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Steel Industry Update/257 December 2010

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

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


Month of October Year-to-Date
(000 net tons) 2010 2009 % Chg 2010 2009 % Chg
Raw Steel Production ............... 7,212 6,603 9.2% 74,328 51,392 44.6%
Capacity Utilization ................. 67.3 62.3 -- 70.8 49.4 --
Mill Shipments .......................... 6,629 6,098 8.7% 69,784 48,888 42.7%
Exports ..................................... 995 983 1.2% 10,059 7,418 35.6%
Total Imports............................. 1,888 1,626 16.1% 20,271 13,428 51.0%
Finished Steel Imports ............ 1,585 1,243 27.5% 15,855 12,037 31.7%
Apparent Steel Supply*............. 7,220 6,358 13.6% 75,579 53,507 41.3%
Imports as % of Supply* ......... 22.0 19.6 -- 21.0 22.5 --
Average Spot Price** ($/ton) ...... $663 $616 7.6% $690 $602 14.6%
Scrap Price# ($/gross ton) .......... $341 $264 29.2% $343 $225 52.4%
Source: AISI, Global Insight *Excl semi-finished imports **Avg price of 8 carbon products #shredded bundles

Table 2: U.S. Spot Prices for Selected Steel Products, November & Year-to-Date
Month of November Year-To-Date
($ per net ton) 2010 2009 % Chg 2010 2009 % Chg
Hot Rolled Sheet………….. 539 508 6.1% 602 469 28.4%
Cold Rolled Sheet......…….. 647 607 6.6% 712 559 27.3%
HD Galvanized Sheet..…… 696 610 14.1% 761 608 25.2%
Coiled Plate................…….. 575 554 3.8% 629 606 3.8%
Cold-Finished Bar (SBQ)….. 864 743 16.3% 847 794 6.7%
Wide-Flange Beams....…… 703 643 9.3% 718 712 0.9%
Wire Rod/Low Carbon.…… 605 564 7.3% 650 556 16.8%
Rebar.........................…….. 563 471 19.5% 571 501 13.8%
Average Spot Price+…….. $649 $588 10.5% $686 $601 14.2%
OCTG Seamless Tube…… 1,769 1,523 16.2% 1,748 1,718 1.7%
Scrap ($/gross ton)*....………. 350 235 48.9% 344 226 52.1%
Sources: Global Insight, Spears Research +Comp price of 8 carbon products *shredded bundles

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Steel Industry Update/257

Table 3: World Crude Steel Production by Region, October & Year-To-Date


(000 metric tons) Month of October Year-to-Date
Region 2010 2009 % Chg 2010 2009 % Chg
European Union……. 15,444 14,790 4.4% 145,460 112,660 29.1%
Other Europe………. 3,087 2,699 14.4% 27,075 23,718 14.2%
C.I.S…………………. 9,315 8,910 4.5% 89,635 79,757 12.4%
North America……… 9,366 8,398 11.5% 93,704 66,066 41.8%
South America……... 3,994 3,880 2.9% 36,739 30,441 20.7%
Africa………………... 1,488 1,268 17.2% 13,947 12,186 14.4%
Middle East…………. 1,680 1,406 19.5% 15,731 14,325 9.8%
Asia………………….. 72,493 72,715 -0.3% 736,007 648,086 13.6%
Oceania………...…... 694 698 -0.6% 6,817 4,693 45.3%
Total………………… 117,562 114,765 2.4% 1,165,116 991,931 17.5%
Countries
China………………… 50,304 52,302 -3.8% 525,095 474,379 10.7%
Japan………………... 9,508 8,801 8.0% 91,443 69,726 31.1%
United States……….. 6,565 5,991 9.6% 67,451 46,623 44.7%
India(e)…….………… 5,750 5,283 8.8% 55,764 51,737 7.8%
Russia(e)...…..……… 5,726 5,607 2.1% 55,561 49,038 13.3%
South Korea..………. 5,206 4,671 11.4% 47,293 39,649 19.3%
Germany.…………… 3,834 3,453 11.0% 36,809 26,108 41.0%
Ukraine……..……….. 2,945 2,660 10.7% 27,589 24,340 30.9%
All Others…………... 27,741 25,860 7.3% 257,887 213,419 20.8%
Source: World Steel Association, 12/10

Graph 1: World Crude Steel Production

Source: World Steel Association, 12/10

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Steel Industry Update/257

Table 4: Global DRI Production, October 2010


Country Oct’10 Oct’09 % Chg
India 1,820 1,720 6%
Iran 800 567 41%
Mexico 490 463 6%
Saudi Arabia 450 445 1%
Venezuela 425 408 4%
Qatar 231 227 2%
Trinidad Tobago 180 123 46%
Argentina 160 138 16%
South Africa 160 150 7%
Libya 125 61 105%
Canada 41 56 -27%
Peru 10 9 11%
Total 4,633 5,159 11%
Source: Worldsteel.org, 11/24/10

Table 5: Global Blast Furnace Iron Production, Y-T-D 2010


Country Jan-Oct’10 Jan-Oct’09 % Chg
China 491,984 454,685 8.2%
Japan 68,691 53,439 28.5%
India 32,654 31,549 3.5%
Russia 40,183 35,987 11.7%
South Korea 26,576 22,194 19.7%
Brazil 26,671 20,008 33.3%
Germany 24,865 15,621 59.2%
U.S. 22,938 14,896 54.0%
Ukraine 22,722 21,031 8.0%
France 8,663 6,371 36.0%
All Others 91,253 70,487 29.5%
Total 857,200 746,268 14.9%
Source: Worldsteel.org, 11/24/10

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright © 2010 by Locker Associates Inc. All
rights reserved. Reproduction in any form forbidden w/o permission. Locker Associates, Inc., 225 Broadway Suite 2625 New York NY 10007.

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Table 6: World Ranking of Coke Producers, by


Capacity, 2008-2009
Country (mil tonnes) 2009 2008
China 345.0 327.0
Japan 30.4 38.2
Russia 25.8 30.3
India 18.4 18.4
Ukraine 13.7 18.5
USA 10.5 14.2
South Korea 10.1 10.6
Brazil 8.4 9.4
Poland 7.0 9.8
Germany 5.8 8.3
World 528.7 541.8
Source: Steel Times International, September 2010

Table 7: Met Coal Shipments, 2004-2009


Seaborne Imports 2004 2005 2006 2007 2008 2009
China (net) 0 0 2 net 1 0 30
Japan 56 55 52 54 54 45
Korea 15 12 12 16 19 15
India 0 21 22 24 25 25
Europe 51 51 54 59 61 41
South America 11 11 12 14 16 12
Other 42 50 40 42 43 31
Total 174 200 192 211 217 199

Seaborne Exports
Australia 117 125 124 137 134 134
USA 20 21 20 26 35 31
Canada 22 25 23 25 25 21
Other 16 29 24 23 23 13
Total 174 200 192 211 217 199
Source: Goldman Sachs October, 2010; in million tonnes

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Steel Industry Update/257

Graph 2: World Coke Production, 1988-2009

Source: Xcoal Energy & Resources, September 2010; in million tonnes

Graph 3: Benchmark Hard Coking Coal

Source: Grande Cache Company Report, October 2010

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Graph 4: Iron Ore & Coking Coal % of Hot-rolled Coil Price, 1998-2011E

Source: Goldman Sachs, October 2010

Graph 5: Number 1 Bushelings &Hot-Rolled Coil, 2007-2010

Source: ISRI Friday Report, December 10, 2010

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Locker Associates Steel Track: Spot Prices


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

800
950
CR Sheet CF Bar (SBQ)
700 850

600 750

HR Sheet Beam
650
500
Wire Rod
550
400
450

300
350

200 250
89 93 97 04 05 07 08 09 O N D J F M A M J J A S O N 89 93 97 04 05 07 08 09 O N D J F M A M J J A S O N

Locker Associates Steel Track: Performance


U.S. Raw Steel Production 100%
U.S. Capacity Utilization
10.0
(mil net tons)
2010 2010 2009
9.0 2009 90%

8.0 80%

7.0 70%

6.0 60%

5.0 50%

4.0 40%

3.0 30%
J F M A M J J A S O N D J F M A M J J A S O N D
2010 6.9 6.9 7.8 7.7 8.0 7.8 7.5 7.3 7.3 7.2 2010 64% 71% 73% 74% 75% 75% 72% 68% 70% 67%
2009 4.5 4.4 4.4 4.2 4.5 4.8 5.6 6.1 6.4 6.6 6.3 6.5 2009 43% 46% 43% 41% 43% 47% 52% 58% 62% 62% 61% 61%

Steel Mill Products: US Imports, October & Year-to-Date


Imports: Country of Origin Month of October Year-to-Date
(000 net tons) 2010 2009 % Chg 2010 2009 % Chg
Canada……………………….. 470 529 -11.2% 5,771 3,346 72.5%
Mexico………………………… 271 163 66.3% 2,451 1,449 69.2%
Other W. Hemisphere……….. 82 95 -13.7% 910 709 28.3%
European Union……………… 355 297 19.5% 3,590 2,122 69.2%
Other Europe*……………….. 130 151 -13.9% 1,922 974 97.3%
Asia……………………………. 541 339 59.6% 4,997 4,523 10.5%
Oceania………………………. 28 51 -45.1% 537 279 92.5%
Africa………………………….. 11 3 266.7% 93 26 257.7%
Total 1,888 1,626 16.1% 20,271 13,428 51.0%
Imports: Custom District
Atlantic Coast………………… 219 230 -4.8% 2,518 1,740 44.7%
Gulf Coast/Mexican Border… 721 417 72.9% 6,918 5,551 24.6%
Pacific Coast…………………. 322 309 4.2% 3,878 2,099 84.8%
Gr Lakes/Canadian Border…. 610 649 -6.0% 6,785 3,886 74.6%
Off Shore……………………… 16 21 -23.8% 173 152 13.8%
Source: AISI; * includes Russia
Update #257
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Steel Industry Update/257

Locker Associates, Inc.


LOCKER ASSOCIATES is a business-consulting firm that specializes in enhancing the
competitiveness of businesses and industries on behalf of unions, corporate and government
clients. By combining expert business and financial analysis with a sensitivity to labor issues,
the firm is uniquely qualified to help clients manage change by:
♦ leading joint labor/management business improvement initiatives;
♦ facilitating ownership transitions to secure the long-term viability of a business;
♦ conducting strategic industry studies to identify future challenges and opportunities;
♦ representing unions in strategic planning, workplace reorganization and bankruptcy
♦ formulating business plans for turnaround situations; and
♦ performing due diligence for equity and debt investors.
Over the last 28 years, the firm has directed over 225 projects spanning manufacturing,
transportation, distribution and mining industries. Typical projects involve in-depth analysis of a
firm’s market, financial and operating performance on behalf of a cooperative labor-
management effort. Locker Associates also produces a widely read monthly newsletter, Steel
Industry Update that circulates throughout the U.S. and Canadian steel industry.

MAJOR CLIENTS
United Steelworkers Air Line Pilots Association/Delta Air Lines MEC
Bank of Boston Sharpsville Quality Products
Congress Financial IPSCO
Santander Investment Securities International Association of Machinists
AEIF-IAM/AK Steel Middletown CSEA/AFSCME
Prudential Securities United Auto Workers
US Steel Joint Labor-Mgmt Comm Service Employees International Union
LTV Steel Joint Labor-Mgmt Committee American Fed of Television & Radio Artists
Int’l Union of Electrical Workers Supervalu
Bethlehem Joint Labor-Mgmt Comm United Mine Workers
Inland Steel Joint Labor-Mgmt Comm Algoma Steel
Northwestern Steel and Wire North American Refractories
Boilermakers UNITE/HERE
American Federation of Musicians AFL-CIO George Meany Center
USS/KOBE Watermill Ventures
Sysco Food Services of San Francisco Wheeling-Pittsburgh Steel
International Brotherhood of Teamsters Canadian Steel Trade & Employment Congress
Development Bank of South Africa Minn Gov's Task Force on Mining
J&L Structural Steel Special Metals

RECENT PROJECTS
• Business Plan for High-Tech Startup (2009-present): drafted detailed business plan to
raise capital and promote a new hydrogen battery technology
• IBT-Supervalu (2010): assist union and management to identify major operational problems
impacting warehouse performance and provide recommendations for joint improvement
• Institute of Scrap Recycling Industries (2010): presented a status report on the U.S. steel
market before the Institute of Scrap Recycling Industries Commodities roundtable
• Save the World Air-Marketing (2009-present): developed a marketing plan to help drive
sales of a green technology product, ELEKTRA, an electronic fuel device for trucks that
increases fuel economy (mpg's), reduces exhaust emissions and improves engine performance