700
Merchant bar 707 714 729 740 739 743 770
CF steel bar 817 840 790 777 728 794 815
Reinforcing bar 495 517 517 517 517 518 525
Wire rod 520 531 532 584 587 586 587
SS sheet (304) 2,188 2,272 2,334 2,589 2,447 2,309 2,449
Source: Purchasing Magazine, 10/29/09

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Locker Associates Steel Track: Spot Prices

U.S. Flat-Rolled Prices U.S. Other Product Prices
1450
1200
($ per ton) 1350
1100 ($ per ton)
1250
1000
Plate 1150
CF Bar (SBQ)
900 1050

800 950

700 850

CR Sheet 750
600
Beam
650
500
550
400 Wire Rod
450
HR Sheet
300 350

200 250
89 93 97 01 03 04 05 06 07 1st2nd3rd4th J F M A M J J A S O 89 93 97 01 03 04 05 06 07 1st2nd3rd4th J F M A M J J A S O

Locker Associates Steel Track: Performance

U.S. Raw Steel Production U.S. Capacity Utilization
10.0 100%
(mil net tons)
2009 2008
9.0 90%

8.0 2009
80%
2008
7.0 70%

6.0 60%

5.0 50%

4.0 40%

3.0
J F M A M J J A S O N D 30%
J F M A M J J A S O N D
2009 4.5 4.4 4.4 4.2 4.5 4.8 5.6 6.1 6.4 2009 43% 46% 43% 41% 43% 47% 52% 58% 62%
2008 9.5 9.1 9.5 9.2 9.6 9.2 9.4 9.6 8.6 7.5 5.1 4.3 2008 90% 92% 90% 90% 91% 90% 89% 90% 85% 71% 51% 41%

U.S. Spot Prices for Selected Steel Products, October & Year-to-Date
Month of October Year-To-Date
($ per net ton) 2009 2008 %Chg 2009 2008 %Chg
Hot Rolled Sheet………….. 535 854 -37.4% 465 886 -47.5%
Cold Rolled Sheet......…….. 630 961 -34.4% 554 972 -43.0%
HD Galvanized Sheet..…… 645 1069 -39.7% 608 1,036 -41.3%
Coiled Plate................……. 587 1099 -46.6% 611 1,006 -39.2%
Cold-Finished Bar (SBQ)….. 777 1068 -27.2% 799 1,193 -33.0%
Wide-Flange Beams....…… 653 1060 -38.4% 719 974 -26.2%
Wire Rod/Low Carbon.…… 584 980 -40.4% 555 887 -37.3%
Rebar.........................…….. 517 870 -40.6% 505 825 -38.9%
Average Spot Price+…….. 616 995 -38.1% 602 972 -38.1%
Stainless Sheet 304……… 2,589 3,956 -34.6% 2,300 4,190 -45.1%
OCTG Seamless Tube…… na 3,354 -- na 2,377 --
Scrap ($/gross ton)*....………. 264 235 12.3% 225 452 -50.3%
Sources: Purchasing Mag, Spears Research +Comp price of 8 carbon products *shredded bundles
Update #244

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